Name: Tanushree Karnawat

PRN: 20010223066

Group: III

Division: D

Course: Law of contracts

Question 1:

The above situation is based on the landmark case of Percival Ltd. London
County Council Asylums and Mental Deficiency Committee and the
Bengal Coal Co. v. Homee Wadia & Co.

Issue:

i)When the supplier refused to supply the goods, whether he revoked the
offer or the acceptance of the Government?

Whether it was the valid revocation on part of the supplier?         

ii) Whether there was a concluded contract between the Government and
M/s ABC Surgical?          

Rule:

Standing offer: An offer which is allowed to remain open for acceptance

over a period of time is known as standing offer or continuing offer. Tenders
that are invited for supply of goods is a kind of standing offer
Section 2(a): When one person signifies to another his willingness to do or
to abstain from doing anything, with a view to obtaining the assent of that
other to such act or abstinence, he is said to make a proposal;

 The Person making the proposal or offer is called the ‘offeror’

 For a valid offer, the party making it must express his willingness ‘to
do’ or ‘not to do’ something:

 An offer can be positive or negative:

 The willingness must be expressed with a view to obtain the assent:

The offer can be expressed or an implied offer.

Section 4:
The communication of a proposal is complete when it comes to the
knowledge of the person to whom it is made.
The 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;
as against the acceptor, when it comes to the knowledge of the proposer.
The communication of a revocation is complete,—
as against the person who makes it, when it is put into a course of
transmission to the person to whom it is made, so as to be out of the power
of the person who makes it; as against the person to whom it is made, when
it comes to his knowledge.

Section 5:  Revocation of Proposals and acceptance —A proposal may be

revoked at any time before the communication of its acceptance is complete
as against the proposer, but not afterwards.
Section 6 (3): A proposal is revoked by the failure of the acceptor to fulfil a
condition precedent to acceptance.

Application:

(1) There was a breach on the part of the supplier as he denied supplying
the goods to the government of Uttar Pradesh even after their
repeated requests to the supplier. He neither revoked the offer nor the
acceptance by which he could remove the blame of breach of contract.
There was a standing offer between the government and the supplier,
and the same was accepted by the supplier by an implied mode of
acceptance i.e. by accepting the offer and supplying the needed
requirements. This was also readily accepted by the government and
the tender was given to the supplier.

Also in the month of December the supplier stopped the delivery of

goods.

Case Law:

This can be seen through the case law of Percival Ltd. London County
Council Asylums and Mental Deficiency Committee.

Facts: The plaintiffs advertised for tenders for the supply of stores. The
defendant made a tender to the effect that he undertook to supply the
company for twelve months with such quantities of special articles as the
company may order from time to time. The Company, by a letter accepted
the tender and subsequently gave various orders which were executed by
the defendant. Ultimately the Company gave an order for goods within the
schedule, which the defendant refused to supply.

Judgment: The Company succeeded in an action for breach of contract. The

tender was a standing offer, to be converted into a series of contracts by the
subsequent acts of the company and that an order prevented pro tanto the
possibility of revocation, and the defendant, though he might regain his
liberty of action for the future, was meanwhile bound to supply the goods
actually ordered.

(2) In the next part there was a valid contract between the Government
and the M/s ABC Surgical as when the tender was there by the
government to invite the bid for the required items, M/s ABC Surgical
came on their own which also proved that their was free consent on
their part. This means that their was a valid tender accepted on their
part. The government of UP also specified certain conditions which
were also accepted by the supplier. The supplier also supplied the
requirements in the month of November, but failed to supply the same
in the month of December.

Case law:

In the case of Bengal Coal Co. v. Homee Wadia & Co.

A agreed in writing to supply coal to B at certain prices and up to a stated
quantity, or in any quantity which may be required for a period of twelve
months, is not a contract unless B binds himself to take some certain
quantity, but a mere continuing offer which may be accepted by B from time
to time by ordering goods upon the terms of the offer. In such a case, each
order given by B is an acceptance of the offer and A can withdraw the offer,
or, to use the phraseology of the Act revoke the proposal, at any time before
its acceptance by an order from B. Such a transaction may be reduced to a
statement by the intending vendor in this form If you will send me orders for
coal, I shall supply it to you for a period of twelve months at a particular
rate.’ This is merely a proposal from A to B. If in reply to such a proposal, B
says to A ‘I agree’, it does not constitute an acceptance of the proposal. An
acceptance can take place only by B sending an order to A”.

