OFFER AND ACCEPTANCE

OFFER OR PROPOSAL

OFFER OR

PROPOSAL

Proposal or offer is the starting point in the process of making

an agreement.
Definition: as per section 2(a)
When one person signifies another his willingness to do Or
abstain from doing any thing , with a view to obtain the assent of
that other to such act or abstinence , he said to make a proposal
The person who make the proposal is called the offerer or
promiser and the person to whom the proposal is made is called
the offeree Or promisee.

ESSENTIALS OF A

VALID OFFER

1. Intention to create Legal Relationship ( Not invitation for a

dinner b/w A& B)
2. Definite terms ( house on lease if it is put under thorough
repair as per present style (vague)
3. Statement of Intention and Invitation to offer
4. Offer must be communicated
5. An offer can be Specific Or General
6. Offer with Special Conditions
7.Cross offers Or counter offers

1.INTENTION TO CREAT LEGAL

RELATIONSHIP
An offer must be such that ,when accepted ,it must create a valid contract. An
offer with social or religious connotation does not constitute a valid contract.
( Kalai Haldar Vs, Sheik) A invited B for a dinner . On Bs failure, A Filed a
suit against B for the price of the Non-consumed food. As suit was dismissed
on the ground that his invitation of B for dinner did not create any legal
relationship between himself and B
2.Definite Terms
(Offer must be Specific)Vague and ambiguous terms
make the offer invalid. ( E.g an offer to take a house on lease for three years
for # 285 , if the house is put in to thorough repair and drawing rooms are
thoroughly decorated as per present style is Vague( Taylor Vs. Portington)
When a proposal is made to sell an item that is not sufficiently identified , then
there can not be a contract. ( E.g. I will sell you watch for Rs.1200/- ,even if a
prospective buyer accepted , it may not be accepted by court as the certainty
of the item to be sold (what watch etc.. Details)

CONTD.. ESSENTIALS OF AN OFFER

3. Statement of intention and Invitation to offer:
A mere statement of intention does not constitute a binding promise ,even though a
person to whom made it acts up on it. E.g A father wrote to his would be son in-law
,that his daughter have a share of what ever he had left .It was held that it was merely a
statement of intention and not a valid offer.(Re Ficus)
similarly , an invitation to offer does not constitute a valid offer.Price lists
,catalogues,advertisements ,window display, tenders ,prospectus are merely statements of
intention and not a valid offer.
4. Offer must be Communicated An offer ,to be complete must be communicated, to
the person to whom it is made.Acceptance is not possible unless offer is brought to the
knowledge of the OFFEREE.
No offer, in ignorance of the offer, confer any right on the acceptor.( defendentss Nephew
absconded home, He sent servant for searching, later announced hand bills and offered
Rs.501 to any body who discover the nephew) Lalman Shkula Vs. Gauri datt (1913)

. CONTD. ESSENTIALS OF AN
OFFER
5. An Offer must be Specific or general
An Offer must be specific ,means addressed to a specific person. But the modern position is that
the offer can be made to the world at large. It can therefore be general offer. But the contract is
not made with ALL the world , but ONLY with that person who come forward and performs the
conditions of the proposal.(carlill Vs. Carbolic Smoke ball company(1893).
6. Offer with special Conditions
If there are special terms or conditions in an offer+, these must be brought to the notice of the
offeree at the time of making a proposal.A conditional offer lapses when the condition is not
accepted by the offeree.
7. Cross offers and counter offers.
When the parties to a contract make identical offers to each other, in ignorance of each others offer,
the offers are said to be CROSS OFFERS
In such a case , the court will not construe one offer as the offer and the other as acceptance, and
as such there can be no concluded contract.

