MEANING OF OFFER/PROPOSAL
Section 2(a) of
Indian contract act “when one person signifies to another person his
willingness to do or abstain from doing with a view to obtain of assent of that
other person”.
Some features
or essentials of such an offer
· The
person making the offer/proposal is known as the “promisor” or the “offeror”.
And the person who may accept such an offer will be the “promisee” or the
“acceptor”.
· The
offeror will have to express his willingness to do or abstain from doing an
act. Only willingness is not enough. Or simply a desire to do/not do something
will not constitute an offer.
CLASSIFICATION OF OFFER
· There
can be many types of offers based on their nature, timing, intention, etc. Let
us take a look at the classifications of offers.
GENERAL OFFER
·
A
general offer is one that is made to the public at large. It is not made any
specified parties. So any member of the public can accept the offer and be
entitled to the rewards/consideration.
·
Say
for example you put out a reward for solving a puzzle. So if any member of the
public can accept the offer and be entitled to the reward if he finishes the
act (solves the puzzle.)
SPECIFIC OFFER
· A
specific offer, on the other hand, is only made to specific parties, and so
only they can accept the said offer or proposal. They are also sometimes known
as special offers.
· Like
for example, A offers to sell his horse to B for Rs 5000/-. Then only B can
accept such an offer because it is specific to him.
ESSENTIALS OF A VALID OFFER
Here
are some of the few essentials that make the offer valid.
1) Offer must create Legal
Relations:
·
The
offer must lead to a contract that creates legal relations and legal
consequences in case of non-performance.
·
Say
for example a dinner invitation extended by A to B is not a valid
offer.
2) Offer must be Clear, not Vague:
·
The
terms of the offer or proposal should be very clear and definite. If the terms
are vague or unclear, it will not amount to a valid offer.
· Take
for example the following offer – A offers to sell B fruits worth Rs
5000/-. This is not a valid offer since what kinds of fruits or
their specific quantities are not mentioned.
3) Offer must be Communicated to the Offeree:
·
For
a proposal to be completed it must be clearly communicated to
the offeree. No offeree can accept the proposal without knowledge of
the offer.
4) Offer may be Conditional:
·
While
acceptance cannot be conditional, an offer might be conditional. The offeror
can make the offer subject to any terms or conditions he deems necessary.
· So A can offer to sell goods to B if he makes half the payment in advance. Now B can accept these conditions or make a counteroffer.
5) Offer cannot contain a Negative Condition:
·
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.
· Example: A offers to sell his cow to B for 5000/-. If the offer is not rejected by Monday it will be considered as accepted. This is not a valid offer.
6) Offer can be specific or general:
· As we saw earlier the offer can be to one or more specific parties. Or the offer could be to the public in general.
7) Offer may be Expressed or Implied:
·
The
offeror can make an offer through words or even by his conduct. An offer which
is made via words, whether such words are written or spoken (oral contract) we
call it an express contract.
MEANING
& DEFINITION OF ACCEPTANCE
·
When
a person to whom the offer is made, gives his acceptance, the offer is said to
be accepted. An offer becomes a promise or an agreement only after its
acceptance.
·
According To Sec 2(a) “When the person to whom the proposal is
made signifies his assent there to, the proposal is said to be accepted. A
proposal when accepted becomes a promise.”
RULES
FOR ACCEPTANCE
1)
Acceptance can only be given to whom the offer was made In the case of a
specific proposal or offer; it can only be accepted by the person it was made
to. No third person without the knowledge of the offeree can accept the offer.
2)
It has to be absolute and unqualified Acceptance must be unconditional and
absolute. There cannot be conditional acceptance that would amount to a
counteroffer which nullifies the original offer. Let us see an example.
3)
Acceptance must be communicated for a proposal to become a contract; the
acceptance of such a proposal must be communicated to the promisor. The
communication must occur in the prescribed form or any such form in the normal
course of business if no specific form has been prescribed
4)
It must be in the prescribed mode Acceptance of the offer must be in the
prescribed manner that is demanded by the offeror. If no such manner is
prescribed, it must be in a reasonable manner that would be employed in the
normal course of business.
5)
Implied Acceptance Section 8 of the Indian Contract Act 1872 provides that
acceptance by conduct or actions of the promisee are acceptable. So if a person
performs certain actions that communicate that he has accepted the offer, such
implied acceptance is permissible.
6)
Rejected offers can be accepted only, if renewed: Offer once rejected cannot be
accepted again unless a fresh offer is made.
7)
Acceptance must succeed the offer: Acceptance must be given after receiving the
offer. It should not precede the offer. In a company shares were allotted to a
person who had not applied for them.
COMMUNICATION
OF OFFER AND ACCEPTANCE
COMMUNICATION
OF OFFER
Communication
of Offer Section 4 of the Indian Contract Act 1872 says that the
communication of the offer is complete when it comes to the knowledge of the
person it has been made to.
So
when the offeree (in case of a specific offer) or any member of the public (in
case of a general offer) becomes aware of the offer, the communication of the
offer is said to be complete.
So
when two people are talking, face-to-face or via telephone, etc the
communication will be complete as soon as the offer is made.
Let
us take the same example. A writes to B offering to fix his roof for five thousand
rupees. He posts the letter on 2nd July. The letter reaches B on 4 th July. So
the communication is said to complete on 4th July.
COMMUNICATION
OF ACCEPTANCE
Mode
of Acceptance In this case of communication of acceptance, there are two
factors to consider, the mode of acceptance and then the timing of it. Let us
first talk about the mode of acceptance. Acceptance can be done in two ways,
namely
· Communication of Acceptance by an Act: This would include
communication via words, whether oral or written. So this will include
communication via telephone calls, letters, e-mails, telegraphs, etc.
· Communication of Acceptance by Conduct: The offeree can also
convey his acceptance of the offer through some action of his, or by his
conduct. So say when you board a bus, you are accepting to pay the bus fare via
your conduct.
REVOCATION
OF OFFER AND ACCEPANCE
Revocation
implies “taking back” or “withdrawal”, it may be a revocation of the offer or
acceptance. The communication of revocation is complete in the following
situation:
1.
As against the person who is revoking: A proposal may be revoked at any time
before the communication of acceptance is complete.
2.
As against the person to whom it is made: A proposal may be revoked at any time
before the communication of acceptance is complete against the person to whom
it is made.
Modes
by which an offer can be revoked
1.
By notice
2.
By lapse of Time.
3.
By non fulfillment of an essential precondition.
4.
By death or Insanity of the proposer.
5.
By counter proposal.
6.
Not being accepted in the prescribed Mode.
7.
The Law Being Changed.
REVOCATION
OF OFFER
· The
Indian Contract Act lays out the rules of revocation of an offer in Section 5.
It says the offer may be revoked anytime before the communication of the
acceptance is complete against the proposer/offeror.
·
Once
the acceptance is communicated to the proposer, revocation of the offer is now
not possible.
· Let us take the same example of before. A accepts the offer and posts the letter on 10th July. B gets the letter on 14th July. But for B (the proposer) the acceptance has been communicated on 10th July itself. So the revocation of offer can only happen before the 10th of July.
REVOCATION OF ACCEPTANCE
· Section
5 also states that acceptance can be revoked until the communication of the
acceptance is completed against the acceptor.
· No
revocation of acceptance can happen after such date. Again from the above
example, the communication of the acceptance is complete against A (acceptor)
on 14th July. So till that date, A can revoke his/her acceptance, but not after
such date.
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