OFFER AND ACCEPTANCE Offer or Proposal Essential Elements of a Valid Contract discussed in detail Section 2(a) defines an offer as, “ a proposal made by one person to another to do an act or abstain from doing it. ” The person who makes the offer is known as the promisor or offer or and the person to whom an offer is made is known as the promisee or the offeree.

Thus an offer can be analysed into two parts comprising of :- (a) a promise by the offeror, and (b) a request to the offeree for something in return of the offer. 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.

Determination of an Offer (Test of an offer) Every proposal made by an offeror is not legally regarded as an offer. Three tests are applied to determine whether or not an offer has actually been made: 1. Does the offer show a clear intention on the part of the offeror to be bound by it. 2. Whether the proposal is definite? 3. Whether the offer is communicated to the offeror?

Offer must be distinguished from (i) Mere invitation to an offer. Offer should be distinguised from a mere invitation to an offer. Catalogue of goods, an advertisement inviting tenders or application for a job, a prospectus of a company; an auctioneer’s request for bids or display of goods in showcase with prices marked upon them etc., are mere invitations to offers and not actual offers.

(ii) Mere statement of Intention : A declaration by a person that he has the intentions to do something does not amount to an offer. The person making the declaration will not be liable to the person who has suffered some loss because of relaince on the delcared intention. Seller cannot be held liable for any loss caused to a prospective buyer by not adhering to the advertisement for sale of goods by auction at a particular time and place because the advertisement was a mere statement of intention (Hari V. Naickersor (1873)

Essentials of a Valid Offer 1. The offer must disclose an intention to create legal relations : If the offer does not contemplate to give rise to legal relationship, it is no offer in the eyes of law, e.g. invitation to a dinner which has no intention to create relationship. An offer must impose some legal duty on the party making it.

2. The terms of offer must be clear and certain and not indefinite, lose or ambiguous : The terms of the offer must be definite, unambiguous, clear and certain and not lose and vague. The offer must not be based on a condition which is uncertain or incapable of performance. Though the proposer is free to lay down any terms and conditions in his offer, but they should be certain and legal, otherwise its acceptance will amount to a vague agreement which the courts will not enforce. But, where an agreement contains its own machinery for clarifying vague term, the agreement will not be vague in Law. (Foley V. Classque Coaches Ltd.) (1934). In some circumstances, the courts might imply a term based upon the presumed, intention to the parties.

3. Offer may be general or specific : An offer may be made to definite person or persons or to the world at large. When it is made to some specific person or persons it is called a specific offer. When it is made to the world at large it is called a General offer. A specific offer can be accepted only by the person to whom the offer has been made and in the manner, if any specified in the terms of the offer. But a general offer can be accepted by any persons having notice of the offer by doing what is required under the offer. The most obvious example of such an offer is where a reward is publicity offered to any about that object, who will recover a lost object or wll give some information, there the party claiming the reward has not to prove anything more than that he has performed the conditions on which the reward was offered. The time table of railways is a general proposal to run trains according to the table, which is accepted by an intending passenger tendering the price of the ticket.

4. Offer may be express or implied: An offer made by words, spoken or written is termed as an ‘ express offer ’. Example : If A says to B that he is willing to sell him his car for a sum of Rs. 10,000 it is an express offer. ‘ Imlied offer ’ means an offer made by conduct, an offer may also be implied from the conduct of the parties or the circumstances of the case. This is known as an implied offer. When one person allows the other to perform certain acts under such circumstances that nobody would accept them without consideration it will amount to an offer by conduct and the permission of the party, who is benefitted by such performances, will amount to his acceptance.

5. Offer must be communicated : The offer, to be valid must be communicated to the offeree. An offer becomes effective only when it has been communicated to the offeree so as to give him an opportunity to accept or reject. An acceptance of the offer, in ignorance of the offer, is no acceptance and, therefore, no valid contract can arise.

6. Statement of Price : If a party makes a statement of price, it cannot be taken as an offer to sell at that price. The decision made in case of Harvey and Facey, is important to note in this connection. Example : A asks B, “ Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid ”. B replies telegraphically “ lowest price for Bumper Hall Pen £ 900 ”. A responds by telegram “ We agree to buy Bumper Ball Pen for the sum of £ 900 asked by you ”. It was held that no contract was concluded between A&B.

6. Offer nust be made with a view to obtain the consent : The offer must be made with a view to obtain the consent of the other party and not merely with a view to disclosing the intention of making an offer. A proposer cannot also dictate terms under which the offer can be refused. At best, he can lay down the mode of acceptance.

7. Offer should not contain a term the non- compliance of which would amount to acceptance : The offer should not contain a term the non- compliance of which would amount to acceptance for example a person cannot make such an offer that if the acceptance of the offer is not received upto Monday, the offer would be presumed to have been accepted.

8. Special conditions attached to an offer must also be communicated : Though an offeror is free to lay down any terms and conditions in his offer, but it is the responsibility of the offeror to bring all the terms of the offer to the notice of the other party, the acceptor is bound only for those conditions which (i) have expressly communicated to him or (ii) have so clearly been written that he ought to have known them or (iii) have reaonsable notice of the existence of those terms. He will also be bound by the conditions if he knew of their existence, though they are in a language unknown to him. It is his duty to get them explained. Examples : (a) A passenger had purchased a ticket for a journey. On the back of the ticket, there were certain terms and conditions. One of the terms was that the carrying company was not liable for losses of any kind. But there was nothing on the face of the ticket to draw the attention of the passenger to the terms and conditions on the back of ticket. Held, the passenger was not bound by the terms and conditions on the back side of the ticket. (Henderson V. Stevenson) (1875).