PART A

1. Queerhatters Inc. v Mx. Pumpkinhead

Section 2(h) under the Indian Contract Act1, 1872 defines a contract as “an agreement that is enforceable by
law”, and section 2(e)2 defines an agreement as “a promise of a set of promises forming a consideration.”
Further, section 10 of the Indian Contract Act identifies agreements are contracts if they fulfil the following
element: consideration or reason for the contracted act, parties are competent to contract, no coercion
involved, and object of the contract must be lawful.

Can an auction sale be considered a contract, and does it satisfy all the elements of a contract? In Lawrence
Paper Co. v Rosen Co. [1991]3, Judge Krenzler observed that a sale at an auction, like every other sale,
must have the assent, express or implied, of both seller and buyer. However, the auction announcement
does not constitute an offer to sell and making a bid does not constitute an acceptance of said offer.
However, it is essential to note that an auction should be perceived as a mere declaration of intention to
hold a sale where bids are received. A contract is formed when a bid is accepted, denoted by the fall of a
hammer. After a bid is accepted, the relationship between the seller and buyer is identical to that between a
promisor and a promisee in a traditional contract of sale.

Queerhatters Inc. may argue on the rule laid down by Warlow v Harisson [1859] 1 E & B3094, and the Sale
of Goods Act, 19305 that the hammer being put down on Mx. Pumpkinhead’s bid denotes the acceptance of
the bid, thereby binding the parties in a contract.

Recission of sale by Mx. Pumpkinhead

Mx. Pumpkinhead bid for the football under the impression that it would be the football from Tom Brady’s
last game before he retires, as announced on Zwitter by Brady himself; after the auction sale between
Queerhatters Inc. and Pumpkinhead, Brady announces on Zwitter that he has changed his mind about
retiring, causing Pumpkinhead to rescind the sale. According to the rule laid down by Girard v Taggart 5
Serg. & Rawle 19, 9 Am. Dec. 327, 1818 WL 2207 6, the vendor cannot sue for the purchase price, where
the earnest price has been paid until the expiration of the time allowed for full payment. In this regard,
Queerhatters Inc. will fail in its action to sue Pumpkinhead. However, it is critical to note that a contract is
formed by combining two ideas agreement and obligation. An agreement is necessarily the outcome of
consenting minds, as also illustrated by Lord Carnis that there must be a ‘consensus of mind’ to lead a
contract [Cundy v Lindsay (1873) 3 A.C. 459]. Therefore, Pumpkinhead will be liable for breach of
contract because both the parties were ad idem at the time of contracting. There was no misrepresentation
on the part of the seller since, at the time of contracting, both the seller and buyer were under the
impression that Brady was retiring.

Is Mx. Pumpkinhead entitled to a refund?

Mx. Pumpkinhead is not entitled to a refund of the money paid as they were liable for breach of contract.
The same can be argued using the judgement of Vishal Builder (P) Ltd. v Delhi Development Authority ILR
19777 Delhi 724 as precedent. Here, the plaintiff placed bids for five plots and was named the highest
bidder at the fall of the hammer. The plaintiff later decided to not go through with the sale as the property
was smaller than they believed it was and demanded a full refund of the earnest money paid to the
1
Indian Contract Act, 1872, §2 cl. h, No. 9, Acts of Imperial Legislative Council, 1872 (India).
2
Indian Contract Act, 1872, §2 cl. e, No. 9, Acts of Imperial Legislative Council, 1872 (India).
3
Lawrence Paper v. Rosen [1991] , 939 F.2d 376 (6th Cir. 1991).
4
Warlow v Harrison [1859], [1859] 1 E & B309.
5
The Sale of Goods Act, 1930, §64, No. 3, Acts of Imperial Legislative Council, 1930 (India).
6
Girard v Taggart [1818], 5 Serg. & Rawle 19, 9 Am. Dec. 327, 1818 WL 2207
7
Vishal Builders v Delhi Development Authority [1997], ILR 1977 Delhi 724, 1977 RLR 347.

