OFFER AND ACCEPTANCE (COMMERCIAL AND LABOUR LAWS) (COMMERCIAL AND LABOUR LAWS)

PROPOSAL OR OFFER SECTION 2 (a) DEFINES PROPOSAL SECTION 2 (a) DEFINES PROPOSAL “ When a 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.” “ When a 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.” EXAMPLE :- EXAMPLE :- A offer to sell his motor cycle to B for Rs B agrees to pay A Rs 3000 for the motor cycle. Here A is called a OFFERER or PROMISER & B the OFFEREE or PROMISEE. A offer to sell his motor cycle to B for Rs B agrees to pay A Rs 3000 for the motor cycle. Here A is called a OFFERER or PROMISER & B the OFFEREE or PROMISEE.

Section 2 (a) reveals 3 essential elements in an “offer” Expression of willingness to do or not to do something. Expression of willingness to do or not to do something. Made to another person i.e. a person cannot make an offer to himself. Made to another person i.e. a person cannot make an offer to himself. With the object of gaining the consent of the other person to such act. With the object of gaining the consent of the other person to such act.

KINDS OF OFFER HOW MADE TO WHOM MADE EXPRESS OFFER IMPLIED OFFER GENERAL OFFER SPECIFIC OFFER

EXPRESS OFFER: An express offer is one which may be made by words spoken or written such as letter, ,etc.. IMPLIED OFFER : An implied offer is one which may be gathered from the conduct of the party or the circumstances of the case.. An implied offer is one which may be gathered from the conduct of the party or the circumstances of the case.. GENERAL OFFER : An offer made to a definite persons is called general offer.. SPECIFIC OFFER : when an offer is addressed to the whole world it is called general offer..

AN OFFER MUST BE DISTINGUISHED FROM: AN OFFER MUST BE DISTINGUISHED FROM: a) A mere statement of intention. b) An invitation to offer. c) A mere communication of information in the course of negotiations. d) A casual enquiry. e) A prospectus inviting the public to subscribe to the shares or debentures of a company. f) Advertisement for the tenders.

ESSENTIAL OF VALID OFFER OFFER MUST BE CAPABLE OF CREATING LEGAL RELATIONS:- The offeror must intended the creation of legal relations.he must intended that if his offer is accepted a legally binding agreement shall result. OFFER MUST BE CAPABLE OF CREATING LEGAL RELATIONS:- The offeror must intended the creation of legal relations.he must intended that if his offer is accepted a legally binding agreement shall result. The leading case is BALFOUR VS. BALFOUR BALFOUR VS. BALFOUR OFFER MUST BE CERTAIN DEFNITE AND NOT VAGUE :- No contract can come into existence if the terms of the offer are vague or loose and indefinite. OFFER MUST BE CERTAIN DEFNITE AND NOT VAGUE :- No contract can come into existence if the terms of the offer are vague or loose and indefinite. Leading case TAYLOR V. PORTINGTON (1855)

OFFER MUST BE COMMUNICATED TO THE OFFEREE:- OFFER MUST BE COMMUNICATED TO THE OFFEREE:- There can be no offer by a person to himself. It must always be communicated to the offeree. There can be no offer by a person to himself. It must always be communicated to the offeree. LALMAN SHUKLA V GAURI DUTT(1913) LALMAN SHUKLA V GAURI DUTT(1913) EXAMPLE : EXAMPLE : D send his servant P to trace his nephew. D announced a reward for providing information about the missing boy. P in ignorance of announcement traced the boy & informed D. P later on come to know of the reward & he claimed it. His claim is dismissed on the ground that he was ignorant of the offer. It was further held that it was the duty of the servant to search for the boy. D send his servant P to trace his nephew. D announced a reward for providing information about the missing boy. P in ignorance of announcement traced the boy & informed D. P later on come to know of the reward & he claimed it. His claim is dismissed on the ground that he was ignorant of the offer. It was further held that it was the duty of the servant to search for the boy.

