TMI Blog1996 (9) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... out 19th of November, 1988. Seventy applications were received by the appellant. Ultimately, on 1st June, 1990, a letter of Intent was issued by the appellant in favour of respondent No. 1 for appointing respondent No. 1 as the selling agent of the appellant for marketing of Saras Brand Dairy Products, inter alia, on the following terms. (1) that you will sign an agreement on non-judicial stamp paper of ₹ 5 with RCDF and this arrangement will be enforceable from the date legally executed contract has come into being. (2) ... (3) ....The goods will be issued to you against irrevocable bank guarantee on furnishing from schedule bank on IS days credit basis...(sic). You are requested to submit irrevocable bank guarantee for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent. In the letter, the appellant pointed out that the Letter of Intent issued to respondent No. 1 was conditional on his fulfilling certain obligation as a condition precedent to entering into a contract. The conditions, inter alia, were, (1) submission of an irrevocable bank guarantee of ₹ 15 lacs by 12th of June, 1990; and (2) execution of an agreement with the appellant by 12th of June, 1990. Beside these two conditions, respondent No. 1 had also promised to submit to the appellant its profit loss account and balance-sheet for the past year before the execution of the agreement. Respondent No. 1 had not done so. The letter also referred to the unauthorised advertisement issued by respondent No. 1 wrongly describing itself as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss account and balance-sheet for the previous year as requested by the appellant. Respondent No. 1 had wrongly held itself out as the sole selling agent of the appellant. These are clearly circumstances which are relevant to the cancellation of the Letter of Intent. Also the Letter of Intent clearly set out the conditions which respondent No. 1 had to fulfil. One such condition was submitting an irrevocable bank guarantee for ₹ 15 lacs. This was also not done. Respondent No. 1 contends that it had informed the appellant that it would submit the bank guarantee within three days of the signing of the contract. The appellant, however, is within its rights in insisting that the bank guarantee should be submitted before the contract is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling agent. The Letter of Intent merely expressed an intention to enter into a contact. If the conditions stipulated in the Latter of Intent were not fulfilled by respondent No. 1 and if the conduct of respondent No. 1 was otherwise not such as would generate confidence, the appellant was entitled to withdraw the Letter of Intent. There was no binding legal relationship between the appellant and respondent No. 1 at this stage and the appellant was entitled to look at the totality of circumstance in deciding whether to enter into a binding contact with respondent No. 1 or not. 8. Respondent No. 1 contends that in anticipation of entering into a contract with the appellant, respondent No. 1 incurred heavy expenses. This statement of respo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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