A) ABSTRACT / HEADNOTE

This landmark judgment in Col. D.I. Mac Pherson v. M. N. Appanna and Another delves into the nuances of contract formation under Indian law, particularly the distinction between a mere quotation of price and an actual offer leading to a binding agreement. The Supreme Court ruled that stating a minimum acceptable price does not constitute a binding offer. The case critically examines whether the communication sent by the defendant indicating the lowest price amounted to a counter-offer or was merely an invitation to treat. The Court held there was no concluded contract as the acceptance was not based on a valid legal offer. The reasoning draws heavily on established English jurisprudence, most notably Harvey v. Facey (1893) AC 552, and clarifies that a mere indication of the lowest acceptable price does not, in itself, amount to a counter-offer. This case is essential in understanding offer and acceptance doctrines under Indian contract law and its practical implications in property sale negotiations.

Keywords: Contract Law, Offer and Acceptance, Counter-offer, Specific Performance, Communication of Acceptance, Indian Contract Act, Property Sale, Supreme Court India

B) CASE DETAILS

i) Judgement Cause Title
Col. D.I. Mac Pherson v. M. N. Appanna and Another

ii) Case Number
Original Suit No. 1 of 1945 (Civil Appellate Jurisdiction)

iii) Judgement Date
9th February 1951

iv) Court
Supreme Court of India

v) Quorum
FAZL ALI J., MUKHERJEA J., CHANDRASEKHARA AIYAR J.

vi) Author
Justice Fazl Ali

vii) Citation
1951 SCR 161

viii) Legal Provisions Involved
Section 10 and Section 2(a) of the Indian Contract Act, 1872
Section 109(c) of the Civil Procedure Code, 1908

ix) Judgments Overruled by the Case (if any)
None

x) Case is Related to which Law Subjects
Contract Law, Property Law, Civil Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The Supreme Court examined the validity of an alleged contract for the sale of a bungalow named “Morvern Lodge” in Mercara. The appellant, Col. D.I. Mac Pherson, owned the bungalow, and the respondent, M.N. Appanna, claimed specific performance based on what he considered a concluded contract. The matter arose due to a chain of correspondence and communication that included verbal and written exchanges involving third parties acting on behalf of the principal owner. The legal issue revolved around the doctrine of offer and acceptance and whether there was mutual assent essential for contract formation.

At the heart of the case was a cable sent by the defendant stating, “Won’t accept less than Rs. 10,000”, which the plaintiff construed as a counter-offer. He allegedly accepted it by subsequent oral and written communications. The trial court awarded compensation for breach but not specific performance, prompting the appellant to challenge the existence of a valid contract altogether. The Supreme Court examined this transactional history to ascertain if it amounted to a legally binding agreement.

D) FACTS OF THE CASE

Col. Mac Pherson, while residing abroad, owned a bungalow in Mercara. He entrusted Mr. White and Mr. Youngman with property management. In mid-1944, M.N. Appanna offered Rs. 4,000, later raised to Rs. 6,000, communicated via cable. Youngman relayed this offer, and Mac Pherson responded via cable on 5th August 1944, stating he “won’t accept less than Rs. 10,000.”

On 11th August, Appanna orally confirmed to Youngman that he would purchase the bungalow for Rs. 10,000. He then wrote a letter on 14th August 1944, reiterating his intention and referencing their oral conversation. Meanwhile, another buyer, Subbayya, made an offer of Rs. 10,500, and White subsequently communicated an even higher offer of Rs. 11,000 to the defendant.

Youngman, on 26th August, cabled Mac Pherson: “Offered ten thousand. May I sell?” The same day, White sent a competing cable, “Hold offer for Morvern Bungalow rupees eleven thousand cash subject immediately acceptance and occupation. Strongly recommended acceptance.” The defendant accepted the higher offer. Eventually, the bungalow was sold to the second respondent, and Appanna filed a suit for specific performance.

E) LEGAL ISSUES RAISED

i) Whether the cable sent by the defendant on 5th August 1944, stating refusal to accept less than Rs. 10,000, constituted a counter-offer.

ii) Whether the communication by the plaintiff on 14th August 1944 constituted a valid acceptance leading to a concluded contract.

iii) Whether the plaintiff was entitled to specific performance or any relief due to alleged breach.