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 defendants, non-deliverance of which caused them to approach the court. A B Rohatgi observed that the
plaintiff was in breach of contract and was not entitled to a full refund but a 6% refund of the earnest
money to cover the damages incurred by the defendants. Section 5 of the Indian Contract Act, 1872 8
permits a bidder to retract the bid before it is accepted; if the bid is retracted after, the party will be liable to
pay for damages henceforth, given there is no misrepresentation on the part of the seller. Therefore, Mx.
Pumpkinhead will be liable for breach of contract and Queerhatters Inc. can avail damages.

2. Mr. Crinkle v Queerhatters Inc.

Section 64 of the Sales of Goods Act, 1930 9 deals with the auction sale in India. The sale is complete only
after the falling of the hammer and by declaring the completion of the sale. Further, for a contract to be
formed, the general principles of offer, acceptance and consideration must be applied as mentioned under
section 10 of the Indian Contract Act, 187210.

There are two questions involved in this case. First, whether an auctioneer at the closure of a sale may
reopen bidding when an overbid is made. Here, Mr Crinkle left the auction premises thinking he was the
highest bidder while the auctioneer would bring down the hammer on his bid. The rule flowing from
Hoffman v Horton 186 S.E.2d 79 (1972)11 and the Uniform Commercial Code is that a sale by auction is
complete when the auctioneer announces so by the fall of the hammer. Where a bid is made while the
hammer is falling in acceptance of an initial bid, the auctioneer may, at his discretion, reopen the bidding or
declare the goods sold under the bid on which the hammer was falling. Therefore, there existed no contract
of sale between Queerhatters Inc. and Mr Crinkle even though Mr Crinkle made an advance deposit.

The second question is whether Mr Crinkle is ‘entitled’ to the football as the sale between Queerhatters Inc.
and Mx. Pumpkinhead fell through. The case most relevant to the facts presented is M. Sathyanath v
District Collector [2006] (1) CTC 328, (2006) 2 MLJ 401 12 , which followed a pattern parallel to Mr
Crinkle v Queerhatters Inc... Here, the highest bidder refused to pay 90% of the bid amount; hence the sale
was implied cancelled. Therefore, the plaintiff, the highest bidder, represented that the seller accepted his
bid and executed the sale in his favour. The seller, however, called in for fresh bids, which caused the
plaintiff to turn toward the law. Under the judgement of Dinakaran, it was held that the defendant has the
discretion to issue a notification calling in for fresh bids after the sale fell through with the highest bidder
without considering the plaintiff to be the second-highest bidder. He also observed that auctions are open
negotiations that give the seller absolute discretionary powers, and bids are offers to the negotiations and
cannot be considered acceptable. Hence, Queerhatters Inc. is not bound by Mr Crinkle considering the
facts.

PART B
1. Mx. Sunshine v Ms. Millionaire
A proposal (or offer, can be used interchangeably) as defined under section 2(a) of the Indian Contract Act,
1872 (the ‘Act’)13 contains two elements: a willingness to act or abstain that is signified to the other party
and an intention to be bound with a view to obtaining the acceptance of the other party. The act of Ms.
Millionaire placing an advertisement in The National Gazette can be seen as a sign to receive offers from
potential buyers, indicating a commitment to enter into legal relations with a prospective buyer. Hence, the
first condition of a proposal is met. However, the critical question remains whether the second element of a
8
Indian Contract Act, 1872, §5, No. 9, Acts of Imperial Legislative Council, 1872 (India).
9
The Sale of Goods Act, 1930, §64, No. 3, Acts of Imperial Legislative Council, 1930 (India).
10
Indian Contract Act, 1872, §10, No. 9, Acts of Imperial Legislative Council, 1872 (India).
11
Hoffman v Hortan [1972], 186 S.E.2d 79 (1972).
12
M. Sathyanath v District Collector [2006], (1) CTC 328, (2006) 2 MLJ 401.
13
Indian Contract Act, 1872, §2 cl. a, No. 9, Acts of Imperial Legislative Council, 1872 (India).