OFFER MUST BE MADE WITH A VIEW TO OBTAINING THE ASSENT OF THE OTHER PARTY :- OFFER MUST BE MADE WITH A VIEW TO OBTAINING THE ASSENT OF THE OTHER PARTY :- an offer must be distinguished from mere expression of intension an offer must be distinguished from mere expression of intension EXAMPLE:- EXAMPLE:- N advertised in a newspaper to effect sale of his goods on a particular day at a particular place. H travelled a long distance to bid for the things. On arrival he found the sale was cancelled. He sued N for breach of contract. It was held that advertisement was merely expression of an intention and an offer which could be accepted by travelling to the place of intended sale. N advertised in a newspaper to effect sale of his goods on a particular day at a particular place. H travelled a long distance to bid for the things. On arrival he found the sale was cancelled. He sued N for breach of contract. It was held that advertisement was merely expression of an intention and an offer which could be accepted by travelling to the place of intended sale.

AN OFFER MAY BE CONDITIONAL:- AN OFFER MAY BE CONDITIONAL:- An offer can be made subject to a condition. In that case it can be accepted only subject to that condition. A conditional offer lapses when the condition is not accepted. A contract formed on a conditional offer is valid. An offer can be made subject to a condition. In that case it can be accepted only subject to that condition. A conditional offer lapses when the condition is not accepted. A contract formed on a conditional offer is valid. EXAMPLE : EXAMPLE : T who could not read, took an excursion ticket on the railway. On the front of the ticket was printed `for conditions see back’. One of the condition was that the railway company would not be liable for personal injuries to passengers. T was injured by a railway accident. Held T was bounded by the conditions and could not recover any damages. T who could not read, took an excursion ticket on the railway. On the front of the ticket was printed `for conditions see back’. One of the condition was that the railway company would not be liable for personal injuries to passengers. T was injured by a railway accident. Held T was bounded by the conditions and could not recover any damages.

OFFER SHOULD NOT CONTAIN A TERM THE NON- COMPLIANCE OF WHICH WOULD AMOUNT TO ACCEPTANCE :- one cannot say while making the offer that if the offer is not accepted before a certain date, it will be presumed to have been accepted. OFFER SHOULD NOT CONTAIN A TERM THE NON- COMPLIANCE OF WHICH WOULD AMOUNT TO ACCEPTANCE :- one cannot say while making the offer that if the offer is not accepted before a certain date, it will be presumed to have been accepted. LAPSE OF AN OFFER :- LAPSE OF AN OFFER :- a) If either offeror or offeree dies before acceptance. b) If it is not accepted within the specified time or a reasonable time if no time is specified. c) If the offeree does not make a valid acceptance d) An offer can also lapses by revocation. A person who makes an offer can withdraw it at anytime before acceptance. A proposal may be made for a fixed period. The offer will automatically expire if it has not been accepted till then. Where no time limit has been specified the offer will lapse after a reasonable time.

AN INVITATION TO OFFER IS NOT AN OFFER:- AN INVITATION TO OFFER IS NOT AN OFFER:- An offer must be distinguished from an invitation to offer. In the case of an “invitation to offer” the aim is merely to circulate information of readiness to negotiate business with anybody who on such information comes to the person sending it. Such invitations are not offers in the eye of law and do not become promises on acceptance. An offer must be distinguished from an invitation to offer. In the case of an “invitation to offer” the aim is merely to circulate information of readiness to negotiate business with anybody who on such information comes to the person sending it. Such invitations are not offers in the eye of law and do not become promises on acceptance. STANDING OR OPEN OFFER STANDING OR OPEN OFFER An offer for the continuous supply of a certain article at a certain rate over a definite period is called standing offer. Such offers though accepted do not give rise to contract unless a actual order is placed. The offeror can withdraw his offer at any time before an order is placed with him. An offer for the continuous supply of a certain article at a certain rate over a definite period is called standing offer. Such offers though accepted do not give rise to contract unless a actual order is placed. The offeror can withdraw his offer at any time before an order is placed with him.

