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URBAN COUNCIL MATALE v. WEERASINGHE H.
NLR54V469
1952 Present : Pulle J.
and L. M. D. de Silva J.
URBAN COUNCIL, MATALE, Appellant, and H. WEERASINGHE,
Respondent
S. C. 69-D. C. Matale, 338
Contract-Tender-Execution of a
further contract-Circumstances when it is necessary as a condition.
Tenders for the erection of certain buildings were called for by the
defendant. The tender notice stated that the successful tenderer should be
prepared to enter into an agreement with the defendant and to deposit a certain
portion of the tendered amount in the name of the defendant for the due
completion of the contract within a period of 5 months from the date of signing
the contract ; if the successful tenderer declined to enter into an agreement
within 10 days of notification of the acceptance of the tender, his tender would
be cancelled and the deposit forfeited. The plaintiff's tender was accepted.
Held, that a binding contract for the erection of buildings could have arisen
only on. the execution of a formal agreement between the plaintiff and
defendant.
" If the documents or letters relied on as constituting a contract contemplate
the execution of a further contract between the parties, it is a question of
construction whether the execution of the further contract is a condition or
term of the bargain or whether it is a mere expression of the desire of the
parties as to the manner in which the transaction already agreed to will in fact
go through. "
APPEAL
from a judgment of the District Court,
Matale.
H. V. Perera, Q.C., with T. B. Dissanayake and C. L. L. de
Silva, for the defendant appellant.
N. E. Weerasooria, Q.C., with H. W. Jayewardene and P.
Ranasinghe, for the plaintiff respondent.
Cur. adv. vult.
470
December 12, 1952. L. M. D. DE
SILVA J.-
The plaintiff in this case sues the Urban District Council of Matale for damages
for breach of a contract which he says that the Council entered into with him.
The chief question which arises is whether there is a binding contract between
the parties and if this question is answered in the negative the plaintiff's
action fails. As we are of that opinion we do not propose to discuss any other
questions.
The facts are accurately stated in the judgment of the learned District Judge
and we recapitulate here only such facts as are necessary for the purpose of the
conclusions we have arrived at.
By a tender notice dated the 7th June, 1949, tenders for the erection of certain
buildings on two sites A and B were called for by the defendant council.
Paragraph 3 of the notice was to the following effect :-
" Successful tenderers must be prepared to enter into an agreement with the
Chairman, Urban Council, Matale, and will be required to deposit a sum equal to
5% of the tendered amount in the name of the Chairman, Urban Council, Matale, at
the Council Office for the due completion of the contract at the rates quoted
and within a period of 5 months from the date of signing the contract. Should
the successful tenderer decline to enter into an Agreement within 10 days of
notification of the acceptance of the tender, his tender will be cancelled and
the deposit forfeited."
The " Form of Tender " on which tenderers were required to tender, and on which
the plaintiff tendered, contained the following clauses :-
" And . . . . . . . . . . . . . . . . . . do hereby undertake to have the
whole of the work comprised in Group ' B ' which are described in the drawings
and specifications complete within the period of 5 months from the date of the
signing of the agreement hereinafter referred to, and . . . . . . . . . . . .
. . . . . . undertake to employ only Ceylonese labour in the execution of
this contract . . . .
And further undertake in the event of this tender being accepted, to execute
when called upon by the Chairman, Urban Council, Matale, to do so, an Agreement
for the due performance of the works, and before the Agreement is signed to
deposit