F) PETITIONER / APPELLANT’S ARGUMENTS

i) The counsels for Petitioner / Appellant submitted that

The statement “won’t accept less than Rs. 10,000” was not an offer but a mere invitation to negotiate, relying on the precedent in Harvey v. Facey (1893) AC 552. The appellant argued that such a statement did not create legal obligations and was simply a response to a query about minimum price.

The appellant also contended that the letter written by the plaintiff on 14th August was a fresh offer and not an acceptance. Since there was no express assent to it by the defendant, no contract could be said to exist.

Further, they emphasized that the language used in the cable from Youngman – “May I sell?” – clearly indicated that even he understood that acceptance from the owner was pending and necessary before any binding contract could form.

They also argued that since a better offer was received and accepted by the owner before confirming the plaintiff’s proposal, no contractual liability could arise towards the plaintiff.

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that

The cable from the defendant dated 5th August 1944 should be construed as a counter-offer, and the plaintiff’s oral and written acceptance on 11th and 14th August 1944 respectively, concluded the contract.

The respondent asserted that actual assent to terms was communicated, both orally and in writing, and hence there was a meeting of minds, essential for a valid contract.

It was also argued that the conduct of Youngman and his discussions with the plaintiff, including the arrangement on conveyance charges and urgency of possession, demonstrated that both parties believed that a binding agreement had come into existence.

The counsel also criticized the reliance on Harvey v. Facey, stating that in the present case, there was a course of negotiations and involvement of representatives, making it distinguishable.

H) RELATED LEGAL PROVISIONS

i) Section 2(a) of the Indian Contract Act, 1872 defines an offer as the willingness to do or abstain from doing something, with a view to obtaining the assent of another.

ii) Section 7 states that an acceptance must be absolute, unqualified, and communicated.

iii) Section 10 of the Act highlights that a valid contract requires lawful offer and acceptance, with free consent and lawful consideration.

iv) Section 109(c) of the Civil Procedure Code, 1908, relates to appeals to the Supreme Court involving substantial questions of law.

I) JUDGEMENT

a. RATIO DECIDENDI

i) The Supreme Court held that the statement “Won’t accept less than Rs. 10,000” was not an offer, but a statement of minimum acceptable price. Relying on Harvey v. Facey, it reiterated that “a mere statement of price does not amount to an offer.”

The Court emphasized that no acceptance could conclude a contract unless there was a valid legal offer to begin with. The plaintiff’s letter on 14th August was not an acceptance but a fresh offer, which required the defendant’s express acceptance.

The conduct of Youngman and the cable stating “May I sell?” demonstrated that the acceptance had not yet occurred, and the parties themselves did not treat the deal as concluded.

The Court thus held that there was no concluded contract, and the plaintiff had no enforceable rights under contract law.

b. OBITER DICTA 

i) The Court observed that even if the conduct of the plaintiff and Youngman pointed towards a potential agreement, it could not override the requirement of clear offer and acceptance under law. Emotional equity cannot substitute legal certainty in contract law.

c. GUIDELINES 

• A mere quote of the lowest acceptable price does not bind the person making it.

• An offer must be specific, capable of being accepted, and not a mere price declaration.

• For a contract to be concluded, communication of acceptance must occur while the offer still exists.

J) CONCLUSION & COMMENTS

The Supreme Court has affirmed the foundational principle in contract law that an offer must be clear, unequivocal, and intended to create legal relations. This decision strengthens the distinction between a mere invitation to offer and a true offer. It adds clarity for transactional negotiations, particularly in real estate dealings, and deters premature conclusions about contractual obligations.

The reliance on Harvey v. Facey bridges Indian and English jurisprudence, reinforcing doctrinal harmony. The judgment also discourages litigation based on informal or ambiguous negotiations, upholding contractual formality and clarity.

K) REFERENCES

a. Important Cases Referred

i) Harvey v. Facey, (1893) A.C. 552 – Privy Council
ii) Col. D.I. Mac Pherson v. M.N. Appanna and Another, 1951 SCR 161

b. Important Statutes Referred

i) Indian Contract Act, 1872, Sections 2(a), 7, 10
ii) Civil Procedure Code, 1908, Section 109(c)