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Moolji Jaitha and Co. Vs. Seth Kirodimal - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKerala High Court
Decided On
Case NumberA.S. No. 8 of 1957
Judge
Reported inAIR1961Ker21
ActsContract Act, 1872 - Sections 7
AppellantMoolji Jaitha and Co.
RespondentSeth Kirodimal
Appellant Advocate K. Rama Iyer,; A.V. Ramanatha Iyer,; R. Krishnaswami Iye
Respondent Advocate V. Rama Shenoi and; R. Raya Shenoi, Advs.
DispositionAppeal dismissed
Cases ReferredS. D. Katherine Stiffles v. M. P. Carr Mackertich Martin
Excerpt:
contract - counter offer - section 7 of indian contract act, 1872 - suit for damages for breach of contract - defendant made counter offer to purchase goods at lower rate in reply to plaintiff's offer - plaintiff accepted counter offer with condition to make advance payment - defendant never accepted such condition - no concluded contract between parties - plaintiff not entitled for any damages from defendant. - - it is well settled that the offeree must unreservedly assent to the exact terms of the offer to bring about a concluded contract. it is equally well settled that an offer once refused is dead and cannot be accepted unless renewed......and the telegram of acceptance referred to in the said paragraph is ext. b, which reads; 'received offer accepted rate 33, thirtythree wire', so it is clear that there was no offer by the plaintiff to sell 660 tins of coconut oil at rs. 33 per tin and hence there is considerable force in the contention of the counsel for the respondent that the contract that is sought to be made out at the time of arguments in the lower court and before us is different from the contract that was pleaded in the plaint. the learned counsel also draws our attention to the observation of the learned subordinate judge in his judgment to the effect that at the time of arguments it was conceded by the plaintiffs advocate that ext. b was only a counter-offer but not an acceptance of the terms of ext. a. but in.....
Judgment:

Raghavan, J.

1. The plaintiff in O. S. No. 127 of 1952 on the file of the District Court of Anjikaimal is the appellant before us and the suit was for damages for breach of contract. The plaintiffs case is that, on defendant's enquiry, he offered to sell 660 tins of coconut oil at Rs. 33/- per tin Bilticut, that this offer was accepted by the defendant by his telegram dated 15-1-1952 and thus a binding contract came into existence between the parties. In confirming the acceptance the plaintiff had also asked for remittance of advance by telegram dared 16-1-1952. On 21-1-1952 the plaintiff again sent a telegram for despatch instructions and fcr remittance of advance. Instead of sending despatch instructions and advance, the defendant cancelled the contract by his telegram D/- 22-1-1952. This telegram was received by the plaintiff on the next day, when he wired back to the effect that the defendant was not entitledd to cancel the contract and that if he did not require the goods, the plaintiff would sell them at the prevailing market rate of Rs. 30-5-0 at the risk of the defendant. The defendant replied stating that the contract was cancelled and that he was not liable for any loss. The plaintiff thereafter waited for a reasonable time and sold the cocoanut oil on 30-1-1952 at the rate of Rs. 27-5-0 per tin and he claimed the balance in price amounting to Rs. 3752-12-0 as damages consequent on the breach of contract committed by the defendant.

2. The defendant contended that the plaintiff never offered to sell coconut oil at Rs. 33 per tin and that the defendant did not accept such an offer by his telegram dated 15-1-1952 resulting in any enforceable contract as stated in the plaint. He further contended that the negotiations did not proceed beyond the stage of offer and counter-offer and did not materialise into a binding contract between the plaintiff and the defendant, that the plaintiffs telegram dated 16-1-1952 was only a counter-offer to the defendant's telegram dated 15-1-1952 and that when the plaintiff did not accept the terms of the telegram dated 15-1-1952, the defendant revoked the same by his telegram dated 22-1-1952. As the defendant did not agree to give any advance, he did not remit the same. In the absence of a concluded contract, the defendant was entitled to revoke his offer and hence the plaintiff was not entitled to any damages. Regarding the quantum of damages the defendant's contention was that the plaintiff was entitled to claim only the difference in price Prevailing on 22-1-1952. There were other contentions also which are not material for the disposal of the appeal.

3. The lower court raised several issues; but we are concerned in the appeal only with issues (i), (ii) and (v). They are:-

(i) Whether there was a concluded contract between the plaintiff and the defendant as alleged in para 1 of the plaint?

(ii) Has the defendant broken the contract as alleged in the plaint?

(v) To what damages, if any, is the plaintiff entitled?

