Any agreement does not form in the air with its way. An agreement contains two or more parties towards the contract. A person should express his desire to something to others. Section 2(a) states proposal (When one person signifies to another his willingness to do or to abstain from doing anything, to obtain the assent of that other to such act or abstinence, he is said to make a proposal).
Meaning and Definition:
The term offer is also called a proposal, every contract emerges from an offer which is the starting point of the agreement. The person who makes an offer is called is “offeror” and the person to whom the offer is the “offeree”.
Example: “B” offers a piece of land to “A” to start is his new company. Here B is the offeror and A is the offeree.
Section 2(b): When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.
Section2(c): The person making the proposal is called the “promisor”, and the person accepting the proposal is called the “promise”.
- Essential’s elements of an offer:
- Offer must be expressed or implied: An offer may be expressed or implied. If the offer is made with words, it is called “express offer”. If the offer is made in writing, then it is called a written offer. In case if there no words then it is called “implied contract”. The contract can be written or oral.
- It must create legal relations: An offer to be enforceable must create offer, consideration, and acceptance. offer for social or moral is no offer.
Example: “A” invites B for lunch and “B” failed to fulfil it, here B cannot sue A as does not create any legal obligation.
In the case of Balfour v. Balfour (1919): The Balfour was a civil servant in Ceylon. When he left for England, he promised his wife (plaintiff) to send 30 pounds per month, but he did not send the amount as promised. the plaintiff files a suit against her husband. lord Atkin dismissed the above suit as it not actionable on the ground that it does not raise legal obligation.
- Terms must be clear and certain: In any agreement, terms and conditions should be clear, in the manner of the conditions it shouldn’t be half baked, and it should give the right accordance to the agreement.
Section 29: Agreements void for uncertainty. Agreements, the meaning of which is not certain, or capable of being made certain, are void.
- It may be specific or public: contracts are made for a specific person or particular group; it is called a specific offer. If it made to the public in general or community then it is called a public offer
Case law: Carlill v. Carbolic smoke ball co. (1893), the company made a product called smoke ball which cures influenza, the company made an advertisement stating that, if the medicine does not cure the person after taking medicine, the company will give 100 pounds to the victim.
The bench overruled the corporation’s argument and told that there was a fully binding agreement for £100 with Mrs. Carlill.
Difference between offer and invitation to offer.
|Offer||Invitation to offer|
|· T signifies intention or willingness to enter into a contract||· It does not signify such intention|
|· It is made to get acceptance||· It is made to get an offer|
|· It is a proposal precedent to acceptance||· it is something precedent to offer|
|· It gives rise to legal consequences||· There are no legal consequences|
- It must be communicated: Without full information of the agreement is void. The communication can be express/implied. it may be communicated by words or signs or any means. Communication of offer completes When it comes to knowledge of the offeree
Case law: Laxman Shukla v. Gowri Dutt 195, in this instance the defendant sent his servant(plaintiff) in search of his nephew, afterward he announced that whoever brings his nephew back they will be rewarded. The plaintiff brought him and claimed the reward. It was held that not enforceable as the communication of offer is no communicated to the offeree.
- Revocation of the offer.
A proposal may be withdrawn at any moment prior to the communication of its acknowledgment is complete as against the proposer, but not afterward. A proposal may be withdrawn at any time earlier the communication of its acceptance is complete as against the proposer, but not afterward.” An acceptance may be withdrawn at any time before the communication of the approval is complete as against the acceptor, but not afterward. Illustrations: X proposes, by a letter sent by post, to sell his residence to Y. X proposes, by a document sent by post, to sell his house to Y.” X accepts the proposal by a letter sent by post. Y agrees to the offer by a document sent by post.” X may invalidate his proposal at any time before or at the instant when Y posts his letter of acceptance, but not afterward. X may revoke his proposal at any time before or at the moment when Y posts his letter of approval, but not afterward.” Y may revoke his acceptance at any time before or at the moment when the letter communicating it reaches X, but not afterwards. Y may revoke his acceptance at any time before or at the moment when the document communicating it reaches X, but not afterwards.”
- Cross offers:
When two persons/parties make similar offers to each other without the knowledge of the counteroffer is called a “cross offer”. and either of them cannot be regarded as an acceptance and hence, it is an incomplete contract. the contract to complete, a fresh acceptance from either of the two must be made.
- Standing or open or continuing offer:
An offer that is allowed to remain open for acceptance of a particular period is known as a standing, open, or continuing offer.
For example, an offer to supply 500bags of rice from 1st Jan to 31st Dec, following orders which may be placed from time to time, is a standing offer.
Acceptance of an offer is an integral part of any agreement, which completes the half process of the contract.
A contract is created only when the offer is accepted, At that stage, the offeror is free to revoke the offer and the offeree is free not to accept the offer or to reject the offer. After the acceptance of the offer, it becomes a promise which if all the elements of the contract are satisfied, then both the parties are bind to the agreement. After acceptance, each party becomes legally bound by the promise made by him through the medium of offer and acceptance of it.
Section 2(B) of the Indian contract act. 1872 defines: when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.
- An acceptance must be absolute and unqualified: The acceptance of the offer must be absolute and unconditional.
Example: A offers his car to B for lease from 1st Jan 2002. But B accepts the offer provided the possession is offered from 1st Dec 2001. it is no acceptance.
Section 7: an acceptance gives rise to a binding contract only when it is unqualified and coincides in its terms with those of the offer.
- Acceptance should be expressed in the usual manner or as per the mode prescribed:
- Where no mode prescribed: section 7 (2) of the Indian contract act provides: be conveyed in some usual and reasonable manner unless the proposal specifies how it is to be accepted. If the proposal prescribes a way it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his offer shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance.
- Where mode is prescribed; where the offeror prescribes the mode in which the offer is accepted, the acceptance must be made in the way the offer is to be accepted, the acceptance will not be valid if the acceptance is not in the prescribed manner.
- Reasonable time: Any offer made will be available for a particular period. In the absence of a specific period, the offer for a particular period. The offer should be accepted within the given frame of time.
- Before revocation of offer: Offeror has the right to withdraw the order before the acceptance of the order, an offer can be withdrawn before the knowledge of the approval is posted but not afterward.
References: Dr. s.s.srivastava ( law of contract ).
 Balfour v. Balfour (1919
 Carlill v. Carbolic smoke ball co. (1893)
 Laxman Shukla v. Gowri Dutt 1957