59. A agrees to sell two cars to B on the terms that the price was to be fixed by valuation of X. B took delivery of one car immediately. X, refused to fix the price. A asked for the return of the car already delivered. B demanded delivery of the other car offering to pay a reasonable price for both the cars. Determine the inputs of A and B.

1. Facts of the Case

• A agreed to sell two cars to B, with the price to be determined by the valuation of X, an independent valuer.
• B immediately took delivery of one car.
• X refused to fix the price, causing uncertainty regarding the agreed contract price.
• A demanded the return of the first car, citing the non-determination of the price.
• B, on the other hand, offered to pay a reasonable price for both cars and demanded delivery of the second car.
• The question arises as to whether the contract is enforceable and what are the rights of A and B in this situation.

2. Issues in the Case

1. Whether a contract to sell goods is valid if the price is not fixed but left to a third party, and that third party refuses to fix it.
2. Whether B is obliged to return the first car already delivered.
3. Whether A can refuse to deliver the second car if B offers to pay a reasonable price for both cars.
4. How Section 8 of the Sale of Goods Act, 1930 applies to contracts with unascertained prices.

3. Legal Principles Covered to Support Case Proceedings and Judgement

Relevant Provisions – Sale of Goods Act, 1930

1. Section 8 – Ascertainment of Price:
   • If the parties to a contract do not fix the price, it is left to be fixed in the following manner:
     1. By a third person (e.g., X) chosen by the parties.
     2. By agreement between the parties.
   • If the price cannot be determined due to refusal or neglect of the third person to fix it, or failure of agreement, the contract is not enforceable.
2. Section 9 – Delivery of Goods and Payment of Price:
   • A buyer cannot be compelled to pay until the price is fixed if the method of price fixation fails.
   • Similarly, the seller cannot demand return unless the contract is void or frustrated.
3. Section 10 – Reasonable Price:
   • When a contract requires a reasonable price to be paid and no price is agreed upon, the buyer is obliged to pay a reasonable price (ascertainable based on market value).

Supporting Case Laws

1. Fournier v. Fairlie (1854) 2 E & B 226:
   • Where price is to be fixed by a third party who refuses or neglects to fix it, the contract fails for uncertainty, and no obligation arises.
2. Merritt v. Merritt (1882) 20 Ch D 287:
   • A contract that leaves essential terms (like price) to be fixed by third parties cannot be enforced if the third party refuses.
3. McRae v. Commonwealth Disposals Commission (1951) 84 CLR 377:
   • Reasonable price may be inferred from market value or custom, allowing partial enforcement of contract if possible.

Legal Analysis

• Price to be fixed by X:
  • Since X refused to fix the price, the method of price determination failed.
  • The contract for both cars became unenforceable at the originally intended price.
• Delivery of first car:
  • B took delivery, assuming the contract was valid.
  • In the absence of a fixed price, A cannot compel return, but B must pay a reasonable price if willing to retain the car.
• Offer to pay reasonable price:
  • Under Section 10, B can pay a reasonable price for both cars.
  • A is then bound to deliver the second car if B pays such a reasonable price.
• Effectively:
  • The contract is partially enforceable at a reasonable price.
  • Neither party is at fault; the failure lies with the third-party valuer X.

4. Possible Judgement

• Held:
  1. B is not required to return the first car already delivered if he offers to pay a reasonable price for it.
  2. A must deliver the second car if B offers a reasonable price for both cars.
  3. The original contract price as fixed by X cannot be enforced due to X’s refusal.
  4. A reasonable price should be determined based on market value of the cars at the time of delivery.
• Legal Basis:
  • Sections 8, 9, and 10 of the Sale of Goods Act, 1930.
  • Case precedents on unenforceability due to uncertainty and reasonable price inference.

Summary Principle

“When the contract leaves price to be fixed by a third party who refuses to fix it, the buyer may offer a reasonable price, and the seller must deliver the goods accordingly; refusal of the third party does not automatically invalidate the contract.”

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