PROPOSAL AND ACCEPTANCE

Essential of Proposal–
● Proposal may be expressed or implied
● Proposal may be to do an act or abstain from doing an act
● Proposal is made with intention to create legal obligation.

Types of Offer

An offer can be of many types, ranging across the spectrum. There are basically

7 kinds of offers:

● Express offer
● Implied offer
● General offer
● Specific Offer
● Counter Offer
● Standing Offer

Express offer and Implied offer (Sec 9)

Section 9 of The ICA defines both of them as: In so far as the proposal or

acceptance of any promise is made in words, the promise is said to be express.

In so far as such a proposal or acceptance is made otherwise than in words,

the promise is said to be implied.

Therefore, any offer that is made with words, it may be regarded as express.

Any promise that is made otherwise than in words is implied.

A case in this regard is Upton-on-Servern RDC v. Powell, wherein the

defendant called a fire brigade assuming that those services would be free to

him, however it was found that his Farm did not come under that of Upton. The

court held that the truth of the matter is that the Defendant wanted the services

of Upton, he asked for the services of Upton and in response to that they

offered their services and they were rendered on an implied promise to pay for

them.

In Ramji Dayawala & Sons (p) Ltd v. Invest Import, a case between an

Indian and Yugoslavian party the notice for revocation of an arbitration clause

in the contract between the parties was made by the Indian party, to which the

other party gave no reply. It was held that this would amount to an implied

acceptance i.e.- the arbitration clause was deleted from the contract, and a suit

would lie in the court of law. Similarly entering into an omnibus also amounts

to implied acceptance, same as consuming edibles at a self-service restaurant.

Therefore in simpler terms a contract that is entered into because of actions on

the offerors part, may be referred to as an implied offer, any contract entered

into otherwise is an express offer

General Offer
A General Offer is an offer that is made to the world at large. The genesis of a

General Offer came about from the Landmark case of Carlill v. Carbolic

Smoke Ball Co. A company by the name Carbolic Smoke Ball offered through

an Advertisement to pay 100 Pounds to anyone who would contract increasing

epidemic Influenza, colds or any disease caused by cold after taking its Medicine

according to the prescribed instructions. It was also added that 1000 Pounds

have been deposited in Alliance bank showing our sincerity in the matter. One

customer Mrs Carlill used the medicine and still contracted Influenza and hence

sued the company for the reward. The Defendants gave the argument that the

offer was not made with an intention to enter into a legally binding agreement,

rather was only to Puff the sales of the company. Moreover, they also contended

that an offer needs to be made to a specific person, and here the offer was not

to any specific person and hence they are not obliged to the Plaintiff.

Setting aside the arguments of the Defendant, the bench stated that in cases of

such offers i.e- general offers, there is no need for communication of

acceptance, anyone who performs the conditions of the contract is said to have

communicated his/her acceptance, and moreover, the money deposited by the

Defendant in Alliance Bank clearly shows that they intended to create a legally

binding relationship. Hence the Plaintiff was awarded with the amount. An

Indian authority in this regard is Lalman Shukla v. Gauri Dutt, wherein a

servant was sent by his master to trace his missing nephew. In the meanwhile,

he also announced a reward for anyone finding his nephew, this in itself is an

example of an offer that is made to the world at large and hence a General

Offer.

Valid acceptance based on fulfillment of condition (Sec 8)-

Performance of the conditions of a proposal, or the acceptance of any

consideration for a reciprocal promise which may be offered with a

proposal, is an acceptance of the proposal.

This section was applied by YEARS CJ of Allahabad high court in the case of Har

Bhajan Lal v. Har Charan Lal, wherein the father of a young boy who ran

from home issued a pamphlet for a reward for anyone who would find him. The

Plaintiff found him at the railway station and sent a Telegram to his father. The

Court held that the handbill was an offer that was made to the world at large

and anyone who fulfilled the conditions is deemed to have accepted it.

