Contract Act 2

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Contract Act-2

01

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Offer or Proposal

When one person signifies to another his willingness to do or to abstain from doing any thing with a view to --

obtaining the assent of that person to such act or absentinence , he is said to make a proposal/offer:

Person making the proposal is called PROMISOR & person accepting is called PROMISEEEssential of a valid offer: An offer may be generic or specific: According to sec 2 ( a) an offer must be made to a specific person . An

offer may be made to the world at large . But the contract is made only with the person who accepts & fulfills the condition of the proposal

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Essentials of a valid Offer In the words of ANSON : An offer need not be made to an ascertained person , but no

contract can arise until it has been accepted by an ascertained person.

Ex: Co offered by ad that he who contacts epidemic influenza , cold or any disease after taking medicine as per printed directions will be given an award; one person took medicine & suffered from influenza & was entitled to recover the promised award.

In the case of general offer of reward for some information or restoration of a missing thing , the offer is open for acceptance to only one person who performs the required condition & as soon as the condition is performed , offer is closed

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Essentials of a valid Offer

An offer should be made within the intention of creating legal obligation.

Examples Do you intend to sell your motorcycle? – It is not a proposal Similarly a mere statement of intention :- I may sell my car if

I can get Rs 2 lakhs for it -- It is not a proposal But if M says to N “ Will you buy my car for Rs2 lakhs or I

am willing to sell my car to you for Rs 2 lakhs . It is a proposal as it has been made with the intention of

obtaining assent of N

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Offer or Proposal

Essential of a valid offer: An offer may be express or implied: Express offer is expressed by words , spoken or written & one which is

inferred from the conduct of a person or circumstances of the case is implied.

A shoe shiner starts shining shoe without being asked to do so, a person who allows this work without giving any verbal or written acceptance for this work has to pay for shoe shining work , because this is an implied offer.

DTC runs buses on different routes to carry passengers at the scheduled fares. This is an implied offer by DTC

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Essential of a valid offer: An offer must contemplate giving rise to legal

consequences & be capable of creating legal relations:

Ex : offer to a friend for dinner or offer to your spouse to take him/her for movie is not a valid offer for creating binding agreement / contract

the terms of an offer must be certain & not loose or vague Ex: M purchased a horse from N & promised to buy another if first

horse proved lucky. M refused to buy second horse. N can not enforce the agreement or sue him because the term of

agreement is vague & uncertain An invitation to offer is not an offer EX: catalogues of prices, or display of goods with prices marked on it do

not constitute an offer. These are an invitation for an offer. Transmission of such an offer does not amount to supply of an unlimited quantity of goods as soon as an order is given

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Essential of a valid offer: An offer must be communicated to the offeree: Doing

anything in ignorance of the offer can never be treated as its acceptance, for there was never a consensus of wills. This applies to both specific & general offers

Ex : A, without knowing the reward for arrest of a particular criminal , catches the criminal & gives info to the Police. A can not recover the reward as he was not aware of the offer when it was made.

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

Ex: An offeror can not say that if acceptance is not communicated up to a certain date , the offer would be presumed to have been accepted . If the offeree does not reply then there is no contract, because no condition of obligation can be imposed on him , on the ground of justice.

An offer can be made subject to any terms & conditions. An offeror may attach any terms & conditions to the offer. He may even prescribe the mode of acceptance.

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Essential of a valid offer: Two identical cross-offer do not make a contract Ex : A wrote to b B offering to sell 100 tons of iron at Rs 8,000/== ton .

On the same day B wrote to A buy 100 tons of iron at Rs 8,000/= ton Letters crossed in post but there is no concluded contract between A & B because the offers were simultaneous , each being made in ignorance of other , hence there is no acceptance of each other’s offer

Lapses & Revocation of offer An offer lapses after stipulated or reasonable time

Ex: An applicant was informed for allotment of shares & deposit the call money by 31 Dec 09. Deposit of money means giving acceptance. If money not deposited by 31 Dec 09 then the offer lapses

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Lapses & Revocation of offer An offer lapses by not being accepted in the mode

prescribed. An offer lapses by rejection i.e. if it has been rejected by offeree.

Rejection may be expressed by words, written or implied An offer lapses by the death or insanity of the offeror or the

offeree before acceptance- Sec 6(4) An offer lapses by revocation : an offer is revoked when it is

retracted by the offeror. An offer may be revoked, at any time before acceptance.

Ex : At an auction ‘A’ offers highest bid but he withdraws it before fall of hammer . There is no concluded contract

An offer stands revoked if the offeree fails to fulfill a condition precedent to acceptance ( sec 6(3)

An offer lapses by subsequent illegally or destruction of a subject matter

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Acceptance-sec 2(b)When the person to whom the

proposal is made signifies his willingness thereto the proposal is said to be accepted :

By accepting offer:-Acceptor expresses his willingness to be

bound by the terms & conditions of an offer.

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Rules regarding Acceptance

An analogy of lighted match stick- given by Anson

Acceptance is to an offer what a lighted match stick is to a gun powder

It produces something which can not be recalled

An acceptance turns the offer into a binding obligation.

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Acceptance-sec 2(b)

Analogy of lighted match stick- given by Anson

Acceptance is to an offer what a lighted match stick is to a gun powder

It produces something which can not be recalled

An acceptance turns the offer into a binding obligation.

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Rules Regarding Acceptance

An offer can be accepted by the person to whom it is made or

to a person who has been authorized on behalf of the person to whom the offer has been made

Acceptance should be unconditional & absolute

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Rules Regarding Acceptance

Acceptance should be communicated By writing, word of mouth or also by

conduct An agreement does not result from a mere

state of mind. Acceptance should be according to

the prescribed form

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Rules Regarding Acceptance

Acceptance should be communicated By writing, word of mouth or also by

conduct An agreement does not result from a mere

state of mind. Acceptance should be according to

the prescribed form- proposer has right to prescribe the manner of acceptance

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Rules Regarding Acceptance

Acceptance must be provoked by an offer i.e acceptor must be aware of offer

Acceptance must be given before an offer lapses or is revoked

Provisional acceptance is no acceptance.- offer may be withdrawn before given final acceptance

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Rules Regarding Acceptance

Contract by Post- under English lawProposer is legally bound by the

acceptance effected through postal medium--

when the latter is prepared, addressed, stamped & mailed even though it is delayed or lost in transit

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Rules Regarding Acceptance Contract by Post- sec 4( Indian law) Communication of an acceptance is complete as against the

proposer when it is put in a course of transmission to him so as to be out of power of the acceptor; as against the acceptor when it comes to the knowledge of the proposer

no acceptance.- offer may be withdrawn before given final acceptance

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Termination of an offer- circumstances

LapseFailure to fulfill a condition precedent-

sec 6(3) Offer is terminated by the failure of the acceptor to fulfill a condition precedent to acceptance- Offer to sell car for Rs 1 lakh - buyer( acceptor) to show driving license ( Condition)

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Rules Regarding Acceptance

Rejection- By rejecting an offer- offeror can terminate the offer- Giving counter offer also implies rejecting an offer

Destruction of the subject matter or illegality- If the thing offered is destroyed or can not be bought & sold due to operation of law the offer it self lapses

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Rules Regarding Acceptance

Revocation- Withdrawal of an offer is called Revocation

Proposal may be revoked any time by the proposer before communication of its acceptance

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