Offer And Acceptance

Shweta Verma, Research ScholarShweta Verma, Research Scholar 11

Offer and acceptanceOffer and acceptance

Section 2(a) of Indian contract act defines offer as Section 2(a) of Indian contract act defines offer as when one person signifies to another hiswhen one person signifies to another his

willingness to do or to abstain from doingwillingness to do or to abstain from doing something with a view to obtaining the assent of something with a view to obtaining the assent of other , such act or abstinence is said as proposal.other , such act or abstinence is said as proposal.


Legal rules regarding valid Legal rules regarding valid offeroffer

An offer may be express or impliedAn offer may be express or implied It should give rise to legal consequences and be capable of It should give rise to legal consequences and be capable of

creating legal relationscreating legal relations The term of the offer must be certainThe term of the offer must be certain An offer can be made subject to any terms and conditions.An offer can be made subject to any terms and conditions. It should be made with a intent to obtain the assent of the other It should be made with a intent to obtain the assent of the other

partyparty An offer should not contain a term the non compliance of An offer should not contain a term the non compliance of

which would amount to acceptancewhich would amount to acceptance Two identical cross offers do not make a contract.Two identical cross offers do not make a contract. An invitation of offer isAn invitation of offer is not an offernot an offer


Invitation to offerInvitation to offer Display of goods by a shopkeeper in his window, Display of goods by a shopkeeper in his window,

with prices marked on them, is not an offer but with prices marked on them, is not an offer but merely an invitation to the public to make an offer to merely an invitation to the public to make an offer to buy the goods at the marked the prices.buy the goods at the marked the prices.

PHARMACEUTICAL SOCIETY OF GREAT PHARMACEUTICAL SOCIETY OF GREAT BRITAIN vs BOOTS CASH CHEMISTSBRITAIN vs BOOTS CASH CHEMISTS

A sees an article marked ‘price rupees twenty’ in B’s A sees an article marked ‘price rupees twenty’ in B’s shop. He offers B Rs20 for the article. B refuses to shop. He offers B Rs20 for the article. B refuses to sell saying the article is not for sale. sell saying the article is not for sale.

Held A cannot force B to sell him the article at Rs20. Held A cannot force B to sell him the article at Rs20. Marking of price of an article amounts to an Marking of price of an article amounts to an invitation to offer and not an offer invitation to offer and not an offer


Essential of offerEssential of offer

It must be an expression of the willingness to It must be an expression of the willingness to do or to abstain from doing somethingdo or to abstain from doing something

It must be made to another personIt must be made to another person It should be done with a objective to obtain the It should be done with a objective to obtain the

assent of the other personassent of the other person The objective of offer should be legal oneThe objective of offer should be legal one


Lapses and revocation of offerLapses and revocation of offer

An offer lapses after stipulated or reasonable time An offer lapses after stipulated or reasonable time An offer lapses by not being accepted in the mode An offer lapses by not being accepted in the mode

prescribed prescribed An offer lapses by rejectionAn offer lapses by rejection An offer lapses by the death or the insanity of the An offer lapses by the death or the insanity of the

offeror or the offeree before acceptanceofferor or the offeree before acceptance An offer lapses by revocation before acceptanceAn offer lapses by revocation before acceptance An offer lapses by subsequent illegality or destruction An offer lapses by subsequent illegality or destruction

of subject matter.of subject matter.


When communication is When communication is completecomplete

Communication of offer (sec 4 para 1)-Communication of offer (sec 4 para 1)- the the communication of offer is complete when ii comes to communication of offer is complete when ii comes to the knowledge of the person to whom is made.the knowledge of the person to whom is made.

Communication of acceptance( sec 4 para2)-Communication of acceptance( sec 4 para2)-

As against the proposer-whenAs against the proposer-when it is put into course of it is put into course of transmission to him so as to be out of the power of transmission to him so as to be out of the power of the acceptorthe acceptor

As against the acceptor- whenAs against the acceptor- when it comes to the it comes to the knowledge of the proposarknowledge of the proposar


Time of revocationTime of revocationof offer and acceptance(sec5)of offer and acceptance(sec5)

Revocation of offer(sec5 para1)-Revocation of offer(sec5 para1)- A proposal A proposal may be revoked at any time may be revoked at any time before thebefore the communication of its acceptance is complete communication of its acceptance is complete as against the proposer but not afterwardsas against the proposer but not afterwards..

((Revocation of acceptanceRevocation of acceptance sec5 para2 sec5 para2)- An )- An acceptance may be revoked at any time acceptance may be revoked at any time before before the communication of the acceptance isthe communication of the acceptance is complete as against the acceptorcomplete as against the acceptor, but not , but not afterwards.afterwards.


