Offer and acceptance

Hello my reader friends. This is one more blog in the series of Law of Contract. This blog is discussing about "Offer and Acceptance". Please read this blog till the end and share it with all law students. These are the notes for preparing exams of Law degree.


Image credit: www.slideshare.net

Offers and Acceptance

Offer or Proposal: -

As per Section 2(a) of Indian Contact Act, 1872, “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.”

In Indian Contact Act, the word “proposal” is used for “offer”.

For an agreement there must be a lawful offer by one and lawful acceptance of that offer from the other party. The term lawful means that the offer and acceptance must satisfy the requirements of Contract Act. 

When an offer is being made, the other party or person would know what is being offer and what the person or party who made the offer expect to have in return. An offer needs to be clear, definite, complete and final. It should be communicated to the offeree.

The offer must be made with the intention of creating legal relations otherwise, there will be no agreement. The first element in a valid contract would be offer. If the offer is accepted than it would constitutes to a legally valid contract.

There is a difference of offer between an advertisement and an option.

Acceptance: -

As per Section 2(b) of Indian Contract Act, 1872, “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.”

After having an offer in the contract, there should be acceptance. For a contract to be made there should be acceptance from the other party or person. 

When the other party is clear with the offer, there would make an acceptance once they are clear with the rules and regulations being offer in the contract. 

There will be no contract if the parties are still negotiating or discussing and have not made accept the offer. 

The person or party can accept the offer being made in writing or orally which is made verbally or being spoken out.

Basically, a contract unfolds when an offer by one party is accepted by the other party. The accepted offer should be without any qualification and be definite.

A proposal when accepted becomes a promise or agreement.

The offer and acceptance must be ‘consensus ad idem’ which means that both the parties must agree on the same thing in the same sense i.e. identity of wills or uniformity of minds.

Case laws

Felthouse v. Bindley– In this case, it was held that, “An offer cannot prescribe silence mode of acceptance”.

Carlil v. Carbolic Smoke Ball Co. – In this case, a medical firm carbolic smoke ball company advertised that any person caught influenza after using the medicine of the company (viz. Carbolic smoke ball), for a specified period, would be 100 pounds. Mrs. C, after using the medicine (as prescribed by the company) nevertheless caught influenza. It was held that she was entitled to recover 100 pounds because the Company’s advertisement was something more than an invitation to transact business. 

Lalman Shukla v Gauri Dutt – In this case, it was held that ‘The mere knowledge of an offer does not imply acceptance by the offeree’.

Examples: -

1) A family F has made an arrangement with a tour agency T to have a holiday at Spain for 6 nights and 7 days. T would make a contract by making forms to each member of F, which would have to be filled up. Member of F who fills up the form would have to be clear with the rules and regulations given by T. Once it is filled up, the contract has been made between the F & T.

2) A tourist T writes to hotel H requesting information about the cost and availability of accommodation for the week commencing on the 25th December 2001. The staffs at hotel H answers the inquiry states that the accommodation available for that week would cost Rs. 60,000 and if the tourist T responds with the deposit of Rs. 25,000 within a week, then the room will be allocated to him. If T accepts the offer, then the contract has been made between T and K.

3) A say to B that he will sell his cycle to him for Rs.2000. This is an offer. If B accepts this offer, there is an acceptance.

Here we are discussing about one of the essentials of a valid contract, listed as follows. All essential features of a valid contract are as follows.

1) Two parties

2) offer and acceptance.

3) Intention to create legal relations

4) Lawful consideration

5) Capacity of parties

6) Free & Genuine consent

7) Lawful objects

8) Writing & registration - legal formalities

9) Certainty

10) Possibility of performance

11) Not expressly declared void.

Thanks for reading till the end. The underlined part in this article is the most important part of this subject and you must write atleast this part in the exam. Also relevant case laws will give you more advantage and an example is must in answer. Please share this blog with all the law students. 

===============================