The plaintiff invited tenders for the supply of 1000 pairs of woolen socks. The defendant submitted a tender offering to supply the goods, as per the sample sent with the tender form, at a certain price… Decide the case, giving reasons for your judgment.

Question: The plaintiff invited tenders for the supply of 1000 pairs of woollen socks. The defendant submitted a tender offering to supply the goods, as per the sample sent with the tender form, at a certain price. The plaintiff placed an order for the supply of 1,000 pairs of socks, subject to the approval of the sample.

The defendant failed to supply the goods and the plaintiff had to buy the same at a higher price from the market. In the suit filed by the plaintiff for damages against the defendant, the defendant contends that he is not liable on the ground that no contract had come into existence between the parties. Decide the case, giving reasons for your judgment. [DJS 1973]

Find the answer to the mains question only on Legal Bites. [Breach of contract | The plaintiff invited tenders for the supply of 1000 pairs of woollen socks. The defendant submitted a tender offering to supply the goods, as per the sample sent with the tender form, at a certain price… Decide the case, giving reasons for your judgment.]

Answer

An invitation for tenders for the supply of goods or for the execution of works is not a proposal. It is an attempt to ascertain whether a proposal can be obtained within such a margin as the employer is willing to adopt; it is an offer to negotiate, an offer to receive proposals. The actual tender is the offer, and if accepted, it becomes a binding contract.

The acceptance of such tender merely amounts to an intimation that the proposal will be considered to remain open during the period specified, and that it will be accepted from time to time by giving orders of specified quantities, and does not bind either party unless and until such orders are given.

In the present case at hand, the order for 1000 pairs of woollen socks is placed by the plaintiff, hence a legally binding contract has formed between the plaintiff and defendant, and upon the order being placed, the defendant is liable to deliver the said orders within a reasonable time.

However, in the present case at hand, the defendant failed to supply the goods and the plaintiff had to buy the same at a higher price from the market. The claim of the plaintiff that no contract had come into existence is of no value because, in terms of the contract act, an invitation to offer was made from the plaintiff’s side to which the defendant made an offer, later being accepted by the plaintiff become a legally enforceable contract between the two.

The conduct of the plaintiff by placing the order for woollen socks suggests the same, hence the defendant will be liable to pay the damages to the plaintiff for the breach of contract he has committed. Now, coming to the second aspect of the proposition, the quantum of damages has to be decided by the court because the plaintiff is compelled to buy the same socks at a higher price from the market owing to the breach committed by the plaintiff.

Section 73 of the Indian Contract Act, 1872 prescribes the method of assessing compensation due to a plaintiff suing upon a breach of contract. It says: “When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things for such breach.”

In Saraya Distillery v. Union of India [AIR 1984 Del 360], the court said that the injured party can recover compensation on the basis of the difference between the contract and market prices without actually purchasing the goods. All that has to be proved is the buying price at which the injured party can obtain substitute goods.

In the present case also, what the buyer/plaintiff is deprived of in the usual course of things by non-delivery is the value of the goods at the time and place of the delivery, less price payable by him under the contract. This loss of value is the only natural result of the breach, the only kind of damage that ensues in the usual course of things.

The quantum of damages on account of the breach of such contract would be the difference between the contract price and the market price of the goods in question at the time when the contract is broken.

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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