Description
The sale of a good, or an item that is moveable at the time of sale, is a transaction designed to benefit both buyer and seller. However, sales transactions can be complex, and they do not always proceed smoothly.
Time and Place of Formation of Contract
1
Time and Place of Formation of Contract
2
Contract Over the Phone
M/s Girdhalal Purshottamdas and Co., based in Ahmedabad, made an offer to Kedia Ginning Factory and Oil Mills of Khamgaon, to purchase cotton seed cake. Kedia Ginning Factory accepted the offer in the same phone conversation. The contract could not be performed and parties needed to go to a court to work out the damages. The case could be filed only in the court of the area where the contract was made.
Was the contract Khamgaon?
made
in
Ahmedabad
or
3
… cond
When is an offer made? To borrow from Lord Denning in the Entroes case, a person, X, makes an offer to another person, Y, walking beside him. Just then a low flying jet passes overhead drowning X’s voice. Has an offer been communicated?
4
… cond
When is the communication of an acceptance complete? To borrow again from Lord Denning in the Entroes case, Y speaks out his acceptance. Just then, another low flying jet passes overhead drowning Y’s voice. Has Y’s acceptance been communicated?
5
Case: Contract through Letter
Vivek, based in Delhi, sends a letter to Shauvik offering to sell a cricket bat of a particular make for Rs. 2200. Shauvik is based in Bangalore. Shauvik posts his acceptance. He also requests Vivek to drop a line that he has received his acceptance. Vivek acknowledges through letter that he has received Shauvik’s acceptance. 1. When was the offer made? 2. When was the offer accepted? 3. When was an agreement formed?
6
Case: International Contract
Koel Ltd., a company based in Delhi, placed an order for supply of a certain quantity of tissue paper on a company, Paperline Inc., based in New York. In his arrangement, Koel Ltd. made the offer and Paperline Inc. accepted the offer. The offer document provided that ‘the parties would submit all disputes to arbitration’. A dispute arose between the parties on the quality of tissue paper which was supplied by Paperline Inc.
The parties further disputed whether the arbitration should be done in Delhi or New York and according to the Indian law or US law. Decide.
7
Judgement: Agreement by Post
The British court summarised the position in Dunlopp v. Higgings case: … as a rule, a contract formed by correspondence through the post is complete as soon as the letter accepting an offer is put into the post, and is not put an end to in the event of the letter never being delivered.
8
Judgement: Supreme Court
The Supreme Court, in Kedia v. Girdhalal case, provided the reason for the position of the British courts: The rule about lost letters of acceptance was made out of expediency because it was easier in commercial circles to prove the dispatch of the letters, but very difficult to disprove a statement that the letter was not received.
9
Judgement: Agency Theory
In Household Fire and Carriage Accident Insurance Co v Grant case, the court reconciled the postal rule: … as soon as the letter of acceptance is delivered to the Post Office, the contract is made as complete and final and absolutely binding as if the acceptor had put his letter into the hands of a messenger, sent by the offeror himself as his agent, to deliver the offer and receive the acceptance.
10
Provision in the Contract Act
4. Communication when complete.- The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete,as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer.
11
doc_444141521.ppt
The sale of a good, or an item that is moveable at the time of sale, is a transaction designed to benefit both buyer and seller. However, sales transactions can be complex, and they do not always proceed smoothly.
Time and Place of Formation of Contract
1
Time and Place of Formation of Contract
2
Contract Over the Phone
M/s Girdhalal Purshottamdas and Co., based in Ahmedabad, made an offer to Kedia Ginning Factory and Oil Mills of Khamgaon, to purchase cotton seed cake. Kedia Ginning Factory accepted the offer in the same phone conversation. The contract could not be performed and parties needed to go to a court to work out the damages. The case could be filed only in the court of the area where the contract was made.
Was the contract Khamgaon?
made
in
Ahmedabad
or
3
… cond
When is an offer made? To borrow from Lord Denning in the Entroes case, a person, X, makes an offer to another person, Y, walking beside him. Just then a low flying jet passes overhead drowning X’s voice. Has an offer been communicated?
4
… cond
When is the communication of an acceptance complete? To borrow again from Lord Denning in the Entroes case, Y speaks out his acceptance. Just then, another low flying jet passes overhead drowning Y’s voice. Has Y’s acceptance been communicated?
5
Case: Contract through Letter
Vivek, based in Delhi, sends a letter to Shauvik offering to sell a cricket bat of a particular make for Rs. 2200. Shauvik is based in Bangalore. Shauvik posts his acceptance. He also requests Vivek to drop a line that he has received his acceptance. Vivek acknowledges through letter that he has received Shauvik’s acceptance. 1. When was the offer made? 2. When was the offer accepted? 3. When was an agreement formed?
6
Case: International Contract
Koel Ltd., a company based in Delhi, placed an order for supply of a certain quantity of tissue paper on a company, Paperline Inc., based in New York. In his arrangement, Koel Ltd. made the offer and Paperline Inc. accepted the offer. The offer document provided that ‘the parties would submit all disputes to arbitration’. A dispute arose between the parties on the quality of tissue paper which was supplied by Paperline Inc.
The parties further disputed whether the arbitration should be done in Delhi or New York and according to the Indian law or US law. Decide.
7
Judgement: Agreement by Post
The British court summarised the position in Dunlopp v. Higgings case: … as a rule, a contract formed by correspondence through the post is complete as soon as the letter accepting an offer is put into the post, and is not put an end to in the event of the letter never being delivered.
8
Judgement: Supreme Court
The Supreme Court, in Kedia v. Girdhalal case, provided the reason for the position of the British courts: The rule about lost letters of acceptance was made out of expediency because it was easier in commercial circles to prove the dispatch of the letters, but very difficult to disprove a statement that the letter was not received.
9
Judgement: Agency Theory
In Household Fire and Carriage Accident Insurance Co v Grant case, the court reconciled the postal rule: … as soon as the letter of acceptance is delivered to the Post Office, the contract is made as complete and final and absolutely binding as if the acceptor had put his letter into the hands of a messenger, sent by the offeror himself as his agent, to deliver the offer and receive the acceptance.
10
Provision in the Contract Act
4. Communication when complete.- The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete,as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer.
11
doc_444141521.ppt