COUNTER OFFER : COUNTER OFFER : A counter offer is an rejection of the original offer and making a new offer. This new offer is a counter offer. A person who make a counter offer and subsequently changes his mind and wishes to accept the original offer cannot do so as the first offer lapses and he cannot treat is as still open. A counter offer is an rejection of the original offer and making a new offer. This new offer is a counter offer. A person who make a counter offer and subsequently changes his mind and wishes to accept the original offer cannot do so as the first offer lapses and he cannot treat is as still open. When special term and conditions are to be included in a contract, they must not be specifically stated but also communicated to the concerned party. It is the duty of the person who deliver a document to give adequate notice to the offeree of the terms & conditions contained in the document. When this is not done the acceptor will not be bound by such terms. When special term and conditions are to be included in a contract, they must not be specifically stated but also communicated to the concerned party. It is the duty of the person who deliver a document to give adequate notice to the offeree of the terms & conditions contained in the document. When this is not done the acceptor will not be bound by such terms.

PRINTED CONTRACTS Many big organisations like LIC, INDIAN RAILWAYS, etc enter into thousand of contracts everyday. It would be difficult for such organisations to draw out a separate contract with every individual.they have therefore printed contract(standard forms of contracts).. Many big organisations like LIC, INDIAN RAILWAYS, etc enter into thousand of contracts everyday. It would be difficult for such organisations to draw out a separate contract with every individual.they have therefore printed contract(standard forms of contracts).. CROSS OFFERS When two parties make identical offers to each other, in ignorance of each other’s offer, such offers are known as cross offer. They shall not constitute acceptance of one’s offer by the other. When two parties make identical offers to each other, in ignorance of each other’s offer, such offers are known as cross offer. They shall not constitute acceptance of one’s offer by the other.

ACCEPTANCE When the person to whom the proposal is made signifies his assent, it is an acceptance of proposal. An accepted proposal is called a promise or an aggreement. An application for the shares in a company is in the nature of offer while the allotment of the shares by the company is an acceptance resulting into contract. The acceptor should do something to signifies his intention to accept. When the person to whom the proposal is made signifies his assent, it is an acceptance of proposal. An accepted proposal is called a promise or an aggreement. An application for the shares in a company is in the nature of offer while the allotment of the shares by the company is an acceptance resulting into contract. The acceptor should do something to signifies his intention to accept. EXAMPLE : EXAMPLE : A offer to sell his horse to B for $50. B accepts the offer to purchase the horse for $50. this is acceptance A offer to sell his horse to B for $50. B accepts the offer to purchase the horse for $50. this is acceptance

TYPE OF ACCEPTANCE EXPRESSED IMPLIED EXPRESSED IMPLIED (acceptance by words, (acceptance by conducts) Spoken or written) (treatment of docter) Spoken or written) (treatment of docter)

ESSENTIALS OF VALID ACCEPTANCE 1. ACCEPTANCE MUST BE ABSOLUTE AND UNCONDITIONAL :An acceptance must be unconditional and unqualified. Accepting an offer with conditional, variation and reservations ammounts to counter offer and rejection of the original offer. 1. ACCEPTANCE MUST BE ABSOLUTE AND UNCONDITIONAL :An acceptance must be unconditional and unqualified. Accepting an offer with conditional, variation and reservations ammounts to counter offer and rejection of the original offer. EXAMPLE : M offered to sell land to N at $ 280 N replied accepting the offer and enclosing $30 and promising to pay balance amount by monthly installments of $ 50 each. Since N accepted the offer subject to making payments in installments, it was held that the acceptance was conditional and qualified. EXAMPLE : M offered to sell land to N at $ 280 N replied accepting the offer and enclosing $30 and promising to pay balance amount by monthly installments of $ 50 each. Since N accepted the offer subject to making payments in installments, it was held that the acceptance was conditional and qualified.

