Question

A, by letter, offers to sell his house to B for Rs. 2,00,000. Without knowing of A's offer, B, by a letter, offers to buy the same house from A for Rs.2,00,000.

• A. No binding contract comes into existence as 'B's letter is merely a cross- offer.
• B. No binding contract comes into existence as consideration in this contract is insufficient.
• C. A binding contract comes into existence as 'B's letter is equivalent to acceptance of A's offer.
• D. The Indian Contract Act is silent on such issues.

Answer 1

Answer: (A)

No binding contract comes into existence as 'B's letter is merely a cross- offer.

The cross offer is an offer which two parties in a contract make to each other without the knowledge of each other's similar offer. Such cross offer is made in ignorance about the other offer, hence it will not lead to the formation of a contract, and hence will not be binding on the parties.

Hence the correct answer is A.