Table of Contents
- Proposal or Offer
- Essentials of Valid Proposal
- Types of Offers
- Communication of Offer
- Revocation of Offer
- Acceptance
- Communication of Acceptance
- Revocation of Acceptance
- Agreement
- Contract
Proposal or Offer – Section 2(a)
Definition: “When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.”
Essentials of a Valid Proposal:
- Intention to Create Legal Relations: The offer must aim at establishing a legal relationship.
- Clarity and Definite Terms: The proposal should not be vague and have clear and definite terms. Example: Offering to sell “oil” without specifying the type is invalid.
- Communication to Offeree: The offeree must be aware of the offer for it to be valid.
- No Automatic Acceptance: The non-compliance of any terms of the offer cannot lead to automatic acceptance of the offer. Hence it cannot say that if acceptance is not communicated by a certain time it will be considered as accepted.
Types of Offers
- Express Offer: It is a kind of offer which is made through words—spoken or written.
- Implied Offer: It is a kind of offer which is inferred from conduct. Example: Boarding a bus implies acceptance to pay the fare.
- Cross Offer: Cross offer is an identical offers made by both parties, unaware of each other’s offer.
- Counter Offer: Counter offer is rejection of the original offer by proposing new terms.
- Specific Offer: Specific offer is a kind of offer which is directed to a particular person.
- General Offer: General offer is a kind of offer made to the public at large.
- Standing Offer: Standing offer is a kind of offer which is open for acceptance over a period of time.
Case- Carlill vs Carbolic Smoke Ball Co. [(1893) 1 QB 256]- In this case the company advertised a reward of £100 to anyone who used their product and still contracted influenza. Mrs. Carlill did and she was contracted with influenza. Then she sue the company for the amount. It was held that it is the general offer and company is bound to give reward to Mrs. Carlill.
Communication of Offer – Section 4
“The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.”
Case: Lalman Shukla vs. Gauri Dutt [(1913) XL ALJ 489]-In this case the defendant`s nephew absconded from home. He sent his servant to find his nephew. After the servant had left in the search of the boy, the the defendant announced that he will give reward to the person who will find his nephew. Servant was unaware of the offer found the nephew. In this case it was held that servant was not eligible for reward because offer was never communicated to him.
Revocation of Offer – Sections 5 & 6
Section 5: A proposal can be revoked anytime before acceptance is complete against the proposer.
Modes/ Rule of Revocation (Section 6):
- Notice of Revocation: Revocation must be communicated before acceptance.
- Lapse of Time: An offer lapse if it is not accepted within prescribed or reasonable time.
- Non-fulfillment of Conditions: Offer fails if conditions attached to the offer aren’t fulfilled.
- Death or Insanity: If the offeror dies or becomes insane before acceptance then the offer is considered to be revoked.
Acceptance – Section 2(b)
“When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.”
Essentials of Valid Acceptance:
- Communication: Acceptance must be communicated to the offeror.
- Absolute & Unqualified: A valid acceptance must match the terms of the offer without modifications.
- Prescribed Mode: An acceptance should be as per prescribed or usual manner.
- While Offer is Subsisting: Acceptance must be made while the offer is still subsisting.
Case- Felthouse vs Bindley [(1862) EWHC CP 735]- In this case the plantiff write a letter to his nephew in order to buy his horse. In the letter he wrote that , “If i hear no more about the horse, I will consider the horse to be mine”. The defendant does not tell anything, It is not a valid acceptance.
Communication of Acceptance – Section 4
- Against Proposer: When it is out of the acceptor’s control (e.g., posted).
- Against Acceptor: When it comes to the knowledge of the proposer.
Revocation of Acceptance – Section 5
According to Section 5 of the Indian Contract Act, an acceptance can be revoked before the offeror receives communication of the acceptance. This means that the acceptor can revoke the acceptance before the offeror becomes aware of the communication of acceptance.
Agreement – Section 2(e)
“Every promise and every set of promises forming the consideration for each other is an agreement.”
Example: A agrees to pay ₹2000 to B for a service. This is a valid agreement.
Contract – Section 2(h)
“An agreement enforceable by law is a contract.” Not all agreements are contracts, only those which can be enforced by law qualify as such under the Indian Contract Act.
References:
- Indian Contract Act, 1872- Bare Act
- Law of Contract-I by R.K. Bangia