ACCEPTANCE MUST BE COMMUNICATED TO THE OFFEROR If the offeree remains silents and does If the offeree remains silents and does nothing to show that he accepted the nothing to show that he accepted the offer, no contract is formed. The offer, no contract is formed. The acceptor should do something to signify his attention to accept. acceptance must be communicated to the offer himself. acceptor should do something to signify his attention to accept. acceptance must be communicated to the offer himself. EXAMPLE : The manager of a railway company recieved an offer by a letter relating to the supply of coal;he wrote on the letter ‘accepted’ and kept it in his drawer and forget all about it. It was held that there was no contract as the acceptance had not been communicated EXAMPLE : The manager of a railway company recieved an offer by a letter relating to the supply of coal;he wrote on the letter ‘accepted’ and kept it in his drawer and forget all about it. It was held that there was no contract as the acceptance had not been communicated

ACCEPTANCE MUST BE MADE IN REASONABLE TIME Acceptance to be valid must be made Acceptance to be valid must be made with in the time allowed by the offeror with in the time allowed by the offeror and if no time is specified, it must and if no time is specified, it must be made with in reasonable time. be made with in reasonable time. acceptance may be made at any time till the offer is alive. Acceptance made after the offer has been withdrawns is invalid. acceptance may be made at any time till the offer is alive. Acceptance made after the offer has been withdrawns is invalid. EXAMPLE : A person applied for shares in a company in june. He cannot be bound by an allotment made late in november. EXAMPLE : A person applied for shares in a company in june. He cannot be bound by an allotment made late in november.

ACCORDING TO THE MODE PRESCRIBED OR USUAL OR RESONABLE MODE Acceptance has to made in the manner Acceptance has to made in the manner prescribed or indicated by the offeror. prescribed or indicated by the offeror. it may be noted that law does not allow it may be noted that law does not allow an offeror to prescribed ‘silence’ as the an offeror to prescribed ‘silence’ as the mode of acceptance.where no mode of mode of acceptance.where no mode of acceptance is prescribed,acceptance must be expressed in someusual and reasonable manner.acceptance by mail is a very resonable manner in such cases acceptance is prescribed,acceptance must be expressed in someusual and reasonable manner.acceptance by mail is a very resonable manner in such cases

ACCEPTOR MUST BE AWARE OF PROPOSAL AT THE TIME OF OFFER Acceptance follows offer. If the acceptor is not aware of the existence of the offer and conveys his acceptance, no contract comes into being.there must be knowledge of the offer before anyone could concern it. Acceptance follows offer. If the acceptor is not aware of the existence of the offer and conveys his acceptance, no contract comes into being.there must be knowledge of the offer before anyone could concern it. CASE : LALMAN SHUKLA V. GAURI DUTT. CASE : LALMAN SHUKLA V. GAURI DUTT. A sold his business to hiis manager B without disclosing the fact to his customers. C, a customer who had a running account with A, sent an order for the supply of goods to A by name.B received the order and executed the same. C refused to pay the price. It was held that there was no contract between B and C because C never made any offer to B and as such C was not liable to pay the price to B. A sold his business to hiis manager B without disclosing the fact to his customers. C, a customer who had a running account with A, sent an order for the supply of goods to A by name.B received the order and executed the same. C refused to pay the price. It was held that there was no contract between B and C because C never made any offer to B and as such C was not liable to pay the price to B.

