Breach of contract | ‘A’ offered by letter to buy his nephew ‘F’s horse for Rs. 10,000/- adding that "if I hear no more about this I shall consider the horse to be mine at Rs. 10,000/." No answer was returned to this letter… B sold the horse by mistake, A sues F for breach of contract and claims compensation. Decide?

Question: Breach of contract | ‘A’ offered by letter to buy his nephew ‘F’s horse for Rs. 10,000/- adding that” if I hear no more about this I shall consider the horse to be mine at Rs. 10,000/-“.

No answer was returned to this letter but F told B, an auctioneer, to keep the horse out of the sale of his farm stock, as he intended to reserve it for his uncle A. B sold the horse by mistake, A sues F for breach of contract and claims compensation. Decide? [DJS 2006]

Find the answer to the mains question only on Legal Bites. [Breach of contract | ‘A’ offered by letter to buy his nephew ‘F’s horse for Rs. 10,000/- adding that “if I hear no more about this I shall consider the horse to be mine at Rs. 10,000/.” No answer was returned to this letter… B sold the horse by mistake, A sues F for breach of contract and claims compensation.]

Answer

Section 2(b) of The Indian Contract Act, 1872 provides that “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.”

The bare reading of provisions of Section 2(b) Act makes it clear that the person to whom ‘proposal’ is made, will signify his assent thereto, then only a proposal is said to have been accepted.

Also, Section 7(1) of The Contract Act provides that for a valid acceptance of a proposal it is essential that acceptance should be absolute and unqualified. Section 7(2) further lays down that an acceptance must be 'expressed in some usual and reasonable manner unless the proposal prescribes the manner in which it is to be accepted.’

Rules regarding Valid Acceptance:

1. Acceptance can only be given to whom the offer was made
2. It has to be absolute and unqualified
3. Acceptance must be communicated

According to Section 3 and 9, if acceptance is made with words spoken or written, it is an express acceptance, and if acceptance is made otherwise than in words, it is implied. What is necessary is that there should be some external manifestation of acceptance. A mere mental determination to accept unaccompanied by any external indication will not be sufficient as observed in Cotton Corpn of India Ltd v. Bombay Dyeing & Mfg Co Ltd, (2006) 5 Bom CR 105.

In Bhagwandas v. Girdhari Lal and Co., AIR 1966 SC 543 was also held “In order to create a contract, acceptance of an offer and intimation of acceptance by some external manifestation, which the law regards as sufficient is necessary.”

The facts of the present case in hand have been borrowed from the English case law of Felthouse v. Bindley (1863) 7 L.T. 835 in which the court held that since the nephew had not communicated the acceptance of a proposal, so no contract had arisen. Communication of acceptance of a proposal should be communicated to the offerer himself. If it is made to any other person, it will be ineffectual as if there was no communication. Moreover, as held in the case, an offeror cannot say that if no answer is received within a certain time, the offer shall be deemed to have been accepted.

Therefore, it is clear that an offer made with a condition attached that the failure to reply by the offeree will be deemed his acceptance to the offer and will result in a contract that is not maintainable in the eyes of law. Section 2(b) of the contract act clearly entails that the assent to the proposal must come through the person to whom the proposal is made and here the acceptance of the offer has not been made by either words, writing, or by B’s action to the offeror himself. Since there is no lawful acceptance of the offer, A is not entitled to recover any compensation from B.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X