Offer (bus.law)

OFFER & ACCEPTANCE

Offer & Acceptance OFFER

OFFER = PROPOSAL

Offer

Person making ‘Proposal’ or ‘Offer’

Offeror

Promisor

Offer

Person to whom offer is made

Offeree

Offer

Person accepting ‘Proposal’ or ‘Offer’

Acceptor

Promisee

Definition of Proposal or Offer Indian Contract Act defines a proposal / Offer, “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”.

Offer

4 Essential Constituents of an Offer

Expression of the willingness. Definite Offer. Offer must be made to another person. Communicated to the Oferee. Offer must be given with intention to gain assent of other party.

How an offer is made? Offer made by

Expressing words Spoken Written

Express Express Offer Offer

Express Offer When A says to B, “ Will you purchase my house at Meerut for Rs. 50,000?”

Express Offer

A advertisement in a news paper offering Rs. $1000.00 to any one who returns his lost dog.

How an offer is made contd……

• Offer made by

Conduct of Parties Circumstances

Implied Implied Offer Offer

Implied Offer

 When a weighing

machine or Public phone is installed on a railway platform or a public place, there is an implied offer by the owner of the machine/phone. Any one by putting coin in the slot of the machine can avail this offer.

How an offer is made contd……

• Offer made to

Definite Person World at large

Specific Specific Offer Offer General General Offer Offer

How an offer is made contd……

Specific Offers

How an offer is made contd……

General Offers

Case on General offer 

Carlill vs Carbolic Smoke Ball Co. Carbolic Smoke Ball Co. issued an advertisement in which the Company offered to pay 100 ponds to any person who contracts influenza, after having used their smoke balls 3 times daily for 2 weeks, according to the printed directions.

Case on General offer Mrs. Carlill, on the faith of the ad bought and used the Balls according to the directions, but she nevertheless subsequently suffered from influenza. She sued the company for the promised reward Verdict:- The company was held liable and were ask to pay promised reward to Mrs. Carlill.

Legal Rules Regarding a Valid Offer

1. 1. An An offer offer may may be be ‘express’ ‘express’ &&

‘Implied’. ‘Implied’. 2. 2.Competent Competent to to give give rise rise to to legal legal consequences. consequences. 3. 3.Definite Definite terms. terms. 4. 4.Invitation Invitation to to offer offer isis not not an an offer. offer.

Legal Rules Regarding a Valid Offer

5. 5. 6. 6. 7. 7. 8. 8. 9. 9.

An An Offer Offer may may be be ‘Specific’ ‘Specific’ or or ‘General’. ‘General’. Offer Offer must must be be Communicated Communicated to to offeree. offeree. NonNon- Compliance= Compliance= Acceptance Acceptance isis not not accepted accepted Any Any terms terms and and condition. condition. Cross Cross offers offers == No No Contract. Contract.

1. An offer may be ‘express’ or ‘implied’ An offer may be made either by words or by conduct. An offer which is expressed by words, spoken or written, is called an ‘express offer’ and the one which is inferred from the conduct of a person or the circumstances of the case is called an ‘implied offer’.

2.Offer Must be Competent to give rise to legal consequences. 

If the offer does not intend to give rise to legal consequences, it is not a valid offer in the eye of law.

(An offer to a friend to dine at the oferor’s place is not a legal binding hence no valid offer.) 

Even if in business agreement if the parties agrees that the breach of the agreement would not confer on either parties a right to enforce the agreement in a court of law, there is no contract.

(Rose & Frank Co. vs Crompton & Brothers Ltd.

3. The terms of offer must be certain and not loose or vague. 





To be a valid offer all the terms of the offer must be definite and certain.

Absence of which creates no binding obligation Thus an agreement to agree in future is not a contract, because the term of agreement are uncertain as they are yet to be settled.

Illustration Taylor vs Portington, (1855) A offered to take a house on lease for the three years at 285 ponds per annum if the house was “ put into through repair and drawing rooms handsomely decorated according to the present style”. Verdict:- The offer was too vague to result in a contractual relation.

