M/s Jameson & Co advertised in newspaper about Clearance Sale. C picks up a shirt with price tag of Rs. 400/-, but salesman discovers it should have been in Rs. 600/- lot and refuses to sell. Can C compel the firm to sell at Rs. 400/-?

This problem is a textbook illustration of the distinction between a proposal and an invitation to treat, and it has a direct and celebrated judicial precedent to govern it.

The Advertisement and the Price Tag: No Offer in Law

Before one can speak of acceptance, there must first be an offer. Section 2(a) of the Indian Contract Act, 1872, defines a proposal as an act by which a person signifies to another his willingness to do or abstain from doing something, with a view to obtaining the assent of that other. The emphasis lies not merely on a communication of willingness, but on a finality of intention — a readiness to be bound the moment the other party says "yes."

When M/s Jameson & Co placed an advertisement about a clearance sale and displayed shirts with price tags in their shop, they did not make a proposal in this legal sense. As both Mulla's commentary and Halsbury's Laws of India make abundantly clear, advertisements of goods for sale in newspapers and the display of goods on the shelves of a self-service store with price tags attached are not offers — they are invitations to treat, that is, invitations to the public to come forward and make offers to buy. The general rule is stated without any qualification: neither a newspaper advertisement of a sale, nor a price tag on a displayed article, constitutes a binding offer capable of immediate acceptance.

The Governing Authority: Boots Case

The most authoritative case on this precise point is Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd. (1953) 1 QB 401, decided by the English Court of Appeal. The facts were almost identical in structure to our problem. Boots operated a self-service pharmacy where goods were displayed on shelves with price tags. A customer would pick up an article, carry it to the cash counter, and pay for it. The court was asked to decide whether the contract was formed the moment the customer picked up the goods from the shelf, or only when the cashier accepted payment at the counter.

The Court of Appeal, speaking through Somervell LJ, held decisively that the display of goods on a shelf with a price tag is not an offer. It is an invitation to treat. The customer who picks up the goods and carries them to the counter is the one who makes the offer to buy. The shopkeeper then has the option to accept or decline that offer at the counter. Therefore, the contract is formed — if at all — at the point of acceptance by the cashier, not at the moment the customer takes the goods from the shelf.

The implications for our problem are direct and inescapable. When C picked up the shirt bearing the Rs. 400/- price tag, C was not accepting an offer made by the firm. C was making an offer to purchase the shirt at Rs. 400/-. The salesman, upon discovering the mislabelling, was perfectly within legal right to refuse to accept that offer. Since C's offer was never accepted, no contract was ever concluded between C and the firm.

The Practical Reason Behind the Rule

The law adopts this position for sound commercial reasons. As Lord Herschell famously observed in Grainger & Sons v. Gough (1896 AC 325), if a price list or display of goods were treated as an offer, a shopkeeper would be committed to selling an unlimited number of items at the stated price — a result that could be commercially disastrous, especially where, as here, a price tag is placed on the wrong article by mistake. The law relieves the seller of such unreasonable consequences by classifying the display as a mere invitation to negotiate.

This principle was also applied in the Indian context when the Supreme Court in Col. D.I. MacPherson v. M.N. Appanna (AIR 1951 SC 184) held that merely stating a price at which one may be prepared to sell does not amount to a binding offer. The owner had merely invited further negotiations, not committed himself to a concluded bargain.

C's Position: The Offer-Maker, Not the Acceptor

It is important to understand that C, in picking up the shirt and presenting it at the counter, was in legal terms the proposer under Section 2(a). The firm was the potential acceptor. The salesman's refusal to sell amounted to a rejection of C's offer. There was no concluded contract, no breach of contract, and hence no cause of action.

It would be a different matter entirely had the salesman already accepted the price and received payment — for then a contract would have been formed, and the firm would have been bound to honour it. But as long as acceptance had not been communicated and the transaction was at the counter stage, the firm retained the right to decline. The law of contract does not compel a shopkeeper to sell merely because a customer has picked up a mislabelled article. The master principle remains: no offer, no acceptance, no contract, no obligation.