Offer and
Acceptance
PROPOSAL OR OFFER ?
+The term “Proposal” used in the Indian Contract Act is
synonymous with the term “Offer” used in English Law.
Section 2(a) of the ICA 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
+The person making the proposal or offer is called the offeror or
proposer
+The person to whom the offer or proposal is made is called the
offeree.
+When the offeree accepts the offer, he is called the acceptor.
Example
+A’s willingness to sell his radio set to B for Rs
500. If b accepts to purchase the same, amounts
to a proposal by A for the same radio set. But if a
statement is made without any intention to obtain
the assent of the other party thereto, that cannot
be termed as a proposal.
Example
+A says to B “I am willing to sell my car to you for 20,000 Rs”
Here
A- Made offer to B
A – Offeror
B - Offeree
An offer may be express or
implied.
As per Section 9, if an offer is made
by words, spoken or written it is
Signifies called an express offer. A writes a
Letter to B, will you buy my car
for 1 Lakh Rs.
If an offer is made otherwise than in
words i.e. inferred from the conduct
of the party, it is called an implied
offer. Ordering coffee, taking a
seat in the metro.
A says to B, “I am willing to sell my
Parker pen to you for Rs 100.”
A writes to B in the letter, “I am
willing to sell my scooty to you for
Rs 2000”
Examples - A transport company runs buses on
different routes in a metropolitan city
to carry passengers at a fixed rate.
A weighing machine kept at a
cinema hall.
Answer
1 and 2 are express offer
3- This is an implied offer by the transport company. The
acceptance of the offer is complete as soon as the
passenger boards the bus
4. An implied offer to use the machine by inserting the
necessary coin.
+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.
Specific Offer – Made to a
specific person
General offer- Made to the
Another general public
Question- A says in an
empty hall- “I want to sell
my car for 10 L”. Which
offer is this ?
Willingness
1. To do something – Positive offer – Offer to do something for the
other.
Eg- Offer to sell a car.
To abstain from doing anything – Negative offer – Offer not to do
something,
Eg- Teacher tells to coaching center- “I will not teach anywhere if
extra payment is made”
Purpose of the Offer
To obtain the assent of the other
A says to B that I am planning to sell my car for 2 Lakhs
A asked B what is the price of your watch?
Essentials of an offer
An offer must be an expression of willingness to do or to abstain from
doing anything
The expression of willingness to do or to abstain from doing must be
made to another person. A person cannot make an offer to himself.
The offer must be made with a view to obtaining the assent of the other
person to such act of abstinence.
Legal Rules for A Valid Offer
An offer must be express or implied
An offer must be made with an intention to create
legal relations
The terms of the offer must be definite and certain
The terms of the offer must be definite and certain
The terms of the offer must be definite and certain not vague or
ambiguous.
For example- An agreement to agree in future is not a contract as the
terms of the agreement are uncertain because they are yet to be
settled.
Accordingly, if the terms of an offer are vague and indefinite, a contract
cannot be created between two parties even if the offer is accepted.
Question ?
1. An agreement to take a lease
of a house for three years at Rs
60,000 per annum, if the house 2. A proposes to sell his car for
is “put into thorough repair, and Rs 2,00,000 or Rs 2,50,000.
the drawing room handsomely
decorated, according to the
present style”
A offers to sell 100
litres of Oil to B. A is
a dealer in mustard oil
only. Decide
VALID
If the terms of the offer are capable of being made
certain, then the offer is not vague.
A offers to sell 100 litres of Oil to B. A is a dealer in
mustard oil only. It is a valid as the terms of the offer are
capable of being made certain by nature of A’s business.
+In Satya Jain vs Anis Ahmed Rushdie { AIR 2013 SC 434} it
was held that Principles of business efficacy can be invoked to
achieve the intended meaning of the parties when terms of the
agreement/ Contract are ambiguous and not clear.
TYPES OF OFFER
An offer can be of many types, ranging across the spectrum. There are 7 kinds of offers:
Express offer
Implied offer
General offer
Specific Offer
Cross Offer
Counter Offer
Standing Offer
Specific Offer Vs General Offer
Specific Offer General Offer
Offer to Whom Here offer is made to a specific person made to general public or the
world at large
Acceptance by Whom Specific offers can be accepted by General offer can be accepted
specific person to whom offer was mad. by any person who comes
No 3rd person can accept it. forward and fulfils the terms.
Mode of Offer Can be made through letter, phone, Usually made through mass
email or in person etc. media, Radio, newspaper
advertisement etc.
Classical Case Boulton Vs Jones Carlill vs Carbolic Smoke Ball
and Co
Questions ?
