Appuhamy v. Attorney-General
1954Present : Gratiaen J. and Gunasekara 3.
H. K. J, APPUHAMY, Appellant, and THE ATTORNEY-GENERAL,
S. O. 371—D. C. Ratnapnra, 8,638m
Contract—Tender—Execution of a further agreement—Point of time -when contractbecomes binding.
Plaintiff had been invited to make a tender for eei’tain work on the under-standing that, if the tender was accepted, he would be required within a fixedperiod of time to sign an agreement for the due performance of the work.He accordingly signed an agreement whereby he undertook to complete thework within a certain period.
Held, that the contract automatically became operative as ^oon as theplaintiff signed the agreement. It was not open to the other party thereafterto change his mind on the ground that he had not signed the agreement himself.
,/^.PPEAL from a judgment of the District Court, Ratnapura.
Sir TJhwatte J ayasundera, Q.C., with V. T. de Zoysa <wid G. T. Samara-wickreme, for the plaintiff appellant.
G. F. Jayaratne, Crown Counsel, for the Crown.
Cur. adv. vuU.
(1938) S. A. A. D. 584.'
GRATIAEN J.—Appuhamy v. Attorney-General
April 5, 1954. Gratiaest J.—
This is an Action against the Grown for breach of contract.
In December 1946 tenders were invited for the construction of twoabutments for a bridge at PeUakada across the Heenganga. The noticesstated that the tenders should reach the Chairman of the Village Com-mittee of Palle Pattu, Kukul Korale, not later than the afternoon of20th February, 1947, and that the successful tenderer “ must be preparedto enter into an agreement with the Government Agent for the due perfor-mance of the work within 7 days of the notification of acceptance and tofurnish cash security in a sum of not less than 10% of the amount of thetender ”. It is common ground that the printed words “ GovernmentAgent ” appearing in this clause should have read, and were understoodto mean, “ Assistant Commissioner of Local Government ”.
The Village Committee recommended to the Assistant Commissionerthat the plaintiff’s tender for Its. 4,795 should be accepted, and theAssistant Commissioner’s acceptance of that tender was in due coursenotified to the plaintiff. He thereupon deposited at the RatnapuraKachcheri on 28th April, 1947, a sum of Its. 480, and he contempora-neously signed in triplicate a printed agreement which was placed beforehim for signature* by the Superintendent of Village Works attached to theOffice of the Assistant Commissioner of Local Government. In thisdocument (marked P3) :
he bound himself, inter alia, to execute the works as set forth in
the relative plans, specifications and schedule of rates ;
he hypothecated in favour of the Assistant Commissioner the
sum of Rs. 480 as security for the due performance of hiscontractual obligations ;
he undertook to complete the work “ within 6 months from date
hereof ” and, in default thereof, to pay liquidated damages tothe Assistant Commissioner at a specified rate.
After the plaintiff had signed this agreement, the Superintendent ofVillage Works (whose function it was to supervise contracts of this nature)showed the plaintiff where the work had to be done, and on 16th May,1947, the plaintiff commenced building operations which the learnedJudge assessed at Rs. 2,087.50. On 10th July, 1947, however, he receivedfrom the Assistant Commissioner a letter bearing the date 30th June,1947, instructing him “ not to commence work until you hear from meand receive a signed copy of the agreement form ”.
The Assistant Commissioner sought to explain his attitude in writingthis letter by stating that, shortly after the plaintiff had signed theagreement and deposited his security as required by the notice callingfor tenders, departmental consideration was for the first time given tothe question whether it would be “ more expedient ” to call for freshtenders for the entire work to be undertaken by a- single contractor.This new development was not however communicated to the plaintiffuntil July, 1947, and the authorities should have realised that, havingalready accepted a tender from the plaintiff for the execution of a partof the work, it was impossible for them to call for fresh tenders on thisnew basis without committing a breach of contract. Be that as it may,2*J. N. B 36491 <6/54)#
GRATIAEN J.—Appuhamy v. Attorney-General
other complications followed, and the plaintiff was prevented fromproceeding with the work entrusted to him. He therefore institutedthis action against the Grown for the recovery of a sum of Es. 3,067-50made up as follows :
Rs. 2,087-50 being the cost of work already performed under
the contract, and which was admittedly of no independentvalue to the plaintiff ;c
Rs. 480 being the amount deposited on 20th April, 1947 ;
Rs. 500 representing the nett profit which the plaintiff would
have earned if the contract had not been broken.
