FORMATION OF CON TRACTS

The presence of an agreement is the first requirement for the fo _

mation of a legally binding contract. Mr Ayush puts up a propert
for sale at an auction. Mr Pushkar makes a bid off 75 lakhs, whic~
was the highest bid. Mr Ayush did not accept the bid because he
was doubtful of the ability of Mr Pushkar to pay the amount of the
bid. This matter was brought to the court, where Mr Pushkar was
the plaintiff and Mr Ayush was the defendant.
Mr Pushkar claimed that he and Mr Ayush had entered into a
legally binding contract be9ause he had made the highest bid. The
court heard both the parties and pronounced the following judge-
ment:
Bidders at any auction are entitled to make an offer but that offer
may or ·may not be accepted by the seller. In other words, auctions
are an invitation to offer. Therefore, it was held that no agreement
was reached because the seller refused the offer made by Mr
Pushkar. The court held that no legally enforceable contract was
entered into because there was a lack of agreement. Mr Ayush
won the suit. Hence, an invitation to offer does not give rise to any
rights or obligations.