CHAPTER 2

OFFER AND ACCEPTANCE

OFFER AND ACCEPTANCE

Definition of offer: An offer is a proposal by one party to

another to enter into a legally binding agreement with him.
Example: Ajay says to Vijay, Will you pruchase my cre for Rs.
50,000?
The person making the offer is known as the offeror, Proposer or
Promisor and the person to whom it is made is called the offeree or
proposee.
When the offeree accepts the offer, he is called the acceptor or
promisee.


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Classification of offers or kinds of offers:

Express offer: the offer made by using words spoken or written is

known as an express offer.
Implied offer: the offer which could be understood by a conduct of
parties or circumstances of case is called the implied offer.
Example: ATM, Bus, Train, Weighing machine etc.
Specific offer: When an offer is made to a specific person it is
called specific offer.
General offer: when an offer is made to the world at large, it is
called general offer.
Cross offer: when two parties make identical offers to each other,
in ignorance of each others offer, the offers are cross offers.
Example: A offers buy a letter to sell 100 tons of steel at Rs. 1000
per ton. On the same day B also writes to A offering to buy 100
tons of steel at Rs. 1000 per ton.
Continuous offer: offer which is open for a continuous period of
time. Also known as open offer or standing offer.
Example: A tender to supply goods as and when required, amounts
to a continuous offer.

Essential elements of an offer (Proposal):

1.

Two parties

2.

Communication

3.

Willingness

4.

With intention of obtaining assent

5.

Offer may be positive or negative

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2.
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Legal rules as to offer:

Offer must be such as in law is capable of being
accepted and giving rise to legal relationship.
Terms of offer must be definite, unambiguous and
certain.
Example: A says to B, I will sell you a car. A owns
three different cars. Offer is not definite.

Legal rules as to offer (cont.):

3. An offer may be distinguished from:
a) A declaration of intention and an announcement.
b) An invitation to make an offer or do business.

Case: Showcase
A person saw an electric iron in the showcase of a
shop. A label below the iron mentioned the price as
Rs. 1500. he had been looking for that model of
electric iron for a long time. He approached the shop
to buy one such iron. However, he was told that the
shop did not have that model in stock. The person
insisted that he be given the one in the display
window. Is the display of articles in the shop window
an offer?

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Note: Newspaper advertisement are not offer:

Case: An auctioneer advertised in a newspaper that a
sale of office furniture would be held on a certain date. A
person, with the intention to buy furniture, came from a
distant place for the auction but he auction was
cancelled. Can he file a suit against the auctioneer for his
loss of time and expenses?
Person cannot file suit for any loss against auctioneer.
Advertisement by auctioneer in newspaper is an invitation to make
an offer. Hence, it does not create any obligation or responsibility on
part of auctioneer.

Offer must be communicated.

Offer must be made with a view to obtaining the assent.
Offer should not contain a term the non-compliance of
which may be assumed to amount to acceptance.
A statement of price is not an offer.

1.
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2.

Tenders: A tender (in response to an invitation to

offer) is an offer and may be either
Tender as a definite offer: when tenders are invited
for the supply of specified goods or services.
Example: A invites tenders for the supply of 1,00,000
bricks. X, Y, and Z submit the tenders. A accepts Xs
tender. There is a binding contract between A and X.
Tender as a standing offer: where goods or services
are required over a certain period, a tender may invite
tenders as a standing offer which is a continuing offer.

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Acceptance: It is the manifestation by the offeree of his

willingness to be bound by the terms of the offer.
An offer when accepted becomes a promise. [sec 2(b)].
Acceptance may be Express or Implied.
Legal rules as to acceptance:
It must be absolute and unqualified.
It must be communicated to the offeror.
It must be according to the mode prescribed or usual and
reasonable mode.
It must be given within a reasonable time.
It cannot precede an offer.
It must show an intention on the part of the acceptor to fulfill
terms of the promise.
It must be given by the party or parties to whom the offer is made.
It must be given before the offer lapses or before the offer is
withdrawn.
It cannot be implied from silence.

Communication of offer, acceptance and

revocation
Mode of communication (sec 3): offer, acceptance or
revocation may be communicated by words spoken or
written or by conduct.
When is communication complete (sec 4):
communication of an offer is complete when it comes to
the knowledge of the person to whom it is made.
Example: A proposes, by a letter, to sell a house to B at
a certain price. The letter is posted on 10 th july. It
reaches B on 12th july.
The communication of the offer is complete when B
receives the letter, i.e. on 12th july.
Revocation: Revocation means taking back,
recalling or withdrawal. It may be a revocation of
offer or acceptance.

Time for revocation of offer and acceptance (sec 5):

A proposal may be revoked at any time before the
communication of its acceptance is complete as against
the proposer, but not afterwards.
An acceptance may be revoked at any time before the
communication of the acceptance is complete as against
the acceptor, but not afterwards.
Example: A proposes by a letter sent by post to sell his
house to B. the letter is posted on the 1st of the month. B
accepts the proposal by a letter sent by post on the 4th.
The letter reaches A on the 6th.
A may revoke his offer at any time before B posts his
letter of acceptance, i.e. , 4th but not afterwards.
B may revoke his acceptance at any time before the letter
of acceptance reaches A, i.e. 6th but not afterwards.


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Revocation or lapse of offer:

By communication of notice of revocation by the
offeror. [sec 6(1)]
By lapse of time. [sec 6(2)]
By non-fulfilment by the offeree of a condition
precedent to acceptance. [sec 6(3)]
By death or insanity of the offeror. [sec 6(4)]
If a counter-offer is made to it.
If an offer is not accepted according to the prescribed
or usual mode.
If the law is changed


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Rejection of offer:
Express rejection: The offeree may reject the offer
expressly i.e. by words written or spoken.
Express rejection is effective only when notice of
rejection reaches the offeror.
Implied rejection: Rejection of the offer is implied
by law:
Where the offeree makes a counter offer.
Where the offeree gives a conditional acceptance.