Example Example

A proposes by a letter sent by post to sell his to B. A proposes by a letter sent by post to sell his to B. the letter is posted on the 1the letter is posted on the 1stst of the month. B accept of the month. B accept the proposal by a letter sent by post on the 4the proposal by a letter sent by post on the 4 thth. The . The letter reaches A on 6letter reaches A on 6thth

AA may revoke his offer at any time before B post his may revoke his offer at any time before B post his letter of accpetance i.e 4letter of accpetance i.e 4thth but not afterwards. but not afterwards.

B may revoke his acceptance at any time before the B may revoke his acceptance at any time before the letter of acceptance reaches A i.e 6letter of acceptance reaches A i.e 6thth but not but not afterwards. afterwards.


Revocation of the offer by the Revocation of the offer by the offerorofferor

The offeror can revoke his offer before it is The offeror can revoke his offer before it is accepted “the bidder at an auction sale may accepted “the bidder at an auction sale may withdraw (revoke) his bid (offer) before it is withdraw (revoke) his bid (offer) before it is accepted by the auctioneer by using any of the accepted by the auctioneer by using any of the customary method e.g. fall of hammer.customary method e.g. fall of hammer.


Decided case on revocationDecided case on revocationof offer by the offerorof offer by the offeror

CASE 1CASE 1 In In cooke .v. Oxley(1790)3 T R 653cooke .v. Oxley(1790)3 T R 653 ,A offered ,A offered

to sell 266 hogshed at a certain price and to sell 266 hogshed at a certain price and promised to keep it open for acceptance by B promised to keep it open for acceptance by B till 4 PM of that day .Before that time A sold till 4 PM of that day .Before that time A sold them to C ,B accepted before 4PM but after them to C ,B accepted before 4PM but after the revocation by A .it was held that the revocation by A .it was held that the offer the offer was already revoked.was already revoked.

A B


CASE 2CASE 2

IN IN Dickinson V. Dodds (1876) 2ch.D.463,ADickinson V. Dodds (1876) 2ch.D.463,A agreed to sell property to B by a written agreed to sell property to B by a written document which stated “this offer to be left document which stated “this offer to be left over until Friday 9AM”.on the Thursday A over until Friday 9AM”.on the Thursday A made a contract to sell the property to C .B made a contract to sell the property to C .B heard of this from X and on Friday at 7AM he heard of this from X and on Friday at 7AM he delivered to A an acceptance of his offer .Held delivered to A an acceptance of his offer .Held B could not accept A’s offer after he knew it B could not accept A’s offer after he knew it had been revoked by the sale of the property to had been revoked by the sale of the property to C.C.


Case 2 Case 2 offer lapses after reasonable timeoffer lapses after reasonable time

In In Ramsgate Hotel Co. V.MontefioreRamsgate Hotel Co. V.Montefiore (1866)1 Ex.109,M applied for shares in (1866)1 Ex.109,M applied for shares in June ,but the allotment was not made till June ,but the allotment was not made till November .Held that the offer to take shares November .Held that the offer to take shares had lapsed as the reasonable time had passed had lapsed as the reasonable time had passed since the making of the offer and M was not since the making of the offer and M was not bound to take shares.bound to take shares.


Offer lapses after stipulated timeOffer lapses after stipulated timeor or reasonable timereasonable time

case 1 case 1 In In Head V. Diggon ,3M and R.97,aHead V. Diggon ,3M and R.97,a seller on seller on

Thursday offered wool to a buyer and gave Thursday offered wool to a buyer and gave him three days in which he had to accept .The him three days in which he had to accept .The buyer accepted the offer on Monday but the buyer accepted the offer on Monday but the seller after waiting for three days had sold the seller after waiting for three days had sold the wool. It was held that the offer had lapsed by wool. It was held that the offer had lapsed by Monday morning by its express terms ,and the Monday morning by its express terms ,and the seller was not bound.seller was not bound.


ACCEPTANCEACCEPTANCE

Section 2(b) states thatSection 2(b) states that

A proposal when the personA proposal when the person

to whom the proposal is to whom the proposal is

made signifies his assent thereto the proposal is made signifies his assent thereto the proposal is said to be acceptedsaid to be accepted


Legal rules regarding acceptanceLegal rules regarding acceptance

Acceptance must be given only by the person Acceptance must be given only by the person to whom the offer is made to whom the offer is made

Acceptance must be absolute and unqualifiedAcceptance must be absolute and unqualified It should be communicated by the acceptorIt should be communicated by the acceptor It should be given within reasonable time or It should be given within reasonable time or

time stipulatedtime stipulated Acceptance must succeed the offer.Acceptance must succeed the offer.


