OFFER AND ACCEPTANCE

A contract is an agreement enforceable by law.

An agreement is every promise and every set of promises forming

considerations for each other.

A proposal when accepted becomes a promise.

An offer or proposal is the starting point for an agreement or

contract.

Section 2 defines the proposal as under:

‘When one party signifies to the other party his willingness to

do or to abstain from doing anything with a view to obtain the
assent of the other party, he is said to make a proposal’

Three essential elements of an offer-

-must be made to the other person or party

-with the objective of obtaining assent
-expression of willingness to do or to abstain

Example- Virat offers to sell his motorcycle to Arun for Rs 30000/-

which Arun accepts. Virat is offeror and Arun is offeree.

An offer is different from

a) Prospectus
b) Advertisement for promotion
c) General enquiry
d) Announcement for sale or auction
e) An invitation for offer
f) An announcement for scholarship to the best students

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Kind of offers

To whom offer madeHow the offer made

1.General offer Express offers

2.Specific offers Implied offers
Example-
- A promises to pay Rs 1000 to anyone who brings back his missing dog.
- A promises to pay Rs 1000 to B if he brings back his missing dog

Example-

- A offers to sell his laptop for Rs 20000 to anyone who wishes to buy
the same
- Going to doctor for treatment, travelling in Rail, buying books from
shops, etc

Essential features of a valid offer: -

1. Intention to create legal relationship

2. Should be specific and definite and not vague.
3. Must be communicated to the offeree.
4. Must be made with a view to obtain the assent of the other party.
5. Can be conditional (time bard, revocation of offer, specific mode of
submission of acceptance,)
6. Must not contain a term such as non-compliance would mean
acceptance (Example- ----if I do not receive a reply by Monday, it
will be presumed that you have accepted the offer)

Other types of offer

Counter offer-When a person gives his acceptance to an offer with

some modifications of the proposal, the same is called a counter offer. A
counter is rejection of the original offer and the offeree thereby, make
an offer to the original offeror.

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Example- ABC company offers to sell one of their factory and offers XYZ
company for Rs 200 Crores provided all the employees are retained and
there will be no retrenchment. The payment terms were Rs 150 upfront
and the balance on transfer of ownership of the factory. XYZ indicated
that they were ready to accept provided the upfront payment was Rs
100 Crores only and with 15% retrenchment of the employees.

Cross offer- When the two parties make identical offer to each other,
in ignorance of each other’s offer, such offers are known as cross offer.
this does not constitute acceptance of one’s offer by the other.

Example- Diamond enterprise offered to Kumar and Co to buy 1000

Tons of coal at Rs 9000 per ton. On the same day Kumar and Co offered
Diamond enterprise to sell 1000 Tons of coal at Rs 9000 per ton.

Open offer- rate contracts

Laps of offers
-on expiry of the validity of offer
-when the offer becomes illegal/opposed to govt policy
-when either offeror or the offeree dies or become insane before the
offer is accepted,
-When an offer lapses by the counter offers
-when the offeror revokes his offer before the offer is accepted.

Acceptance of the proposal/offer

- Acceptance must the absolute and unconditional

- Must be communicated to the offeror
- Must be made within stipulated/reasonable time
- Must be submitted according to the mode prescribed in the offer
- Must be given before the offer is revoked
- Silence does not imply acceptance
- Must be in response to an offer
- Must be made by the offeree only

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COMMUNICATION OF OFFER,ACCEPTANCE AND REVOCATION

Communication of offers

- Written/post
- Mail/fax
- Telephone
- Tender notice
- Advertisement

Communication of an offer is complete as soon as it comes to the notice

of the offeree.

Communication of acceptance
When the acceptance is communicated as per the mode specified
in the offer. Communication is complete when it reaches the
proposer as to be out of the power of the acceptor to withdraw it.

Communication of revocation of the proposal

A proposal may be revoked at any time before the communication of

acceptance is complete,but not afterwards.
Revocation of bid in auction sale- A bid is only an offer and is rejected
by a higher bid. A bid can be withdrawn at any time before the fall of
the hammer.
Revocation of standing offers-a standing offer may be revoked /replaced
by a new offer for future procurements. But orders already placed
against the standing offer cannot be revoked.
Modes of revocations of offers
- By notice of revocation
- By lapse of time
- Non fulfilment of certain conditions
- By death or insanity
- By counter offer
- By not complying with the prescribed mode of submission of
acceptance
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