On issue (i) the lower Court held that there was no concluded contract between the parties and consequently on issue (ii) it held that there was no question of the defendant committing breach of any contract as there was no concluded contract. On the second issue it was also held in the alternative that, if it were to be held that there was a concluded contract, then the defendant committed breach of the same. On issue (v) the lower court held that the defendant's telegram dated 22-1-1952 stating that the bargain was cancelled, was received by the plaintiff on 23-1-1952 and in case damages were to fee allowed to the Plaintiff, he was entitled only to the difference betwen the contract rate and the price prevailing on 23-1-1952, On this basis the tower court fixed the damages at Rs. 1773-12-0 at the rate of Rs. 2-11-0 per tin for 660 tins. As a consequence of the finding on issue (i) that there was no concluded contract between the parties, the suit was dismissed, but without costs.

4. The plaintiff appeals and the appeal is directed only against the decision of the lower court on issues (i) and (ii) to the effect that there was no concluded contract between the parties and consequently there was no breach of contract. Regarding the quantum of damages, in case he succeeded, the plaintiff has no dispute in the appeal.

5. Before we consider the main question we will dispose of a contention raised by the respondent's learned counsel. He contends that the contract pleaded in the plaint and which was made the subject matter of the first issue in the suit was different from the contract that was sought to be established at the time of arguments in the lower court and also in the appeal before us. He invites our attention to paragraph (1) of the plaint which pleads:

'On defendant's enquiry the plaintiff offered to sell 660 tins of coconut oil at Rs. 33 per tin Bilticut, that is, F. O. R. Cochin. This offer was accepted by trie defendant by his telegram dated 15-1-1952 and thereby a binding contract was created between the parties'.

To this the defendant in his written statement pleads:

'It is denied that the plaintiff offered to sell coconut oil at Rs. 33 per tin and that the defendant accepted it by his telegram dated 15-1-1952 result-ling in an enforceable contract as stated in the plaint':

These two passages extracted from the pleadings make it clear that the plaintiffs case was that he offered to sell 660 tins of coconut oil at Rs. 33 per tin which was accepted by the defendant by his telegram dated 15-1-1952. As a matter of fact there was no sucb offer by the plaintiff to sell coconut oil at Rs. 33 per tin and consequently there could not have been any acceptance by the defendant by his telegram dated 15-1-1952. Issue No. (i) in the suit also relates to the contract between the parties as alleged in paragraph (1) of the plaint. The telegram of tbe plaintiff that is referred to in paragraph (1) is Ext. A, which reads: 'Received offering one wagon of 680 tins Bilticut 38/3 sub-ject immediately reply wire with advance' and the telegram of acceptance referred to in the said paragraph is Ext. B, which reads; 'Received offer accepted rate 33, Thirtythree Wire', So it is clear that there was no offer by the plaintiff to sell 660 tins of coconut oil at Rs. 33 per tin and hence there is considerable force in the contention of the counsel for the respondent that the contract that is sought to be made out at the time of arguments in the lower court and before us is different from the contract that was pleaded in the plaint. The learned counsel also draws our attention to the observation of the learned subordinate judge in his judgment to the effect that at the time of arguments it was conceded by the plaintiffs advocate that Ext. B was only a counter-offer but not an acceptance of the terms of Ext. A. But in view of the fact that all these telegrams were put into court along with the plaint and that the defendant could have had inspection of these documents immediately on service of summons to him, we do not propose to decide the appeal on this short point. We propose to decide the question in controversy on merits, i.e., on the effect of the whole correspondence that passed between the parties.

6. As to the meaning of the term 'Bilticut' occurring in the correspondence in this case there is no dispute between the parties. The parties are agreed on the authority of Seth Hajarimal v. Gulabchand Udechand Firm, AIR 1956 Nag 118, that it means only a contract F. O. R., the price having to be paid against the delivery of the Railway Receipt.

7. The first telegram was sent by the defendant on 12-1-1952 which reads: 'Offer one wagon coconut oil Bilticut Kerosene tin wire'. In reply to this the plaintiff sent Ext. A on 14-1-1952 to the effect: 'Received offering one wagon of 660 tin Bilticut 33/3 subject immediately reply wire with advance'. In reply the defendant again wired on 15-1-1952 as follows: 'Received offer accepted rate 33, Thirtythree wire'. This is Ext. B. To this the plaintiff replied by Ext. C to this effect: 'Received Accepted 660 tins Bilticut 33 remit advance'. These are the telegrams with which we are concerned in this case in deciding the question whether there was a concluded contract between the parties or not.

8. According to the learned counsel of the appellant Ext. A made an offer of one wagon of 660 tins at Rs. 33-3-0 per tin and this telegram contained a stipulation for advance also. To this the defendant replied by Ext. B by which he accepted the offer in its entirety excepting the rate. Instead of Rs. 33-3-0, the defendant suggested Rs. 33 Per tin. In reply to this telegram the plaintiff sent Ext. C accepting the price of Rs. 33 suggested by the defendant. Hence, according to the learned counsel of the appellant, with Ext. C, all the terms of the first offer were accepted and so there was a concluded contract between the parties. According to him even the stipulation for advance was contained in the plaintiffs offer, Ext. A, which was accepted by Ext. B sent by the defendant. Therefore the demand for remittance of advance in Ext. C was only a request for the performance of the contract and this demand was not an additional term in the contract between the parties.

