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Question
The principle is to be applied to the given facts and to choose the most appropriate option:
Principle: An offer made by one party when accepted by another makes it a contract.
Transactions:
1. P offered to sell his house for Rs. 20 lakhs to R; R told P that he was interested to buy a house for 15 lakhs only.
2. C was looking for a house for not more than 25 lakhs; P informed C that his house was available for 20 lakhs.
3. K wanted to buy some old furniture; L told K that he would sell his furniture for Rs. 10, 000.
4. R advertised to sell his old car for a price of Rs. Three lakhs; S found the advertisement and offered to buy it for Rs. 2 lakhs 50 thousand; R agrees to sell it to S.
Which among the above is actually a contract?
Options
Situation 3 only is a contract
Situations 1 and 2 are contracts
Situation 4 only is a contract
Situations 2 and 4 are contracts
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Solution
Situation 4 only is a contract
Explanation:
One of the essentials of a valid contract makes it mandatory that the offer by one party must be accepted clearly by another party. The acceptance must also be communicated. (Bhagwandas Goverdhandas Kedia vs M/s. Girdharilal Parshottamdas... on 30 August 1965)
In instance 4 (which is the correct answer), there is an offer advertisement by 'R' for selling his old car at Rs 3 lakhs. 'S' offers to buy it for Rs. 2 lakhs 50 thousand. This has been agreed by 'R' to sell it to 'S'. The offer by 'S' has been accepted by 'R'. The contract is valid.
In instance 1, P does not agree to sell his house to R. The contract is invalid. In instance 2, there is only communication between P and C about the availability of the house. There is no offer and acceptance between the two.
In instance 3, there is only communication between K and L about the availability of the furniture. There is no offer and acceptance between the two.
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