How to make a contract Offer & Acceptance Dr. Manaswee K Samal

Meaning of a contract An agreement enforceable under law Agreement =promise or set of promises Promise= proposal accepted Contract= Proposal made by one person and accepted by another person that is enforceable under law

About proposal/offer Proposal: two persons are involved; proposer to signify willingness, to do or not to do, requires consent of the other; it is not a mere desire Methods of proposing: By conduct: a bus plying on a route, but a train is different Orally (in our daily life) Writing: a must in some cases- e.g. govt. contracts

Proposal v. Invitation Advertisement for employment- intention to offer Lowest price for property sale- information for offer Auction withdrawn without notice- invitation to offer Tender call: invitation to offer No offer in above cases

Offer? Would you buy my old car for Rs.10,000? I have only one car. Would you buy my old car for Rs.10,000? I have three cars. A bank’s manager offers not to file a case if the old loan is repaid. You board on a bus plying on a specific route. You board on a train plying on a route. Remember window shopping. You see a price and insist on buying at that price. You read an auction notice and reach the place to see that auction is cancelled.

Case Laws Fisher v. Bell: Bell had displayed of flick knife in his shop. Was law violated? Pharmaceutical Society of Great Britain v. Boots Cash Chemicals Ltd.: Display of drugs in a self-service drugs store: Is it an offer? Automatic vending machine in airports: Who makes the offer? Owner of the machine; so putting money into the machine is acceptance

Cases Carbolic smoke ball v. Carlill: general offer Advertisements read ‘terms and conditions apply’: What is the implication? Lefkowitz v. Great Minneapolis Surplus Store, Inc: An advertisement like: Saturday 9 am sharp, 3 brand new fur coats worth $100, $1 each on first come first serve basis: clear, definite and explicit without room for negotiation; then an offer

Cases Snapdeal displays price of a mobile set at Rs.10,000: Is it an offer? Harris v. Nickerson: Auctioneer didn’t put the entire lot on auction

Proposal must be communicated Offer to be communicated for acceptance Terms of offer to be communicated to be within offer [for conditions overleaf] Cross offers: Identical offers crossing each other Counter offers: Variation in the original proposed terms, the original offer stands cancelled

Offer Must give rise to legal relationship (Social invitations are not offers) Must be definite (I will sell you a car, I have three cars. The offer is not definite) and unambiguous (a house to be leased for 3 Rs.1,000 p.a. if house is handsomely decorated in accordance with present test- a vague offer)

Offer to a person Specific offer General offer Offer to a person: Person-in-fact or person-in-law

Withdrawal or revocation of offer Can be withdrawn before communication of acceptance is complete as against the proposer A proposes to B to buy his land for Rs.1lac on and sends a letter which reaches B on The offer is made on B agrees to it and sends the letter on A can revoke the offer before , not after that.

When does an offer come to an end? Revocation by notice By lapse of time By rejection: express rejection (has to reach the offeror) / implied rejection by counter offer or conditional acceptance Failure of the acceptor to fulfill conditions precedent to acceptance (e.g. advance payment) Incapacity or death of acceptor

ACCEPTANCE Like a match to a train of gun-powder When the person to whom the proposal is made, signifies his assent thereto (some overt act) Should be in toto (absolute and unqualified)- all terms of the offer whether major or minor In usual and reasonable manner In the manner mentioned by the proposer - if made otherwise, proposer should point out within a reasonable time and insist, if not, then deemed acceptance

Acceptance continued…. Silence is no acceptance Need not be communicated if the proposer has dispensed with communication (some conditions are met) Acceptance by conduct, if conduct is prescribed by the proposer Within the time prescribed, if no mention, then within reasonable time Cannot precede an offer (share allotted without application) By the party to whom offer is made

When is acceptance made? a) As against the proposer, when it is put into the course of transmission so as to be out of power of acceptor a) As against the acceptor, when the proposer comes to know about it.

Cont…. Revocation of acceptance: Anytime before it is complete as against the acceptor, i.e, when the proposer comes to know about it

Loss of letter of acceptance in transit Acceptance is complete as against the offeror as soon as the letter of acceptance is posted. Contract is complete, even if the letter is lost by an accident in post. (Must have been correctly addressed, stamped)

Cases Bharati Knitting Company v. DHL Worlwide Express Courier: lost packet, liability limited to $100 Olley v. Marlborough Court Limited: Olley’s valuables got stolen from hotel room, notice inside room mentioned about management’s no-responsibility.

Cases: Hollier v. Rambler Motors: Incorporation of past dealings when the form of contract is different not possible. (car repair, risk note previously signed from customer, not done in one case by Rambler limiting liability)