STANDING, OPEN OR CONTINUING OFFER

An offer which is allowed to remain open for acceptance over a period of time is known as a standing, open or a continuing offer.

ILLUSTRATION

An offer to supply 1,000 bags of wheat from 1st January to 31st December, in accordance with the orders which may be placed from time to time, is a standing offer. As and when the orders are placed that amounts to acceptance of the offer to that extent. In the above stated illustration if an order for the supply of 100 bags of wheat is placed on 15th January, there is acceptance of the offer to that extent and the offeror becomes bound to supply those 100 bages of wheat. So far as the remaining quantity is concerned, this offer can be revoked just like any other offer.

TENDER FOR THE SUPPLY OF GOODS

Tender for the supply of goods is a kind of standing offer. An advertisement inviting tenders is merely an invitation for quotations. When the tender is approved, it becomes a standing offer. As and when an order is placed on the basis of the tender that amounts to acceptance of the offer and results in a binding contract.

DICKINSON V. DODDS, (1876) 2 Cr. D. 463.

Such an offer may be revoked or withdrawn before the order has been placed. Even though the offer is originally made open till a particular time,      it may be revoked earlier than that, because the offeror is not bound to keep the offer subsisting and he may revoke it at any time before its acceptance.

       BENGAL COAL CO. V. HOMEE WADIA & CO., [I.L.R. (1899) 24 Bom. 97.

The defendants (Bengal Coal Co.) agreed to supply coal to the plaintiffs (Homee Wadia & Co.) upto a certain quantity at an agreed price for a period of 12 months, as may be required by the plaintiffs from time to time.

The plaintiffs placed orders for the supply of some coal and the same were complied with.

Before the expiry of the said period of 12 months, the defendants withdrew their offer to supply further coal, and refused to comply with the orders placed thereafter. They were sued for the branch of contract.

It was held that there was no contract between the plaintiff and the defendant and, therefore, there could be no liability for the breach of contract. There was simply a continuing offer to supply coal. They were bound to supply coal only as regards orders which had already been placed, but were free to revoke their offer for supply of coal thereafter.

UNION OF INDIA V. MADDALA THATHAIAH [A.I.R. 1966 S.C. 1724;

This is another illustration, where the tender was in the form of a standing offer.

In such a case, the offeree was held not bound to accept the same or place orders for the purchase of the goods.

In this case, the Dominion of India as the owner of a Railway invited tenders for the supply of 14,000 maunds of cane jaggery to the railway grain shops.

Although the dates by which the supplies were to be made had been mentioned, yet orders for the supply had to be made from time to time.

One of the conditions stipulated in the tender form was that the "Administration reserves the right to cancel the contract at any stage during the tenure of the contract without calling up the out standings on the unexpired portion of the contract. "

It was held that the stipulation whereby the appellant could cancel the agreement (revoke the offer in the strict sense) as regards the supplies of jaggery about which no formal order has been placed is a valid one, and the appellants are bound only for the supply of such quantities for which specific orders have already been placed. 

KRISHNAVENI CONSTRUCTIONS V. THE X.E.N., PANCHAYAT RAJ, DARSI, [A.I.R. 1995 A.P. 362.

The condition that a tender cannot be withdrawn before it was accepted, is invalid.

Any offer, including a standing offer, may be revoked before the same has been accepted. Any restriction on the right to revoke an offer is void.

This may be explained by referring to the case of RAJENDRA KUMAR VERMA V. STATE OF M.P. [A.I.R. 1972 M.P. 131;

In that case the respondents (State of M.P.) invited tenders for the sale of Tendu Patta (leaves).The petitioner (Rajendra Kumar Verma) submitted his tender and also deposited some security.

The tender was to be opened on 9th April, 1969. Before that date the petitioner made an application withdrawing his tender and requested that on the stipulated date the tender be not opened.

Inspite of the petitioner's application his tender was opened, and that being the only tender the same was also accepted.

The petitioner refused to execute the agreement to purchase the leaves. The Government sold the leaves to somebody else and then sued the petitioner to recover damages amounting to about Rs. 25,000.

One of the contentions of the respondent was that there was a clause in the tender notice according to which the petitioner having submitted his tender was not entitled to withdraw the same.

It was held that inspite of such a clause in the tender notice, the tender or any offer could be withdrawn, and therefore in the present case since the offer had been withdrawn, no contract had arisen between the parties, and the petitioner could not be made liable.

It was observed:

"A person who makes an offer is entitled to withdraw his offer or tender before its acceptance is intimated to him.

The Government by merely providing such a clause in tender notice could not take away that legal right of the petitioner.”

SURAJ BESAN AND RICE MILLS V. FOOD CORPORATION OF INDIA [A.I.R. 1988 Delhi 224.]

The Delhi High Court held that a person can withdraw or modify his offer or tender before the communication of the acceptance is complete as against him.

It was also observed that the Government by merely providing a clause to the contrary in the tender notice could not take away the legal right of a person to revoke the offer.