The learned judge dismissed the plaintiff’s action because in his opinion :
there was no concluded contract between the parties, as' the
Assistant Commissioner had not yet signed the agreement P3;
in any event, the contract, even if concluded, was entered into by
the Assistant Commissioner as agent of the Village Committeeand not of the Crown.
In my opinion there was no merit in either of these defences.
As for the second line of defence relied on by the Crown, it is quiteobvious that the Assistant Commissioner was through^u/- the (transactionacting as an agent of the Crown. He himself explained that the costof construction of the proposed bridge was to be met from funds belongingto the Central Government and exclusively administered and controlledby the Department of the Commissioner of Local Government (whichis a Government Department). Before that Department was establishedunder the provisions of Ordinance No. 57 of 1946, the proper authorityfor controlling such funds and entering into contracts in connectionwith expenditure of this kind was the Government Agent. The VillageCommittee, on the other hand, (beyond making recommendations forthe acceptance of tenders by an officer of the Crown) could not and didnot enter into contracts of this nature on its own account except in caseswhere the necessary funds were (by an entirely different procedure)placed under their direct control. The forms of the notices calling fortenders, and also the terms of the printed agreement Pc3, could not buthave been intended to make it clear to the tenderer that he was beinginvited to negotiate with the Government (which controlled the relativefunds) and not with the Village Committee (which had no funds fromwhich payments under the proposed contract could be met). c.
The question remains whether the omission of the Assistant Commis-sioner to sign the agreement which the plaintiff had duly signed had theeffect of leaving the parties still in the stage of “ negotiations ”, so thatthere was no concluded contract in force when the plaintiff commencedwork under the honest and (according to the evidence) the inducedbelief that there was.<-‘
Let us analyse the position. The plaintiff had been invited to makea tender on the understanding that, if it was accepted, he would berequired within a fixed period of time to (1) enter into an agreement forthe due performance of the work and (2) furnish cash security in a sumnot less than 10% of the tender. The acceptance of his tender would
C’handradasa v. The Queen
(but for these stipulated conditions) have automatically brought theparties into contractual relationship with one another. But in this case,the incidence, of contractual rights and obligations was postponed untilthe plaintiff duly complied with both these conditions—V. C. Matale v.Weerasinghe 1. As soon as that was done, nothing further was requiredto be done by the Assistant Commissioner to make the bargain bindingon the Crown on whose behalf he was acting.
It is important to note that the terms of the formal agreement P3expressly imposed very onerous obligations on the plaintiff and none(except by implication) on the other party. Moreover, by signing theagreement the plaintiff immediately became bound to complete the workwithin six months from that date. This clause strongly supports theargument that the contract automatically became 'operative as soonas the plaintiff signed the document. In other words, the unqualifiedacceptance by the Assistant Commissioner of the plaintiff’s offer tocomplete the work for Rs. 4,795, subject only to the latter’s due com-pliance with the unilateral conditions stipulated in the “ notice callingfor tenders ”, left the former no locus poenitentiae to withdraw his accept-ance after these conditions had been duly satisfied. The language ofthe agreement shows conclusively that the security was deposited andhypothecated on the basisfthat a contract had been entered into, not onthe assumption that the other party was still free to change his mind.
I would allow the appeal with costs in both Courts, and enter judg-ment in favour of the plaintiff for Rs. 3,967.50 together with legalinterest on the sum of Rs. 480 from date of action until date of decreeand on the aggregate amount of the decree in full.
<Ittnas:ekajra J.—I agree.