A Counter Offer
is a rejection of original Offer. It is a new offer and needs
acceptance by the original promisor before a contract is made. This point was
made clear in Hyde Vs, Wrench(1840) An offer to sell a farm for # 1000 was
rejected by the plaintiff , who offered #950 for it.This was turned down by the
offerer and then the plaintiff agreed to pay #1000 , holding that the defendant
was not bound by any such acceptance. The defendant was not bound by any such
acceptance., as it was not accepted earlier( when it was offered for #1000)
Effect of Counter Offer.
A counter offer by the offeree terminates the original offer in the same manner as a
flat rejection of the proposal.The courts usually say that any material deviations
from , or addition to, the original offer is a counter offer.( selling house qualified
acceptance or conditional acceptance is not an acceptance as per court)

OFFER WITH SPECIAL CONDITION

If there are some special terms or conditions in an offer, these must be brought
to the notice of the offeree at the time of making a proposal. It should be
understandable by ordinary persons.
Standing offer Open offer
Some times a proposal may take the form of a
continuous offer. Such offers are called Standing offers or Open Offers. It
may be in the form/nature of a tender to supply certain commodity for a certain
period. The quantity to be supplied may or may not be specified , some times.
Mr. X signed a tender addressed to London County Council (L C C ) agreeing , on
acceptance, to supply all the goods specified in the schedule, to the extent
ordered. The tender was accepted , but the LCC did not order any goods. It was
held that LCC was not bound to order any goods, but if it(LCC) did so , Mr. X was
bound to supply the goods as and when ordered. ( Percival Ltd. Vs. L C C (1918)

TERMINATION OF AN OFFER
Section 6 of the Indian Contract Act deals with various modes of
termination of an OFFER. It is also termed as revocation or Lapse
of an offer ( i.e. end of an offer)
1. by Notice of revocation
An offer can be revoked any time before acceptance, offeror
doing so by giving notice of revocation to offeree. A revocation of
offer must be communicated to the offeree, otherwise revocation
does not prevent acceptance. And it should be from the Offeror
or from his duly authorized agent .
2. By lapse of time A proposal is revoked by lapse of time
prescribed in that proposal for its acceptance. If no time is
prescribed that proposal is revoked by the lapse of reasonable
time

 3. By the failure of the acceptor to fulfill a condition precedent to

acceptance.
The offer will naturally be revoked if the acceptor fails to fulfill
that precedent.
4. By failure to accept according to the mode prescribed.
if no mode is prescribed , acceptance should as per some reasonable
mode or usual mode

5. by death or insanity of the offeror.

6. By rejection by the offeree
7. by subsequent illegality or destruction of subject matter.

ACCEPTANCE
If the Offer is starting point of forming an Agreement , ACCEPTANCE represents
the end point of the process.
Definition of Acceptance
When the person to whom the offer is made signifies his assent there to , the
proposal is said to be accepted.
Essentials of VALID Acceptance:
Communication (acceptance must be communicated)
Absolute ( must be absolute and unqualified) conditions/variations/reservations
should NOT be there.
Express Or Implied
By DEFINITE Person
Mode of acceptance. (mail reply) or sms etc. or over phone??

CONTD ESSENTIALS OF
ACCEPTANCE
No mental acceptance ( mere mental acceptance is no
acceptance) external manifestation like speech, writing or other
Act.
When the offer is in force ( before the offer lapses)
Preceded by Offer ( acceptance with out offer is not acceptance)

CONTINGENT CONTRACT
When performance of a contract is not immediately due, but it
becomes so only after the happening or non-happening of some
contingency.( i.e. some uncertain event), it is known as a
CONTINGENT CONTRACT. e.g. The contract of Insurance , contract
of Indemnity and guarantee
It is a CONDITIONAL CONTRACT.
The happening of the event (condition) is NOT merely the will of
the promisor.

WAGERING AGREEMENT
As per section 30 of the Indian Contract Act 1872, agreements by
way of wager are Void.
Definition: Wager is a promise to give money or moneys worth up
on determination or ascertainment of an uncertain event
Essentials of a wager:
Uncertain event
Mutual chances of gain Or Loss
Neither party to have control over the event
The promise must to pay money or moneys worth.