A published an advertisement for selling his house at a price of Rs. 15 lakhs. A declined to sell his house to B who was ready to pay Rs. 15 lakhs as price of house of A. A sold his house to C who agreed to pay price of Rs. 20 lakhs. Whether B can sue A for purchase of house?

The entire question turns on one of the most fundamental distinctions in the law of contract: the difference between a proposal and an invitation to treat. The sources have provided rich material on this, and the answer deserves to be explained with the care the question merits.

An Advertisement Is Not a Proposal

The starting point of any contract is Section 2(a) of the Indian Contract Act, 1872, which defines a proposal as the act of one person signifying to another his willingness to do or abstain from doing something, with a view to obtaining the assent of that other. The operative phrase here is "with a view to obtaining the assent" — it requires a finality of intention, a readiness to be immediately bound the moment the other party says "yes."

When A published an advertisement stating that his house was for sale at Rs. 15 lakhs, he did not make a proposal in this sense. He merely held out an invitation to treat — an invitation to the public at large to come forward and make offers. As Mulla's authoritative commentary explains, advertisements of goods for sale are not offers; they are invitations for making offers. The general rule, settled beyond doubt, is that a display or advertisement of a thing for sale, with or without a price, is not an offer capable of acceptance — it is an invitation to negotiate.

The Locus Classicus: Harvey v. Facey

The distinction was brought into sharp relief in the celebrated Privy Council decision in Harvey v. Facey (1893 AC 552). The plaintiffs telegraphed the defendants asking: "Will you sell us Bumper Hall Pen? Telegraph lowest cash price." The defendants replied stating their lowest price. The plaintiffs immediately telegraphed back saying they agreed to buy at that price. The defendants refused to sell. The Privy Council held that there was no contract — the defendants had merely answered the question about price but had never signified their willingness to sell. Merely quoting a price, or advertising at a price, is not the same as making an offer.

The same principle was applied closer home in Col. D.I. Macpherson v. M.N. Appanna (AIR 1951 SC 184), where the Supreme Court of India clearly held that a communication stating the price at which a person "may be prepared to sell" in response to an inquiry does not amount to an offer. The owner had retained the freedom to accept or decline, and so too did A in our problem.

B's "Acceptance" Creates No Contract

When B came forward ready to pay Rs. 15 lakhs — the very price mentioned in the advertisement — he was not accepting a proposal. He was himself making a proposal to A to purchase the house at that price. The advertisement had only invited B to do exactly this. Since A had made no offer, there was nothing for B to accept.

A was entirely within his legal rights to decline B's offer and later sell the property to C at Rs. 20 lakhs. There is no concluded contract between A and B — and without a concluded contract, there can be no breach, and without breach, there is no cause of action. The law is unequivocal that so long as one of the parties to the transaction could back out at his choice, there can be no binding or concluded contract between them, even if they had discussed the material terms.

This reasoning was further reinforced in Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd. (1953 1 QB 401), where the English Court of Appeal held that displaying goods on shelves with price tags is not an offer — the customer picking up the goods makes the offer, which the shopkeeper may accept or refuse. The principle translates seamlessly to A's advertisement.

The Rationale Behind the Rule

The reason for this rule is rooted in practical necessity and fairness. If an advertisement were treated as a binding offer, A would be bound to sell to every person who came forward with the stated price — a potentially impossible and commercially unworkable obligation. As the House of Lords observed in the classic case involving a price list for wine (Grainger & Sons v. Gough, 1896 AC 325), treating a price quotation as an offer could bind the offeror to an unlimited number of contracts far exceeding his capacity to perform. The law wisely prevents this result by classifying such communications as invitations to treat.

Conclusion on B's Rights

B has no actionable claim against A. He made a proposal to buy, which A was free to reject. A exercised that freedom. A then accepted C's counter-offer of Rs. 20 lakhs, and a valid contract was formed between A and C. The chain of legal reasoning is straightforward: no offer by A → no acceptance by B → no contract → no breach → no remedy. The advertisement was merely the commencement of negotiations, not the conclusion of them.