Types of offerTypes of offer

General & specific offerGeneral & specific offer Express & implied offerExpress & implied offer Positive &negative offerPositive &negative offer Cross offerCross offer


General and specific offerGeneral and specific offer

General offer made to the General offer made to the whole world at large whole world at large

Specific offer made to Specific offer made to some specific person some specific person

General offer can be General offer can be accepted by any person accepted by any person having notice of the offerhaving notice of the offer by doing what is required by doing what is required under the offerunder the offer

Specific offer can be Specific offer can be accepted only by person to accepted only by person to whom it was madewhom it was made


Carbolic smoke ballCompany advertisement

I want reward

Carlill vs Carbolic smoke ball company,(1983)IQB256


Decided caseDecided case Carbolic smokeCarbolic smoke ball company advertised in the newspaper ball company advertised in the newspaper

that whosever would take smoke balls ,manufactured by that whosever would take smoke balls ,manufactured by it ,according to the printed instructions would not contract it ,according to the printed instructions would not contract influenza. The company offered a reward of $100 to anyone influenza. The company offered a reward of $100 to anyone who contracted influenza after taking its smoke balls who contracted influenza after taking its smoke balls according to the printed instructions .It was added that $1000 according to the printed instructions .It was added that $1000 was deposited with alliance bank to show the sincerity of the was deposited with alliance bank to show the sincerity of the company. one Mrs.carlill used the smoke balls according to company. one Mrs.carlill used the smoke balls according to the directions given but contracted influenza. It was held that the directions given but contracted influenza. It was held that the offer was general one ,and Mrs.carlill had accepted it by the offer was general one ,and Mrs.carlill had accepted it by acting according to the advertisement and therefore the acting according to the advertisement and therefore the company could not get away from responsibility by saying company could not get away from responsibility by saying that it was a mere puff. She was entitled to get reward.that it was a mere puff. She was entitled to get reward.


Harbhajan lal vs. harcharan lalHarbhajan lal vs. harcharan lal In this case a young boy had run away from his In this case a young boy had run away from his

father’s house. the father issued a pamphlet father’s house. the father issued a pamphlet stating ,anybody who finds trace the boy and bring stating ,anybody who finds trace the boy and bring him home will get Rs500.Harbajan Lal who knew of him home will get Rs500.Harbajan Lal who knew of the reward, found out the boy at a Railway station the reward, found out the boy at a Railway station Dharamshala ,and took to the police station. It was Dharamshala ,and took to the police station. It was held that the handbill was a general offer and held that the handbill was a general offer and therefore he was entitled to the reward.therefore he was entitled to the reward.

I HAVE FOUND THEBOY


LALMAN vs GAURIDATTALALMAN vs GAURIDATTA It was held that the reward for the missing child cannot be It was held that the reward for the missing child cannot be

claimed by a person who traced the child without any claimed by a person who traced the child without any knowledge of the announcement. There was no contract knowledge of the announcement. There was no contract between the two in the first place because the proposal never between the two in the first place because the proposal never came to the knowledge of the announcement. There was no came to the knowledge of the announcement. There was no contract between the two in the first place because the contract between the two in the first place because the proposal never came to the knowledge of the person who proposal never came to the knowledge of the person who found the child and thus he could never accept it.found the child and thus he could never accept it.

I want reward


Express and implied offerExpress and implied offer

When an offer is expressed by words spoken or When an offer is expressed by words spoken or written it is termed as an express offer.written it is termed as an express offer.

Implied offer means an offer made by conduct. when Implied offer means an offer made by conduct. when one person allows the other to perform certain acts one person allows the other to perform certain acts under such circumstances that nobody would accept under such circumstances that nobody would accept them without consideration it will amount to an offer them without consideration it will amount to an offer by conduct and the permission of the party ,who is by conduct and the permission of the party ,who is benefited by such performance ,will amount to his benefited by such performance ,will amount to his acceptance .such an acceptance will be asked to pay acceptance .such an acceptance will be asked to pay for it.for it.


Example of implied offerExample of implied offer A bus company runs buses between India A bus company runs buses between India

gate to kahsmiri gate. there is implied offer gate to kahsmiri gate. there is implied offer from the bus company to take any person from the bus company to take any person on the route who is prepared to pay the on the route who is prepared to pay the prescribed fare. the offer will be said to be prescribed fare. the offer will be said to be accepted by a passenger as soon as he accepted by a passenger as soon as he takes seat in the bus.takes seat in the bus.

A bid at an auction is an implied offer to A bid at an auction is an implied offer to buy. Similarly consuming eatables at a self buy. Similarly consuming eatables at a self service restaurant, both create implied service restaurant, both create implied promise to pay for the benefits enjoyed.promise to pay for the benefits enjoyed.

auction

Acceptor Of offer

BidderIs anofferor


Positive and negative offerPositive and negative offer

A person may express his willingness to do A person may express his willingness to do something or to abstain from doing something something or to abstain from doing something e.g it may be an offer to construct a wall to e.g it may be an offer to construct a wall to provide privacy or not to construct a wall so provide privacy or not to construct a wall so that free passage of light and air may that free passage of light and air may notnot be be obstructed.obstructed.


