Legal Principle: Auction/sale of goods is an invitation of offer; not an offer.

Factual Situation: N advertised in a newspaper to effect the sale of his goods in a particular place. H travelled a long distance to bid for the things. On arrival, he found that the sale was cancelled. He sued N for breach of contract.
Issue: Is N liable?

N is not liable because the advertisement was merely an expression of an intention and not an offer which could be accepted by travelling to the place of intended sale.

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N is liable for all the expenses incurred by H for travelling such a long distance.

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It is voidable at the option of H.

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None of these.

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Solution

The correct option is A N is not liable because the advertisement was merely an expression of an intention and not an offer which could be accepted by travelling to the place of intended sale.
Section 10 of the Indian Contract Act, 1872 requires a valid offer and acceptance for a contract to be enforceable. An auction constitutes only an invitation to offer and not an offer in itself. An invitation to offer is only a call to the public to make an offer. Therefore, the intention to be bound by a contract is a test for a valid offer. It was held in the case of Hari v Naickersor that seller is not liable for a loss caused to a prospective buyer due to failure in conducting the auction in the particular time and place stated because there is no intention to be bound.

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Q. Given below is a statement of legal principle followed by a factual situation. Apply the principle to the facts given below and select the most appropriate answer.
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Q. LEGAL PRINCIPLES:

1.

Acceptance must be given only by the person to whom the offer is made.

2.

Communication of acceptance to a person who did not make the offer does not bind the offeror.
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