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 proposal is fulfilled. The general legal principle concerning advertisements is that an advertisement is an
invitation to treat rather than an offer, as stated in Partridge v Crittenden [1968] 1 WLR 1204
(‘Crittenden’)14. Although in cases such as Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256
(‘Calill’)15 and Lefkowitz v Great Minneapolis Surplus Stores Inc. [1957] 86 NW2d 689 (‘Lefkowitz’)16, it
was found that advertisements are offers only if the advertisement is clear, definite and leaves no room for
negotiations.

In the case at hand, the advertisement posted by Ms. Millionaire cannot be considered an offer as the rule
arising from Lefkowitz and Crittenden does not apply here. A significant part of the advertisement just
mentioned the starting price; it was open to negotiations and an invitation to treat rather than a contract.

Acceptance is defined under section 2(b) of the Act as “When the person to whom a proposal is made
signifies his assent to the proposal is said to be accepted. A proposal, when accepted, becomes a promise.”
Further, section 7(1) of the Act states that acceptance must be absolute and unqualified. The
communication of acceptance between the two parties can be considered vague and almost nonexistent
because Ms.Millionaire never unequivocally accepted Mx. Sunshine’s offer to buy the yacht for $2.3
million. She merely stated that she was okay with the deal, but there were other offers. In subtext, she
means that she thinks $2.3 million is a fair price, but she was open to negotiating further. Therefore, Ms.
Millionaire is not bound to Mx. Sunshine.

2. Mr. Fancypants v Ms. Millionaire

Is the contract between Mr. Fancypants and Ms. Millionaire voidable due to a mistake of fact?
The voildability of a contract is subject to the facts presented. In the case at hand, Mr. Fancypants’ raises a
claim that the contract between himself and Ms. Millionaire is void based on mistake of fact as Mr.
Fancypants believed the ‘Carina’ yacht to be blue whereas it was white. He ultimately rescinds the sale and
looks to recover $2.75 million paid to Ms. Millionaire as an advance.

Mr. Fancypants can argue that the agreement relied on the assumption that the Carina was blue. Smith v
Hughes (1871) L.R. 6 QB 597 (‘Smith’)17 illustrates a similar issue with almost parallel facts. In delivering
the judgement, Blackburn J observed that the purchaser must go through with the sale even if the object of
the sale does not meet the purchaser’s expectations unless there is warranty of the seller, making the quality
significant to the negotiations of the sale. In Smith, the quality of the oats was immaterial to the sale, and
therefore the defendant was obliged to go through with the sale. Adding on to this, Ms. Millionaire never
mentioned the colour of the yacht in the advertisement or during negotiations, nor was it brought to her
attention by Mr, Fancypants that the colour of the yacht was an essential element of the agreement; hence is
immaterial to the sale.

According to the commentary by Ewan McKendrick, two significant points are highlighted in Smith. The
first relates to the doctrine of mistake. The court distinguished between two possible situations: the plaintiff
believed the defendant thought they were buying old oats, and the plaintiff believed that the defendant
thought they were purchasing oats that the plaintiff had assured were old. In the former, the defendant is
liable to go through with the sale and must accept the consequences of their mistake. In contrast, in the
latter, the plaintiff is liable for the misrepresentation of fact, and the defendant is not liable to go through
with the sale. The case at hand points to the former situation, which makes Mr. Fancypants liable to accept

14
Partridge v Crittenden [1968] 1 WLR 1204.
15
Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256.
16
Lefkowitz v Great Minneapolis Surplus Stores Inc. [1957] 86 NW2d 689.
17
Smith v Hughes [1871] LR 6 QB 597.

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the Carina as is, irrespective of it being white and not blue as he had hoped. Further, both parties posed
‘consensus ad idem’ while contracting. Therefore Mr. Fancypants does not have a claim against Ms.
Millionaire.