Tarun who is the owner of a mountain bicycle writes a letter to Satish on March 15, 2015 offering to sell him his bicycle for Rs. 50,000. The latter also mentions that the offer will be open till 20th of March, 2015.......Indian Contract Act

Question: Tarun who is the owner of a mountain bicycle writes a letter to Satish on March 15, 2015 offering to sell him his bicycle for Rs. 50,000. The latter also mentions that the offer will be open till 20th of March, 2015.

On 18th March, 2015 at 3:50 pm Satish posts a letter of acceptance to buy the bicycle which reaches Tarun at 8:30 pm the same day. Critically examine whether a binding contract has been entered between Satish and Tarun citing relevant provisions of Indian Contract Act, 1872.

Find the answer to the mains question of the Law of Contract only on Legal Bites. [Tarun who is the owner of a mountain bicycle writes a letter to Satish on March 15, 2015 offering to sell him his bicycle for Rs. 50,000. The latter also mentions that the offer will be open till 20th of March, 2015. On 18th March, 2015 at 3:50 pm Satish posts a letter of acceptance to buy the bicycle which reaches Tarun at 8:30 pm the same day. Critically examine whether a binding contract has been entered between Satish and Tarun citing relevant provisions of Indian Contract Act, 1872.]

Answer

In order to determine whether a binding contract has been formed between Satish and Tarun, we need to examine the essential elements of a valid contract under the Indian Contract Act, 1872. These essential elements are offer, acceptance, consideration, capacity, free consent, the legality of an object, and certainty of terms.

In the given scenario, Tarun has made an offer to Satish to sell his mountain bicycle for Rs. 50,000 on March 15, 2015, and has also specified the time limit for acceptance of the offer as March 20, 2015. This offer fulfils the requirement of certainty of terms.

Now, we need to examine whether Satish has accepted the offer within the specified time limit. Satish posted his acceptance letter on March 18, 2015, at 3:50 pm, which means that the acceptance was made within the time limit specified by Tarun. However, the letter of acceptance reached Tarun at 8:30 pm on the same day. This delay in the receipt of the acceptance letter by Tarun can be a crucial factor in determining the formation of the contract.

Section 4 of the Indian Contract Act, 1872 states that communication of an acceptance is complete as against the proposer when it is put in a course of transmission to him, so as to be out of the power of the acceptor. This means that the acceptance is considered complete as soon as it is dispatched by the acceptor, even if it is delayed in transit or lost in the post.

In the case of Bhagwandas Goverdhandas Kedia v. M/s. M. Lachmandas & Co., AIR 1967 SC 1170, the Supreme Court of India held that where the acceptance of an offer is communicated by post, the contract is complete as soon as the letter of acceptance is posted, even if it is delayed in transit or lost in the post. The court further held that the risk of delay or loss in transit is on the offeror, and not on the offeree.

Therefore, in the given scenario, it can be argued that Satish's acceptance of Tarun's offer was complete as soon as he posted the letter of acceptance on March 18, 2015, at 3:50 pm. Even though the letter of acceptance was received by Tarun at 8:30 pm on the same day, the delay in its receipt does not affect the validity of the contract.

Furthermore, there is consideration involved in this transaction, as Tarun is offering to sell his bicycle for Rs. 50,000, and Satish is willing to pay that amount in exchange for the bicycle. Thus, the requirement of consideration is also fulfilled.

Therefore, all the essential elements of a valid contract are present in the given scenario, and it can be concluded that a binding contract has been formed between Satish and Tarun for the sale of the mountain bicycle.