Principle When one person signifies to another his willingness to do or abstain from doing anyt...........

Indian Contract Act (ICA)1872 Formation of Contract

Principle: When one person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of that person to such an act or abstinence, he is said to have made a proposal.

Fact: “Ramanuj telegraphed to Shyam Sunder, writing: “Will you sell me your Rolls Royce CAR? Telegram the lowest cash price.” Shyam Sunder also replied by telegram: “Lowest price for CAR is Rs. 20 lakh.” Ramanuj immediately sent his consent through telegram stating: “I agree to buy the CAR for Rs. 20 lakh asked by you.” Shyam Sunder refused to sell the car.

He cannot refuse to sell the CAR because the contract has already been made.

He can refuse to sell the CAR because it was only invitation to offer and not the real offer

It was not a valid offer because willingness to enter into a contract was absent

None of these

Explanation:

When Shyam replied that lowest price for car is 20 lakhs that was an invitation to offer and Ramanuj had to make another offer to which Shyam could have given an acceptance or refusal.
Hence, option 2 is the correct answer.