Conclusion:
There is a valid contract between the government and the company since
the company readily bided for the tender and got the acceptance there was
also free consent on the part of the supplier. It is breach of the contract
because of its inability to supply the goods after repeated requests made by
the government.
There was no valid revocation on part of the company as it failed to notify
the government about the same.

Question 2

The above facts are based on the landmark case of Bhagwandas

Goverdhandas Kedia v Girdharilal Parshottamdas & Co.

Issue:
(1) In case where the contract is negotiated using telephonic conversation,
when and where the offer and acceptance is complete?
(2) Whether the Postal Rule of communication of offer and Acceptance can
be applied when the contract is negotiated using telephonic conversations?
(3) Where is the contract concluded and where will be the jurisdiction

Rules:

Section 4:
The communication of a proposal is complete when it comes to the
knowledge of the person to whom it is made.
The 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;
as against the acceptor, when it comes to the knowledge of the proposer.
The communication of a revocation is complete,—
as against the person who makes it, when it is put into a course of
transmission to the person to whom it is made, so as to be out of the power
of the person who makes it; as against the person to whom it is made, when
it comes to his knowledge.
 There are two modes of communication:
• Two modes of communication:
• (i) Non-instantaneous Mode of Communication
• (ii) Instantaneous Mode of Communication
• Instantaneous Mode of Communication: Communication through
telephone and telex/fax is an instantaneous mode of communication that is,
face to face or a direct communication between the parties.

When parties are at a distance and communicate an offer and acceptance via
telephone or telex, then the place of completion of the contract is the place
where the offeree speaks to the offeror his acceptance to the offer. Thus,
when the offeree expresses his acceptance, the place at which he says it is
the one where a contract is formed.

Application:
A. In the above facts mentioned the contract is completed in
Lucknow, where the acceptor Mr. Goyal resides.
Also, the offer made by Mr. Deshmukh is complete as soon as the
acceptor, Mr. Goyal hears the answer over the telephone line.
 B. No, the postal rule of communication will not apply in this case
as in this scenario the offer and acceptance is not done through posts
and letter. Rather it is done instantaneously. In the Instantaneous
mode, the communication doesn’t take time and is done
instantaneously.

Case law:
This can be the Seen through the following case:

Bhagwandas Goverdhandas Kedia v. Girdhari Lal & Co. :

Facts - The plaintiffs made an oral offer on phone from Ahmadabad for the
purchase of cotton seed cake from the defendants. The defendants accepted
this offer on phone at Khamgaon. Later, the defendants failed to supply the
requisite cotton seed cake. Consequently, the plaintiffs sued the defendants
for a breach of contract. Plaintiffs demanded compensation for their
monetary loss, amounting to Rs.31,150. The suit was filed at Ahmadabad.
The defendants contended that the Ahmadabad Court had no jurisdiction on
the ground that the contract was completed by the acceptance of offer on a
telephone, at Khamgaon. On the other hand, the plaintiffs contended that
the contract was struck when the acceptance was communicated to him
(when he heard the acceptance through telephone) at Ahmadabad and
therefore, the suit was within the jurisdiction of the Ahmedabad Court. The
Supreme Court, after considering the facts and evidence of the case held
that the contract was made at Ahmedabad where the acceptance was
communicated and the part of action for an action for the breach of contract
in this case had arisen within the jurisdiction of the Ahmedabad Court.
Judgment - On the issue of jurisdiction, the Trial Court took cognizance
of the fact that the plaintiffs had made an offer from Ahmedabad by a
long-distance telephone to the defendants to purchase the goods. The
 defendants had accepted the offer at Khamgaon. The goods under the
contract were to be delivered at Khamgaon and payment was also to be
made at Khamgaon. The Court pointed that the contract was to be
performed at Khamgaon and only because the offer was made from
Ahmedabad, Ahmedabad Court could not be invested with the jurisdiction
to entertain the suit. However, the Trial Court held that when a contract
is made by conversation on telephone, the place where acceptance of
offer is intimated to the offeror, is the place where the contract is made,
and therefore the Civil Court at Ahmedabad had jurisdiction to try the
suit.

Conclusion:
 Through the following case law and application it can be seen that the
postal mode of communication will not be applied in the case where
the communication is through instantaneous mode of communication.
 Also, there was a valid contract between Mr. Goyal and Mr. Deshmukh.
 Finally, the jurisdiction lies at place of Lucknow.