Summary
The Court held that the Port Trust’s purported acceptance, which added a final-inspection condition rejected by the supplier, did not create a concluded contract. It set aside the damages decree and dismissal of the supplier’s refund suit, directing repayment of the earnest deposit with interest.
Issues
- Whether acceptance of a conditional offer with a further condition created a binding contract without the original proposer’s assent.
- Whether the Port Trust could recover damages or retain the earnest deposit in the absence of a concluded contract.
Provisions considered
- Section 7, Indian Contract Act, 1872Acceptance must be absolute and unqualified; a variation is a counterproposal requiring the original proposer’s acceptance. (¶ 55–59)
- Section 4, Indian Contract Act, 1872The courts below relied on timely communication of purported acceptance but overlooked the distinct requirement of unqualified acceptance under Section 7. (¶¶ 31, 55, 59)
Held
- Acceptance containing a new condition is a counterproposal. A contract is not complete until the original proposer accepts that condition; timely dispatch alone does not cure a substantive variation in the proposed terms. (¶ 55–59)
- The supplier offered inspection at its depot and sought an increased price if inspection was required at the Port Trust’s site. The Port Trust insisted on final inspection at its own premises, and the supplier rejected that condition. No concluded contract arose, so damages, risk purchase at the supplier’s cost and retention of its earnest deposit could not be justified on an alleged breach. (¶¶ 8–13, 59–61)
- Questions about proof or quantum of damages, mitigation, and whether prior Board approval or subsequent ratification was required were unnecessary to decide once contract formation failed. (¶ 60)
Result
Appeal allowed; High Court and trial court judgments in both suits set aside. Earnest deposit to be refunded within four weeks with 6% annual interest from institution of the refund suit until payment; no costs.