Offer and Acceptance As a first step in the making of a contract there must be a ‘lawful offer’ by one party and a ‘lawful acceptance’ of the offer by the other party. Offer: Sections 2 (b) of the Contract Act, 2000 provide the legal definition of “offer”. According to which offer means a proposal made by one person to another with the intent of obtaining his/her acceptance to do or abstain from doing a work. Two elements of an offer: (i) Expression of one’s willingness to do or abstain from doing something; and (ii) Such expression should be made with a view to obtain the assent (acceptance) of the other person to the proposed act or abstinence. 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, pr proposee. When the offeree accepts the offer, he/she is called the acceptor or promisee.

Types of Offer Express and implied offer: An offer which is expressed in by words, written or spoken, is called an express offer. The offer, which is made by conduct or act, is called an implied offer. Specific and general offer: An specific offer is one which is made to a specific or definite person. It can only be accepted by the person to whom it is made. A general offer is one which is not made to any specific person, but a public at large. It can be accepted by any person who having the knowledge of the offer comes forward and acts accordingly. Essentials and Legal Rules for a valid offer: 1.The terms of the offer must be definite and clear. 2.The offer must be communicated to the other party. 3.The offer must express the final willingness of the offeror. 4.The offer must be made with a view to obtain the consent of the offeree. 5.The offer must be capable of creating legal relationship when accepted. 6.The offer must be distinguished from an invitation to receive offer: Advertisements, tenders or bidding, auctions, company’s prospectus, display of price and goods are not valid offers.

Contd.. 7. The offer must be distinguished from mere an answer to a question or mere a statement of intention. 8. The offer may be made with or without conditions. 9. The offer may be made to a particular person or to a particular group of persons or to the world at large. Acceptance: An acceptance is the consent given to the offer and a binding contract between the offeror and offeree comes into existence on the acceptance of the offer. Sections 2 (c) of the Contract Act, 2000 provide the legal definition of “acceptance”. According to which acceptance means the consent given by the person, to whom the offer is made, to an offer in a sense as taken by the offeror. Thus, an acceptance is the manifestation by the offeree of his willingness to be bound by the terms and conditions of the offer. When the offeree signifies his/her assent to the offeror, then the offer becomes a promise.

Legal Rules for a Valid Acceptance 1.The acceptance must be communicated and such communication must be made by a person who has the authority to accept. 2.The acceptance must be communicated to the offeror or to the person authorized by the offeror. 3.The acceptance must be absolute and unqualified. It means the acceptance must be for all the terms stipulated in the offer and without any condition by the person accepts the offer. 4.The acceptance must be according to the mode or manner prescribed or usual and reasonable mode or manner, if no mode or manner is prescribed. 5.The acceptance must be given within a prescribed time or within a reasonable time, if no time is prescribed. 6.The acceptance cannot be presumed from silence. 7.The acceptance must show an intention that the accepter is willing to fulfil the terms and conditions of the offer. 8.The acceptance must be given before the offer lapses or before the offer is withdrawn.

Communication and Revocation of Offer and Acceptance Revocation of Offer and Acceptance: Section 8 of the Contract Act, Revocation means “taking back”, “recalling” or “withdrawal”. An offer may be revoked at any time before the communication of its acceptance is complete as against the offeror. Its revocation takes effect only when the revocation is communicated to the offeree. An acceptance may be revoked at any time before the communication of the acceptance is complete for the acceptor. The communication of revocation of acceptance must reach the offeror earlier than the acceptance itself. If both the communication reach to the offeror at the same moment, the acceptance will be deemed to have been revoked.

Lapse of an Offer An offer may come to an end in any of the following ways as stipulated in Section 9 of the Contract Act: 1.By communication of notice of revocation. 2.By lapse of time. 3.By failure to accept condition precedent. 4.By the death or insanity of the offeror. 5.By counter-offer by the offeree. 6.By not accepting the offer, according to the prescribed or usual mode. 7.By rejection of the offer by the offeree. 8.By change in law.