26.
The answer is: C
Explanation
The correct option is C: B made a counter offer that A rejected, and since the counter offer caused A's initial offer to lapse, there is no valid contract between A and B.
This option is correct, because it follows the principle that an offer lapses if a counter offer is made. A counter offer is considered a fresh offer, which must be accepted in order to give rise to a contract. In this case, A offered to buy B's motorcycle for Rs. 35,000/-, which was an offer communicated to B. B replied that the motorcycle may be bought for Rs. 45,000/-, which was a counter offer communicated to A. This counter offer implied that B was not willing to accept A's offer on its terms, and therefore he rejected it. A immediately let B know that the counter offer was not acceptable, which was a rejection communicated to B. Thus, the initial offer made by A lapsed by the counter offer made by B, and the counter offer made by B lapsed by the rejection made by A. Ten days later, B agreed to sell the motorcycle to A at Rs. 35,000/- and communicated his acceptance to A. This was not a valid acceptance of the initial offer, because the initial offer had already lapsed and could not be revived or accepted after making a counter offer. Therefore, there was no valid contract between A and B.
The other options are incorrect for the following reasons:
A: As B has accepted the initial offer made by A and communicated his acceptance to A, there is a valid contract between A and B. This option is incorrect, because it ignores the fact that B had made a counter offer that caused A's initial offer to lapse. B's acceptance of the initial offer after making a counter offer was not valid, as the initial offer was no longer open for acceptance.
B: B was only negotiating the price and once it was determined that A would only accept Rs. 35,000, B communicated his acceptance to A and this resulted in a valid contract between A and B. This option is incorrect, because it assumes that B's reply was not a counter offer but a mere inquiry or suggestion. However, this is not true, as B's reply clearly indicated that he was proposing a new price for the motorcycle, which was different from A's offer. This amounted to a counter offer, which rejected and terminated A's offer.
D: A failed to expressly revoke his initial offer, and hence B accepted A's initial offer resulting in a valid contract between A and B. This option is incorrect, because it assumes that A's initial offer remained valid until he expressly revoked it. However, this is not true, as A's initial offer lapsed by the counter offer made by B, which did not require any express revocation from A.
E: A's rejection of B's offer is a counter offer, and B's acceptance of A's counter offer resulted in a valid contract between A and B. This option is incorrect, because it confuses the roles of the parties and the nature of their communications. A's rejection of B's counter offer was not a counter offer but a mere refusal or denial. It did not propose any new terms or conditions for the contract, but simply expressed that he was not interested in B's counter offer. Therefore, it did not create any new offer that could be accepted by B.