9. On the other hand the learned counsel of the respondent contends that Ext. A was an oifer to which the defendant sent Ext. B suggesting a modification in the price. This latter telegram, according to him, was not an acceptance of the offer contained in the former telegram but was really a counteroffer. To this counter-offer the plaintiff sent Ext. C in which the price of Rs. 33 and the quantity of 660 tins were accepted, but an additional term for advance payment was included, which term was never accepted by the defendant and hence there was no concluded contract between the parties.

10. To properly evaluate the aforesaid contentions of the parties we have to consider the law regarding offers, counter-offers and acceptances in the Law of Contracts. It is well settled that the offeree must unreservedly assent to the exact terms of the offer to bring about a concluded contract. If, on the other hand, while purporting to accept the offer as a whole, he introduces a new term which the offerer has had no opportunity of examining, he is in fact merely making a counter-offer. The effect of such a counter-offer in the eyes of law is to destroy the original offer. It is equally well settled that an offer once refused is dead and cannot be accepted unless renewed. But it is sometimes difficult to determine whether a communication by the offeree amounts to a counter-offer or not. The offeree, for example, may be seeking further information before making up his mind or may be but making an enquiry as to whether the offeror will not modify his terms. Such requests do not obliterate the original offer. Section 7 of the Indian Contract Act enacts the same rule that in order to convert a Proposal into a promise the acceptance must be absolute, i.e., that an acceptance with a variation is no acceptance; it is simply a counter-proposal. The question whether the terms added are intended to be part of the contract or are merely in the nature of enquiries for further information has to be decided by the Court in individual cases by looking into the effect of the words used in particular cases and thereby gathering the intention of the parties.

11. The appellant's learned counsel cited two decisions at the bar in support of his contentions. The first is: Pacific Minerals Ltd. v. Singhbhum Mining Syndicate, AIR 1938 Cal 343. In that case one Mr. Bennet offered to sell some ore at Rs. 8-14-0 per ton on 22nd May. On 25th May the plaintiff accepted this offer, but sought to add a further term, namely that sampling should be paid for equally. On 27th May Mr. Bennett refused to consider this proposition, but by his reply he repeated in effect the offer which he made on 22nd May, that is to say, the offer without the new term for sampling. On 29th May the plaintiff accepted the offer which Mr. Bennett had made on 22nd May and repeated on 27th thereby bringing into effect a concluded contract. It is clear in this case that on 27th May, Mr. Bennett repeated his offer of 22nd May, which otherwise was obliterated by the addition of the term for sampling by plaintiff on 25th May and therefore by the acceptance of 29th May there resulted a concluded contract. The other case is: S. D. Katherine Stiffles v. M. P. Carr Mackertich Martin, 164 Ind Cas 732, In this case, in the course of negotiations by correspondence between die parties, the plaintiff wired a definite offer with certain terms and conditions to which the defendant replied 'terms accepted remit cash down 25 thousand by February 5, otherwise acceptance subject to withdrawal please wire'. It was held that it was a firm contract of sale, concluded by the acceptance and the addition of the words, 'otherwise acceptance subject to withdrawal' meant nothing more than that if the defendant did not receive the money she would consider herself at liberty to treat the contract as having been broken by the plaintiff. In effect the learned Judges held that there was no counter-offer in that case, but there was an acceptance on the language of the correspondence and the added words meant that the acceptance was subject to withdrawal, that is to say, the defendant would consider herself at liberty to treat the contract as having been broken by the plaintiff. Thus in this case also no different principle has been laid down.

12. In the light of the above statement of the principles of law regarding offers, counter-offers and acceptances if we examine the facts of this case, what we find is that the defendant's telegram dated 15-1-1952, Ext. B is not an acceptance but only a counter-offer, offering to purchase 660 tins of coconut oil at 33 per tin. If that be so, the original offer of the plaintiff, Ext. A is obliterated. To this counter-offer, Ext. B, the plaintiff replied by Ext. C, by which also he did not accept the counteroffer in absolute and unqualified words, but added a term by demanding an advance remittance. This demand for advance remittance by the plaintiff was never accepted by the defendant at any stage in the correspondence. Therefore, it is difficult to hold that there was a concluded contract between the parties.

13. There is yet another difficulty which the plaintiff has to surmount in this case. Even in demanding an advance remittance Ext. C did not specify the amount. Before the amount of advance demanded was also fixed by agreement of parties no concluded contract could have come into existence. In the above circumstances we are inclined to agree with the lower court that there was no concluded contract between the parties and consequently no breach of contract could have been committed by the defendant.

14. In the result we confirm the decision ofthe lower court and dismiss the appeal with costs.


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