Name- Kunal Gupta

PRN – 20010223031

Group III

Division D

Course – Law of contracts

 This situation is based on the landmark case of Perclval Ltd.

London County Council Asylums and Mental Deficiency
Committee [(1918) 87 L.JKB 677] and the case of Bangal
Coal Co. Ltd. Vs. Homee Wadia & Co. [(1899) L Bom. 97]

ISSUE –

If the supplier refused to supply the goods, whether he revoked the offer
or the acceptance of the Government?

If there was the valid revocation on part of the supplier?

If there was a concluded contract between the Government and M/s ABC
Surgical?

RULE –

• Standing Offer: An offer which is allowed to remain open for

acceptance over a period of time is known as standing offer or continuing
offer. Tenders that are invited for supply of goods is a kind of standing
offer.

• Section 2(a):- When one person signifies to another his

willingness to do or to abstain from doing anything, with a view to
obtaining the assent of that other to such act or abstinence, he is said to
make a proposal;

 The Person making the proposal or offer is called the ‘offeror’.

 For a valid offer, the party making it must express his willingness
‘to do’ or ‘not to do’ something.
 An offer can be positive or negative.
 The willingness must be expressed with a view to obtain the assent.
 The Offer can be Express offer or an Implied offer.

 Section 4: -

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.

The communication of a revocation is complete, —

As against the person who makes it, when it is put into a course of
transmission to the person to whom it is made, so as to be out of the
power of the person who makes it; as against the person to whom it is
made, when it comes to his knowledge.

 Section 5: -

A proposal may be revoked at any time before the communication of its

acceptance is complete as against the proposer, but not afterwards.

An acceptance may be revoked at any time before the communication of

the acceptance is complete as against the acceptor, but no afterwards.

 Section 6(3)
A proposal is revoked by the failure of the acceptor to fulfil a condition
precedent to acceptance.

APPLICATION: -

 When the supplier refused to supply the goods even after repeated
requests made by the government to supply the good, he is simply
in breach of contract. He did not revoke either the offer or the
acceptance. With the means of biding readily accepted by the
government, he responded to the standing offer and the tender was
further approved for a period of 1 year, i.e., from October 28, 2020
to October 27, 2021.

The company is in breach of contract because, despite repeated demands

made by the government, it failed to deliver the products in the month of
December.

 In the case of Perclval Ltd. v. London County Council Asylums

and Mental Deficiency Committee,

Facts: -

The plaintiffs advertised for tenders for the supply of stores. The
defendant made a tender to the effect that he undertook to supply the
company for twelve months with such quantities of special articles as the
company may order from time to time. The Company, by a letter
accepted the tender and subsequently gave various orders which were
executed by the defendant. Ultimately the Company gave an order for
goods within the schedule, which the defendant refused to supply.

Judgement: -

The Company succeeded in an action for breach of contract. The tender

was a standing offer, to be converted into a series of contracts by the
subsequent acts of the company and that an order prevented pro tanto
the possibility of revocation, and the defendant, though he might regain
his liberty of action for the future, was meanwhile bound to supply the
goods actually ordered.

ii. Indeed, there was a legitimate and a concluded contract among

government and M/s ABC Surgical Company on the grounds that the
because the company readily bided for the tender and its bid got
accepted. It further got advised by the public authority with respect to the
terms and states of the agreement. It likewise provided the products to
the public authority in the period of November. All the essential elements
to constitute a valid contract were met.

On account of the case of Bengal Coal Co. v. Homee Wadia and Co.

‘A’ agreed in writing to supply coal to ‘B’ at certain prices and up to a

stated quantity, or in any quantity which may be required for a period of
twelve months, is not a contract unless B binds himself to take some
certain quantity, but a mere continuing offer which may be accepted by B
from time to time by ordering goods upon the terms of the offer. In such
a case, each order given by B is an acceptance of the offer and A can
withdraw the offer, or, to use the phraseology of the Act revoke the
proposal, at any time before its acceptance by an order from B. Such a
transaction may be reduced to a statement by the intending vendor in
this form If you will send me orders for coal, I shall supply it to you for a
period of twelve months at a particular rate.’ This is merely a proposal
from A to B. If in reply to such a proposal, B says to A ‘I agree’, it does
not constitute an acceptance of the proposal. An acceptance can take
place only by B sending an order to A”.

Conclusion: -

Since the company readily bid for the tender and obtained the approval,
there is a legitimate & valid contract between the government and the
company. Owing to its failure to deliver the products despite repeated
demands made by the government, it is in breach of contract.
On the part of the company, there was no valid revocation as it neglected
to disclose the same to the government.