Contract Law

Col. D.I. MacPherson v. M.N. Appanna

AIR 1951 SC 184; 1951 SCR 161

Facts

Colonel MacPherson owned a bungalow in Mercara called “Morvern Lodge.”
Since MacPherson was away, the property was being looked after by persons associated with his estates, particularly Youngman and White.
Appanna was interested in purchasing the bungalow.
Initially, lower offers of around ₹4,000, ₹5,000 and ₹6,000 were communicated to MacPherson.
In response to the ₹6,000 offer, MacPherson sent a cable stating:
“Won’t accept less than rupees ten thousand.”
Youngman communicated this statement to Appanna.
Appanna then said that he was willing to pay ₹10,000 and later wrote:
“I hereby confirm my oral offer of ten thousand for the bungalow.”
Youngman subsequently cabled MacPherson:
“Offered ten thousand Morvern Lodge immediate possession. May I sell.”
Meanwhile, another purchaser offered ₹11,000.
MacPherson accepted the ₹11,000 offer, and that purchaser paid the amount and took possession.
Appanna sued, arguing that MacPherson’s statement that he would not accept less than ₹10,000 was a counter-offer, which Appanna had accepted.
The Judicial Commissioner held that there was a concluded contract and awarded Appanna ₹3,000 as compensation.
MacPherson appealed to the Supreme Court.

Whether MacPherson’s statement, “Won’t accept less than ₹10,000,” amounted to a definite offer to sell the bungalow for ₹10,000.
Whether Appanna’s willingness to pay ₹10,000 constituted acceptance resulting in a concluded contract.

A valid offer must show a clear and final willingness to be bound as soon as the other party accepts it.
A mere statement of the lowest price at which a person may be willing to sell is ordinarily not an offer.
Such a statement merely supplies information or invites the other party to make an offer.
A response can amount to acceptance only when there is already a definite offer capable of being accepted.
The Court applied Harvey v. Facey, where a statement of the “lowest cash price” was held to be information about price, not an offer to sell.

The Court examined MacPherson’s words objectively.
His statement did not say:
“I offer to sell the bungalow for ₹10,000”; or
“I will sell it to Appanna if he pays ₹10,000.”
It merely indicated that ₹10,000 was the minimum amount he would consider.
Therefore, MacPherson was not promising to sell immediately to Appanna.
The surrounding correspondence confirmed this interpretation.
Appanna’s own letter described his ₹10,000 communication as “my oral offer.”
This wording showed that Appanna himself was making a fresh offer rather than accepting an existing offer from MacPherson.
Youngman’s cable also stated:
“Offered ten thousand … May I sell.”
The words “May I sell” showed that Youngman still required MacPherson’s approval.
If MacPherson’s earlier cable had already been a binding offer and Appanna had accepted it, no further permission would have been required.
The conduct of the parties therefore showed that:
MacPherson had only indicated his minimum price;
Appanna later offered ₹10,000;
that offer still required MacPherson’s acceptance.
MacPherson never accepted Appanna’s ₹10,000 offer.
Instead, he accepted the higher offer of ₹11,000 from another purchaser.
Since there was no acceptance by MacPherson, there was no consensus or concluded contract between him and Appanna.

The Supreme Court held that MacPherson’s statement, “Won’t accept less than ₹10,000,” was only a statement of the lowest price at which he might sell.
It was not a counter-offer or a definite offer capable of acceptance.
Appanna’s communication offering ₹10,000 was merely a fresh offer.
Since MacPherson never accepted that offer, no binding contract was formed.
The Supreme Court therefore rejected Appanna’s claim based on the alleged contract.
Use this case for: a statement of the minimum or lowest acceptable price is not, by itself, an offer to sell.