4. An invitation to offer is not an offer Invitation to Offer

Legal Rules Regarding Valid Offer

Offer

Invitation to offer is not an offer

offer must be distinguished from ‘invitation • An to receive offer’. an invitation to offer/ treat, the party is • In merely inviting offers from others, that is, he is willing to deal with anybody who, on such information, is willing to deal with anybody who, on such information, is willing to negotiation with him.

Invitation to offer is not an offer

Such invitations are not consider a lawful offer and thus not turn into agreement on its acceptance. E.g. 1.

2.

An auctioneer's announcement for auctioning of certain good is not an offer it is just invitation for offers.

An advertisement inviting tenders is not an offer but a mere invitation to offer.

Invitation to offer is not an offer

• Generally, advertisements are invitations to treat, so the person advertising is not compelled to sell to every customer. In Partridge v Crittenden [1968] 1 WLR 1204, it was held that where the appellant advertised to sell wild birds, was not offering to sell them. Lord Parker CJ commented that it did not make "business sense" for advertisements to be offers, as the person making the advertisement may find himself in a situation where he would be contractually obliged to sell more goods than he actually owned.

Invitation to offer is not an offer

• In certain circumstances however, an advertisement can be an offer, a well known example being the case of Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256, where it was held that the defendants, who advertised that they would pay anyone who used their product in the prescribed manner and caught influenza £100 and said that they had deposited £1,000 in the bank to show their good faith, has made an offer to the whole world and were contractually obliged to pay £100 to whoever accepted it by performing the requested acts.

Invitation to offer is not an offer

Thus, the basic difference between an offer and an invitation to offer is that in case of an offer and the offerer shows his willingness to be bound by his offer if the other party accepts his offer, but in case of an invitation to offer he is only informing others the terms on which he is willing to negotiate.

Invitation to offer is not an offer

Note:A declaration of intention and an announcement is not a offer:(Haris v Nickerson(1873)):An auctioneer advertised in newspaper about sale of old office furniture to be held. A broker came from distant place but all the furniture was withdrawn. The broker sued the auctioneer for his loss of time and expense Verdict :- A declaration of intention to to do a thing did not create a binding contract with those who acted upon it and thus can not claim for anything.

Invitation to offer is not an offer

Rooke v Dawson (1895)):-

A announcement made by a college for some scholarship examination is not an offer.

5. An offer may be specific or general An offer is said to be ‘specific’ when it is made to a definite person or persons. Such an offer can be accepted only by the person or persons to whom it is made. A ‘General offer’ , on the other hand, is one which is made to the world at large or public in general and may be accepted by any person who fulfills the requisite conditions.

6. An offer must be communicated to the offeree.

The offer must be communicated to the

person to whom it is made. An offer becomes effective only when it is communicated to the offeree. Untill the offer is made known to the offeree, there can be no acceptance and no contract. Doing anything in ignorance of the offer can never be treated as its acceptance for there was never a consensus of will.

Communication of offer

Lalman Shukla vs Gauri Datt :-

“the defendant’s nephew absconded from home. He sent his servant, the plaintiff to search him. After the servant left the defendant announced for Rs.501 as reward to any body giving information relating to the boy. The servant unaware about the reward informed the defendant about the boy. Latter on reading the notice the servant claimed the reward.

Communication of offer

Verdict:- His suit was dismissed on the

ground that he could not accept the offer unless he had knowledge of this.

 Communication of special term if any is also necessary to make a valid offer.

7. An offer should not contain a term the non-compliance of which would amount to acceptance

An offeror cannot say that if

acceptance is not communicated up to certain date, offer would be presumed to have been accepted. It the offeree does not reply, there is no contract, because no obligation to reply can be imposed on him, on the grounds or justice.

8. An offer can be made subject to any terms and conditions.  An offeror may attach any terms and conditions to the offer he makes. He may even prescribe the mode of acceptance.  Unless all the terms are agreed and accepted contract do not come into existence.

