Transcript Offer and Acceptance

Offer and Acceptance
• As a first step in the making of a contract there must be a ‘lawful offer’
by one party and a ‘lawful acceptance’ of the offer by the other party.
• Offer:
• Sections 2 (b) of the Contract Act, 2000 provide the legal definition of
“offer”. According to which offer means a proposal made by one person
to another with the intent of obtaining his/her acceptance to do or
abstain from doing a work.
• Two elements of an offer: (i) Expression of one’s willingness to do or
abstain from doing something; and (ii) Such expression should be made
with a view to obtain the assent (acceptance) of the other person to the
proposed act or abstinence.
• The person making the offer is known as the offeror, proposer or
promisor and the person to whom it is made is called the offeree, pr
proposee. When the offeree accepts the offer, he/she is called the
acceptor or promisee.
Types of Offer
• Express and implied offer: An offer which is expressed in by words,
written or spoken, is called an express offer. The offer, which is made by
conduct or act, is called an implied offer.
• Specific and general offer: An specific offer is one which is made to a
specific or definite person. It can only be accepted by the person to
whom it is made. A general offer is one which is not made to any
specific person, but a public at large. It can be accepted by any person
who having the knowledge of the offer comes forward and acts
accordingly.
• Essentials and Legal Rules for a valid offer:
1. The terms of the offer must be definite and clear.
2. The offer must be communicated to the other party.
3. The offer must express the final willingness of the offeror.
4. The offer must be made with a view to obtain the consent of the
offeree.
5. The offer must be capable of creating legal relationship when accepted.
6. The offer must be distinguished from an invitation to receive offer:
Advertisements, tenders or bidding, auctions, company’s prospectus,
display of price and goods are not valid offers.
Contd..
7. The offer must be distinguished from mere an answer to a question
or mere a statement of intention.
8. The offer may be made with or without conditions.
9. The offer may be made to a particular person or to a particular group
of persons or to the world at large.
Acceptance:
• An acceptance is the consent given to the offer and a binding
contract between the offeror and offeree comes into existence on
the acceptance of the offer.
• Sections 2 (c) of the Contract Act, 2000 provide the legal definition of
“acceptance”. According to which acceptance means the consent
given by the person, to whom the offer is made, to an offer in a sense
as taken by the offeror.
• Thus, an acceptance is the manifestation by the offeree of his
willingness to be bound by the terms and conditions of the offer.
When the offeree signifies his/her assent to the offeror, then the
offer becomes a promise.
Legal Rules for a Valid Acceptance
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The acceptance must be communicated and such communication
must be made by a person who has the authority to accept.
The acceptance must be communicated to the offeror or to the
person authorized by the offeror.
The acceptance must be absolute and unqualified. It means the
acceptance must be for all the terms stipulated in the offer and
without any condition by the person accepts the offer.
The acceptance must be according to the mode or manner
prescribed or usual and reasonable mode or manner, if no mode or
manner is prescribed.
The acceptance must be given within a prescribed time or within a
reasonable time, if no time is prescribed.
The acceptance cannot be presumed from silence.
The acceptance must show an intention that the accepter is willing
to fulfil the terms and conditions of the offer.
The acceptance must be given before the offer lapses or before the
offer is withdrawn.
Communication and Revocation of Offer and
Acceptance
• Revocation of Offer and Acceptance: Section 8 of the Contract
Act, 2000. Revocation means “taking back”, “recalling” or
“withdrawal”.
• An offer may be revoked at any time before the communication
of its acceptance is complete as against the offeror. Its
revocation takes effect only when the revocation is
communicated to the offeree.
• An acceptance may be revoked at any time before the
communication of the acceptance is complete for the acceptor.
The communication of revocation of acceptance must reach the
offeror earlier than the acceptance itself.
• If both the communication reach to the offeror at the same
moment, the acceptance will be deemed to have been revoked.
Lapse of an Offer
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An offer may come to an end in any of the following
ways as stipulated in Section 9 of the Contract Act:
By communication of notice of revocation.
By lapse of time.
By failure to accept condition precedent.
By the death or insanity of the offeror.
By counter-offer by the offeree.
By not accepting the offer, according to the
prescribed or usual mode.
By rejection of the offer by the offeree.
By change in law.