Specific Offer
A Specific offer is an offer that is made to a specific or ascertained person, this

type of offer can only be accepted by the person to whom it is made

Cross Offer
When two parties make an identical offer to each other, in ignorance to each

other’s offer, they are said to make cross offers. Cross offers are not valid

offers. For example- if A makes an offer to sell his car for 7 lakhs to B and B in

ignorance of that makes an offer to buy the same car for 7 Lakhs, they are said

to make a cross offer, and there is no acceptance in this case, hence it cannot

be a mutual acceptance.
Basic essentials of a cross offer

1. Same offer to one another- When the offeror makes an offer to the

offeree and the offeree without prior knowledge makes the same offer

to the offeror, then both the object and the party remain the same.

2. Offer must be made in ignorance of each other- The two parties must

make their offer in ignorance of each other.

An important case in this aspect is the English case of Tinn v. Hoffman, the

defendant wrote to the complainant an offer to sell him 800 tons of iron at 69s

per ton, at the same time the complainant also wrote to the defendant an offer

to buy the iron at similar terms. The issue in this case was that, was there any

contract between the parties, and would simultaneous offers be a valid

acceptance. The court held that these were cross offers that were made

simultaneously without knowledge of one another and would not bind the

parties.

Counter offer
When the offeree offers a qualified acceptance of the offer subject to

modifications and variations in terms of the original offer, he is said to have

made a counter offer. A counter offer is a rejection of the original offer.

An example of this would be if A offers B a car for 10 Lakhs, B agrees to buy for

8 Lakhs, this amounts to a counter offer and it would mean a rejection of the

original offer.
the landmark judgement of Hyde v. Wrench, in which an offer to sell a farm

for 1000 Pounds was rejected by the Plaintiff, who offered 950 for it.

Subsequently the Plaintiff gave an acceptance to the original offer. Holding that

the Defendant was not bound by a contract, the court said that the Plaintiff

accepted the original offer of buying the farm at the price of 1000 pounds, it

would have been a completely valid contract , however he gave a counter

proposal to it, thus rejecting the original offer.

When a counter proposal is accepted the contract arises in terms of the

counter proposal and not in terms of the original contract.

Standing offer
An Offer which remains open for acceptance over a period of time is called a

standing offer. Tenders that are invited for supply of goods is a kind of Standing

Offer. In Perclval Ltd. V. London County Council Asylums and Mental

deficiency Committee, the Plaintiff advertised for tenders for supply of goods.

The defendant took the tender in which he had to supply to the company

various special articles for a period of 12 months. In-between this the

Defendant didn’t supply for a particular consignment. The Court held that the

Tender was a standing offer that was to be converted into a series of contracts

by the subsequent acts of the company and that an order prevented pro tanto(

to that extent ) the possibility of revocation, hence the company succeeded in

an action for breach of contract.

Difference between an offer and Invitation to offer

distinguish both to even construe what an actual offer is. An invitation to

offer is an offer to negotiate, an offer to receive offers, offers to

chauffeur. An offer is a final expression of willingness to get into a contract upon

those following terms. The concept of Invitation to offer was explained in the

Privy Council case of Harvey v. Facey, the Plaintiffs in this asked two questions

from the defendant i.e.- Would you sell me your Bumper Hall pen , telegram me

the lowest price? , the Defendant only gave the answer to the latter question ,

post which he refused to sell. The Court held that the defendant was not to sell

as he had only answered the second question and reserved the same for his

first question. Thus, this clearly shows the distinction between an offer and

invitation to offer.

Rules regarding display of goods in shops

In Pharmaceutical Society of Great Britain v. Boots Cash Chemists

Southern Ltd., lord GODDARD CJ, said that it would be wrong to say that a

shopkeeper intends to sell everything that is displayed in his shop. Meaning that

the customer makes an offer, to which the shopkeeper has the discretion to

accept or deny.

Communication of Proposal:(Sec 4)

Communication of proposal is complete, when it comes to the knowledge of the person to whom
it is made. There can be acceptance only when there is knowledge of an offer.

A proposal is revoked –(Sec 6)

party;

(2) by the lapse of the time prescribed in such proposal for its acceptance, or, if

no time is so prescribed, by the lapse of a reasonable time, without

communication of the acceptance;

(3) by the failure of the acceptor to fulfil a condition precedent to acceptance;

or

(4) by the death or insanity of the proposer, if the fact of the death or insanity

comes to the knowledge of the acceptor before acceptance.