9. Two Identical cross- offers do not make a contract

 When two parties make identical offers to each other, in ignorance of each other’s offer, the offers are ‘ Cross-Offers’.  Cross-Offers do not constitute acceptance of one’s offer by the other and as such there is no completed agreement.

Cross offers

On 15th October, 1989 A wrote to B offering to sell him 100 tons of iron at Rs. 8,800 per ton. On the same day, B wrote to A offering to by 100 tons of iron at Rs. 8,800 per ton. The letters crossed in the post. There is no concluded contract between A and B, because the offers were simultaneous, each being made in ignorance of the other, and there is no acceptance of each other’s offer.

Cross Offers and Counter Offer • Cross offers are different from counter offer • Counter Offer:The party being offered the agreement (contract) must accept the EXACT terms of the offer. If he introduces new terms (eg an item is being offered for £50 but the buyer offers £40 instead) then this is a counter offer.

Laps and Revocation of Offer

• Laps and Revocation of offer means

taking back or withdrawal of the offer.

Laps and Revocation of Offer

Laps and Revocation of Offer

1. 2. 3. 4. 5. 6. 7.

By laps of time Lapse by Rejection Lapse due to insanity or death of offeror. Lapse due to acceptance of offer in non prescribed mode. Lapse by revocation. Non-fulfillment of a condition Lapse due to illegality or destruction of subject matter.

1.An offer lapses after reasonable time

An offer lapses if acceptance is not

communicated within the time prescribed in the offer, or if no time is prescribed, within a reasonable time. In Ramsgate Victoria Hotel Co. vs Montifore An application for allotment of shares was made on 8th June. The applicant was informed on the 23rd November that shares were allotted to him. He refused to accept them. It was held that his offer had lapsed by reason of the delay of the company in notifying their acceptance, and that he was not bound to accept the shares.

2. An offer lapses by not being accepted in the mode prescribed An offer lapses by not being accepted in the mode prescribed, or if no mode is prescribed, in some usual and reasonable manner. • But if the mode of acceptance is not been conveyed than the offer do not lapse automatically. • If he fails to do so he is deemed to have accepted the acceptance.

3. An offer lapses by rejection An offer lapses if it has been rejected by the offeree. The rejection may be:-

Express Express (words (words spoken spoken or or written) written) Implied Implied

1. 1.Counter Counter Offer Offer 2. 2.Conditional Conditional acceptance acceptance

4. An offer lapses by the death or insanity of the offeror or offeree before acceptance  If the offeror dies or become insane before

acceptance, the offer lapses provided that the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.  An acceptance in ignorance of the death or insanity of offeror leads to a valid contract.  Death or insanity of the offeror would not put an end to the offer untill it comes to the notice of the acceptor before acceptance  An offeree’s death or insanity before accepting the offer puts an end to the offer and his heirs cannot accept for him.

5. An offer lapses by revocation

An offer is revoked when it is retracted back by the offeror. An offer may be revoked at any time before acceptance, by the communication of notice of revocation by the offeror to the other party.

An offer lapses by revocation

• A revocation of an offer must be communicated or made known to the offeree, otherwise the revocation does not prevent acceptance. Revocation of “general offer” must be made through the same channel by which the original offer was made. • Revocation must always be expressed and communicated by the offeror himself or his duly authorized agent to the other party.

6. Revocation by non-fulfilment of a condition precedent to acceptance An offer stands revoked if the offer fails to fullfill a condition precedent to acceptance. A offers to sell his car to B at Rs.75,000, if B joins Lions club with in a week. The offer can be revoked by A if B do not join Lions Club with in a week.

7. An offer lapses by subsequent illegality or destruction of subject matter. An offer lapses if it becomes illegal after it is made, and before it is accepted. Thus, where an offer is made to sell 10 bags of wheat for Rs. 6,500, and before it is accepted, a law prohibiting the sale of wheat by private individuals is enacted, the offer comes to an end.