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Business Studies

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A, by letter,...

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.

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B

No binding contract comes into existence as consideration in this contract is insufficient.

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C

A binding contract comes into existence as 'B's letter is equivalent to acceptance of A's offer.

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D

The Indian Contract Act is silent on such issues.

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Solution

The correct option is D 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.

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Similar questions

Q. LEGAL PRINCIPLES:

1.

Once a person accepts another's offer, and signifies such acceptance to the former, a contract comes into existence between them.

2.

Uncertain agreements are void agreements.

3.

Rejected offers can be accepted only if renewed.
FACTUAL SITUATION: Bakshi wanted to purchase a particular land. He sent a letter to his cousin. Dutt, offering him

R s . 4

lakhs for it. Dutt replied that he would not sell it below

5

lakhs. Bakshi communicated his willingness to pay this amount. Dutt did not sell the land to Bakshi. Bakshi sued him for breach for contract.
DECISION

Q. Legal Principle:With the counter offer the original offer lapses.

Factual Situation: A, offers to sell his house to B for Rs.5 lakhs (must be given in cash). B says,'I accept your offer.Here is Rs.2 lakhs in cash and three month promissory note for the balance.
Issue: Is there any contract between A and B.

Q. Given below is a statement of legal principle followed by factual situation. Apply the principle to the facts and select the most appropriate answer.
Principle: A contract requires a proposal and an acceptance of the proposal. It is necessary to make a binding contract, not only that the proposal be accepted, but also that the acceptance is notified to the proposer.
A sent a letter to B stating that he was willing to sell to B,

10

bags of rice at

R s . 20 / -

each. B made a telephone call to A to inform him that he had accepted the offer. Just as he was stating his acceptance, a very noisy aircraft few over B's house. A was not able to heat the acceptance.

Q. Solve.
X offered to sell two plots of land to Y at a certain price. Y accepted the offer for one plot. Is there a valid contract?

Q. Principle: Acceptance (of offer) must be communicated by the offeree to the offerer so as to given rise to a binding obligation. The expression 'by the offeree to the offerer' includes communication between their authorised agents.
Facts 'X' made an offer to buy Y's property for a stipulated price. 'Y' accepted it and communicated his acceptance to 'Z', a stranger.
Which of the following derivations is correct?

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