+A writes a letter to B will you buy my car for 1 Lakh.
+A puts an advertisement in the newspaper that whoever finds
the dog will get Rs.10,000
CARLIL VS CARBOLIC SMOKE BALL CO
+Coram: 3 Judge-Bench
consisting of Justice Lindley,
Justice Bowen, Justice Smith
+Citation: [1893] 1 QB 256;
[1892] EWCA Civ 1
+Decided on: 7th of December
1892
Facts
+The Carbolic Smoke Ball Co produced the 'Carbolic Smoke Ball' designed to
prevent users contracting influenza or similar illnesses. The company
advertised (in part) that:
+“100 pounds reward will be paid by the Carbolic Smoke Ball
Company to any person who contracts the increasing epidemic
influenza, colds, or any disease caused by taking cold, after
having used the ball three times daily for two weeks according to
the printed directions supplied with each ball. 1,000 pounds is
deposited with the Alliance Bank, Regent Street, showing our
sincerity in the matter”.
+After seeing this advertisement Mrs Carlill bought one of the
balls and used it as directed. She subsequently caught the flu
and claimed the reward. The company refused to pay. Mrs
Carlill sued for the reward.
Contentions Made -
Whether there was any binding effect of the contract between the
parties?
Whether the contract in question required a formal notification of
acceptance?
Whether Mrs Carlill was required to communicate her acceptance of
the offer to the Carbolic Smoke Ball Company?
Whether Mrs Carlill provided any consideration in exchange for the
reward of 100 pounds offered by the company?
INVITATION TO OFFER
+An invitation to treat or an invitation to bargain (used in the
USA) is a concept in the law of contracts which has been
derived from the Latin phrase “invitation ad offerendum”,
meaning “inviting an offer”.
+There is no mention of an ‘invitation to offer in the Indian
Contract Act, of 1872.
In the words of professor Andrew
Burrows, an invitation to treat means:
+“…an expression of willingness to
negotiate. A person making an
invitation to treat does not intend to
be bound as soon as it is accepted by
the person to whom the statement is
addressed.”
+In an invitation to offer, no specific party has the intention to
enter into a contract. The seller may enter into a contract with
anybody from the public who makes the best offer to him. So,
the essence of an invitation to offer is that the offer is actually
made by the seller.
+For instance, a shopkeeper selling antique statues in his
store would prefer the buyer who would agree to pay the
higher price for his goods.
Question -1
+ a display of clothes in a shop, of goods in an auction,
and even advertisements screaming “Offer! 50% Off on
All Shirts!”
1. Invitation to Offer
2. Offer
3. Both
4. None
The Role of Intention
+In an offer, both the parties have an intention to enter into a
legally binding agreement after due negotiation. Such an intention
is absent in an invitation to offer.
+One might, while returning home from office stop by a shop and
look at a displayed book or dress, and not have the intention to
buy it immediately.
+Similarly, a seller may want to sell his goods at a higher price
than offered by a particular customer and therefore reject selling
the good to him.
+a person named Z may offer to sell his bike to N at a certain
amount, for example Rs. 50,000. ?
Harvey vs. Facey
+ the plaintiff sent a telegraph to the defendant asking “Will you sell us
Bumper hall pen? Telegraph Lowest Cash Price” the defendant in reply
sent another telegram that the lowest price for pen is £900.
+The Plaintiff sent an affirmation telegram that “we agree to buy Pen for
£900 as asked by you”.
+The defendant however denied to sell the plot of land at that price. So the
plaintiff went to the Court o file a suit against the defendant. The Court
here held that the defendant only stated the lowest amount of price but
they did not expressed any willingness to sell the plot of land. So it can be
considered as an invitation to offer
The following are few examples of invitation to make an offer:
+Catalogue of goods is not offer, but only an invitation for offer.
+Display of goods with price tags in a self-service shop is merely
an invitation to offer.
+A tender notice does not amount to an offer; it is merely an
invitation to contractors for making offers.
+A prospectus issued by a company to purchase its shares or
debentures is an invitation to offer.
+A menu card in a hotel is an invitation to offer, etc.
+Thus an offer is an expression of final willingness to
do or not to do something, with a view to obtain assent
of the other person. Whereas invitation to an offer only
indicates broad terms for negotiating business and
while an offer results in generation of acceptance in its
response, an invitation to an offer results in generation
of offers in its response.
Difference Between Offer and
Invitation to offer
Feature Offer Invitation to Offer
Purpose Form a contract Initiate negotiations
Creates a binding Doesn't create a
Acceptance
contract contract
Clear terms and
Specificity No specific terms
conditions
"I'll sell you my car for Products on a shelf with
Example
₹100,000" price tags
