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There must be a concluded contract in compensation claim for loss and damages

In Vedanta Limited V.  Emirates Trading Agency LLC, the Supreme Court held that Section 7 of Indian Contract Act, 1872 provides that, in order to convert a proposal into a contract, acceptance must be absolute and unqualified. Existence of a concluded contract is a sine qua non in a claim for compensation for loss and damages under Section 73 of Act arising out of a breach of contract. If instead of acceptance of a proposal, a counter proposal is made, no concluded contract comes into existence. In U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd., Apex Court observed that, material alterations in contract make a world of difference to draw an inference of concluded contract.

Fulcrum of entire controversy is draft agreement dated 26th October, 2007 marked Exhibit 8-A, for supply of phosphoric acid by Appellant to Respondent. Proposal of Respondent, led to a counter proposal by Appellant. There was no acceptance of proposal by Appellant giving rise to a concluded contract. Quantity and duration of supply, therefore, remained in realm of uncertainty and was never agreed upon so as to give rise to a concluded contract. In absence of a concluded contract between parties having been established by Respondent, claim under Section 73 of Act was not maintainable. Supreme Court set aside Impugned orders and allowed the appeals.

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