TMI Blog1963 (5) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... security and said that on receipt of the remittance, official order would be placed with the respondent. In his letter dated February 16, 1948, the Deputy General Manager reiterated the acceptance of the tender subject to the respondent's acceptance of the terms and conditions printed on the reverse of that letter. Among these terms, the terms of delivery stated : Programme of delivery to be 3,500 maunds on March 1, 1948; 3,500 maunds on March 22, 1948; 3,500 on April 5, 1948; and 3,500 maunds on April 21, 1948. At the end of the terms and conditions was a note that the administration reserved the right to cancel the contract at any stage during the tenure of the contract without calling up the outstandings on the unexpired portion of the contract. The date for the delivery of the four installments were slightly changed by a subsequent letter dated February 28, 1948. 3. By his letter dated March 8, 1948, the Deputy General Manager informed the respondent that the balance quantity of jaggery outstanding on date against the order dated February 16, 1948, be treated as cancelled and the contract closed. The protests of the respondent were of no avail as the railway administrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the months of December 1947 and January 1948 and should be delivered in equal lots of 1,750 imperial maunds each commencing from 10th December 1947 and completed on 31st January 1948. Note : This Administration reserves the right to cancel the contract at any stage during the tenure of the contract without calling up the outstandings on the unexpired portion of the contract. 8. Security deposit. - Five percent of the tender value will be required to be paid by the successful tenderer as security deposits towards proper fulfilment of the contract. This amount will carry no interest. This should be paid in cash in addition to the earnest money already paid to the Paymaster and Cashier of this Railway, Madras, and his official receipt obtained therefor. Cheques and drafts will not be accepted in payment of security deposit. In the case of contracts or the supply of gingelly oil, the security deposit will be arranged only after 90 days have elapsed from the date of the last supply against the order. 9. Placing of order. - A formal order for supply will be placed on the successful tenderer only on the undersigned being furnished with the receipt issued by the Paymaster and C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 'tenure of the contract' contemplates the contract being of a continuing nature. It is only a contract with a sort of a tenure. The contract is to be cancelled at any stage during such a tenure, that is, it could be cancelled during the period between the acceptance of the tender and March 31, 1948, the last date for the delivery of the jaggery under the contract. The note further provided that as a result of the cancellation, the appellant will not call up the outstandings on the unexpired portion of the contract. This expression can only mean without ordering the supply of jaggery which was to be delivered within the remaining period of the contract , that is, the period between the date of cancellation and March 31, 1948. 8. Paragraph 13 dealing with penalties draws a distinction between outstandings on the contract and the purchase of the goods to the extent not supplied by the respondent. The provision about penalty comes into operation when the supplies are not effected on the dates laid down in the official order, or when acceptable replacement of the whole or part of any consignment which is rejected is not made within the time prescribed. Clause (a) of para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o that portion of the goods to be supplied for which no formal order had been placed. If this note had a particular reference to the cancellation of the orders, if that was possible in law, its language would have been different. It would have referred to the right to cancel the orders about the delivery of the consignments and would have provided that the orders for such supplies which were to be made on dates subsequent to the date of cancellation would stand cancelled or that the appellant would not be bound to take delivery of such consignments which were to be delivered on dates subsequent to the cancellation of the orders. There is nothing in this letter that the formal order placed is subject to this condition. The condition governed the acceptance of the tender according to the content of para 1 of this letter. 13. It appears that the order has been placed on a printed form which could be used also for placing an order for delivery of part of the commodity which the tenderer has agreed to supply. That seems to be the reason why that particular recital appears in the letter. It cannot possibly have any bearing on a case like the present where the railway administration ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced and accepted a contract arose. It is true this contract would be governed by the term set out in the letters but until an order was placed and accepted there was no contract. Reference may also be made to what is said in 'Law of Contract', by Cheshire Fifoot (5th Edition) at p. 36. There is no doubt, of course, that the tender is an offer. The question, however, is whether its 'acceptance' by the corporation is an acceptance in the legal sense so as to produce a binding contract. This can be answered only by examining the language of the original invitation to tender. There are at least two possible cases. First, the corporation may have stated that it will definitely require a specified quantity of goods, no more and no less, as, for instance, where it advertises for 1,000 tons of coal to be supplied during the period January 1st to December 31st. Here the 'acceptance' of the tender is an acceptance in the legal sense, and it creates an obligation. The trader is bound to deliver, the corporation is bound to accept, 1,000 tons, and the fact that delivery is to be by installments as and when demanded does not disturb the existence of the oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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