ACCEPTANCE MUST BE GIVEN BEFORE THE OFFER IS REVOKE It means that acceptance must be made while the offer is in force i.e. Before the offer has been revoked or offer has lapsed. It means that acceptance must be made while the offer is in force i.e. Before the offer has been revoked or offer has lapsed. ACCEPTANCE CANNOT BE IMPLIED FROM SILENCE ACCEPTANCE CANNOT BE IMPLIED FROM SILENCE No contract is formed if the offeree remains silent and does nothing to shoe that he has accepted the of fer. No contract is formed if the offeree remains silent and does nothing to shoe that he has accepted the of fer. EXAMPLE : pankaj told radhika, ‘I offer you my car for Rs if you don’t reply in 10 ten days time, i shall assume that you accept the offer’. Radhika kept silenct. Held,there is no contract. EXAMPLE : pankaj told radhika, ‘I offer you my car for Rs if you don’t reply in 10 ten days time, i shall assume that you accept the offer’. Radhika kept silenct. Held,there is no contract.

Communication of offer(section 4) An offer to be communicated An offer my be communicated to the offered or offer's by word of mouth, by writing or conduct. A written offer my be contained in a letter or a telegram. When communication of offer is Complete The communication of proposal is complete when it comes to the knowledge of the person to whom it is made.

Communication of acceptance (section 4) The communication of acceptance is complete, as against the proposer, when it is put a course of transmission to him, so as to be out of the power of the acceptor; and as against the acceptor, when it comes to the knowledge of the proposer. The communication of acceptance is complete, as against the proposer, when it is put a course of transmission to him, so as to be out of the power of the acceptor; and as against the acceptor, when it comes to the knowledge of the proposer.

Example of Communication of offer and acceptance Example of offer:- Example of offer:- Amir propose, by letter. To sell a house to Babul at Taka 10 lac. The communication of proposal is complete when Babul receives the letter. Amir propose, by letter. To sell a house to Babul at Taka 10 lac. The communication of proposal is complete when Babul receives the letter. Example of acceptance:- Example of acceptance:- A propose by a letter to sell a house to B at a certain price. B accepts A’s proposal by letter by post. The communication of acceptance is completed as against A, when the letter is posted, as against B when the letter is received by A. A propose by a letter to sell a house to B at a certain price. B accepts A’s proposal by letter by post. The communication of acceptance is completed as against A, when the letter is posted, as against B when the letter is received by A.

Communication of Revocation (section 5) As against the persons who makes it, when it is put into a course of transmission to the persons to whom it is made so as to be out of the power of the person who makes it, as against the person to whom it is made, when it comes to his knowledge. As against the persons who makes it, when it is put into a course of transmission to the persons to whom it is made so as to be out of the power of the person who makes it, as against the person to whom it is made, when it comes to his knowledge.

Modes of revocation of offer (section 6) Notice of revocation Lapses of time Non fulfilment of condition precedent Death or insanity Counter offer Subsequent illegality

Communication of revocation of acceptance (section 5) An acceptance can be revoked at any time before the communication of acceptance complete as against the acceptor but not afterwards. Where an acceptor is sent by post, it stands complete against the acceptor when the letter reaches the offeror. It means that acceptance can be revoked before the letter actually reaches the offeror. An acceptance can be revoked at any time before the communication of acceptance complete as against the acceptor but not afterwards. Where an acceptor is sent by post, it stands complete against the acceptor when the letter reaches the offeror. It means that acceptance can be revoked before the letter actually reaches the offeror. Therefore, the communication of revocation of acceptance must reach the offeror before acceptance. But in English law once an acceptance given cannot be revoked at all. Therefore, the communication of revocation of acceptance must reach the offeror before acceptance. But in English law once an acceptance given cannot be revoked at all.

Difference b/w English law & Indian law 1. Under Indian law a proposal is revoked by death of the proposer before its acceptance only. Where as in English law, death of the proposer revokes an offer even if acceptance is made after the death of the proposer in ignorance of his death. 2. Under Indian law acceptance can be revoked before the communication of acceptance is complete against the acceptor. Where as in English law an acceptance once given, can not be evoked at all. Example:- X by a letter dated July 5, 1995 accepted the offer of Y. the letter did not reach Y. X on July 10, 1995 revokes the acceptance by a letter which reaches Y on 12 th. The acceptance revoked.