The case established the importance of the determination of the price in a contract of sale and the impact of external factors, such as government orders, on the formation of a contract.

1. These appeals are against the decision of the Anjikaimal District Court awarding damages for the non-delivery of cocoanuts according to the provisions of Ext.D subsequent to the publication of Ext. K, an order of the Government of Cochin in the Development Department No. 105, dated 29.4.1122. The contention of the appellant is that Ext. D became irnfructuous with the publication of Ext. K and that the suits should have been dismissed.

2. Ext.D is dated 16.10.1121 and it is common ground that it embodies an agreement to sell future goods, that is, the cocoanuts to be harvested from the three items of property mentioned therein during a period of one year from 1.11.1121, the price payable for every 120 nuts being the market price per chothana of cocoanut oil in the Mattancherry bazaar on the dates of delivery plus an additional sum of Re. 1-6-0. Ext. K fixed a ceiling price for cocoanut oil and is in the following terms:

"No. 105 - In exercise of the powers conferred on them by sub-s. (1) of S. 3 of the Cochin Essential Articles Control and Requisitioning Powers Proclamation, III of 112, Government are hereby pleased with effect from the 15th day of December 1946 to fix the maximum prices of copra and cocoanut oil (without containers) at Rs. 884 and Rs. 1,390 per ton respectively and to prohibit the export from Cochin State of copra and cocoanut oil except under and in accordance with the terms and conditions of a permit issued by the Director of Food Supplies or any officer duly authorised by him in his behalf".

3. Under the Indian Sale of Goods Act, 1930, the term "contract of sale" includes both an actual sale and an agreement to sell, that is, an executory contract of sale as in this case. Sub-s. (3) of S. 4 defines the difference between the two as follows:

"Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell".

In either case it is essential that the contract should provide for the payment of a money consideration. Though it is not necessary that the contract should specify the amount, the parties must at least specify the method by which the price will be determined.

4. S. 9(1) which corresponds to S. 8(1) of the English Sale of Goods Act, 1893, provides:

"The price in a contract of sale may be fixed by the contract or may be left to be fixed in manner thereby agreed or may be determined by the course of dealing between the parties".

There can be no doubt that when the price is determined as provided in a contract it is the same as if the parties had fixed it in the contract and that if the method for fixing the price provided in an executory contract of sale becomes unavailable, that by itself will preclude the formation of a contract. As stated in Benjamin on Sale, Eighth Edition, page 150:

"It is not uncommon for the parties to agree that the price of the goods shall be fixed by valuers appointed by them. In such cases they are of course bound by their bargain, and the price when so fixed is as such part of the contract as if fixed by themselves. But it is essential to the formation of the contract that the price should be fixed in accordance with this agreement, and if the persons appointed as valuers fail, or refuse to act, there is no contract in the case of an executory agreement, that is to say, an agreement to sell".

5. What Ext. D has done is to prescribe the manner in which the price should be computed, namely, the ascertainment of the price of cocoanut oil per chothana in the Mattancherry bazaar on the relevant dates, the addition of Re. 1-6-0 thereto and the acceptance of the total as the price per 120 cocoanuts. According to the appellant the formula for the calculation of the price became unavailable because of the disappearance of a "m