Cross offerCross offer

Two offer similar in all respects, made by one Two offer similar in all respects, made by one party to the other ,party to the other ,in ignorance of each other’sin ignorance of each other’s offer,offer, are termed as cross offers. they shall not are termed as cross offers. they shall not constitute acceptance of one’s offer by the constitute acceptance of one’s offer by the other.other.


Example of cross offerExample of cross offer

Sham made an offer to ram to sell his car for Sham made an offer to ram to sell his car for Rs20000 through post. on the same time ram Rs20000 through post. on the same time ram made an offer to buy sham’s car in Rs18000 made an offer to buy sham’s car in Rs18000 through post ,without info of the offer of sham.through post ,without info of the offer of sham.

Such an offer is known as cross offer. and Such an offer is known as cross offer. and offer of ram do not constitute acceptance.offer of ram do not constitute acceptance.


Example of cross offerExample of cross offer

TINN vs HOFFMANNTINN vs HOFFMANN

A offers by a letter to sell his car to B for Rs A offers by a letter to sell his car to B for Rs 15000. B at the same time offers by a letter to 15000. B at the same time offers by a letter to buy A’s car for Rs 15000. The two letters buy A’s car for Rs 15000. The two letters cross each other in the post. Is there a contract cross each other in the post. Is there a contract between A and B?between A and B?

No cross offer do not form any contract.No cross offer do not form any contract.


Communication of offer and Communication of offer and acceptanceacceptance

Communication of offer(sec 4):The communication Communication of offer(sec 4):The communication of the offer complete when it comes to the knowledge of the offer complete when it comes to the knowledge of the person to whom it is madeof the person to whom it is made

ExampleExample: A sends a proposal in the mail to B and if : A sends a proposal in the mail to B and if the mail lost, it can be held that the communication of the mail lost, it can be held that the communication of the proposal is not complete.the proposal is not complete.

Communication of acceptance(sec4):communication Communication of acceptance(sec4):communication of acceptance is complete when it put in course of of acceptance is complete when it put in course of transmission to him as to be out of the power of the transmission to him as to be out of the power of the acceptor to withdraw same and when it come to the acceptor to withdraw same and when it come to the knowledge of the proposer.knowledge of the proposer.


Legal rules regarding acceptanceLegal rules regarding acceptance

Acceptance must be given only by the person to Acceptance must be given only by the person to whom the offer is made.whom the offer is made.

Acceptance must be absolute and unqualified Acceptance must be absolute and unqualified Acceptance must be expressed in some usual and Acceptance must be expressed in some usual and

reasonable manner ,unless the proposal prescribes the reasonable manner ,unless the proposal prescribes the manner in which it is to accepted.manner in which it is to accepted.

Acceptance must be communicated by the acceptor.Acceptance must be communicated by the acceptor. Acceptance must be given within a reasonable time Acceptance must be given within a reasonable time

and before the offer lapses and /or revoked.and before the offer lapses and /or revoked. Acceptance must succeed the offer.Acceptance must succeed the offer.


Check your memoryCheck your memory

Harish says in conversation to suresh that he Harish says in conversation to suresh that he will give Rs.10000 to a person whosoever will give Rs.10000 to a person whosoever marries his daughter .Alok marries Harish’s marries his daughter .Alok marries Harish’s daughter and files a suit to recover daughter and files a suit to recover Rs10000.will he succeed ?Rs10000.will he succeed ?


solutionsolution

No ,Harish has expressed his wish only ,and No ,Harish has expressed his wish only ,and has never made an offer with a view to has never made an offer with a view to obtaining the assent of the other party.obtaining the assent of the other party.

Secondly there was no offer to Alok or Suresh Secondly there was no offer to Alok or Suresh

It was neither general offer nor specific offer.It was neither general offer nor specific offer.


Check your memory Check your memory againagain

Amar had two visitors in his office one evening, Bharat and Ram. Bharat ran Amar had two visitors in his office one evening, Bharat and Ram. Bharat ran an event mgmt service. Amar had hosted a party the previous evening to an event mgmt service. Amar had hosted a party the previous evening to celebrate his son’s birthday. Bharat had done the mgmt for the party. Bharat celebrate his son’s birthday. Bharat had done the mgmt for the party. Bharat had come to Amar’s office that evening, to collect Rs20000 for having done had come to Amar’s office that evening, to collect Rs20000 for having done the work.the work.

Ram was the son of an ex- colleague of Amar. Ram’s family had fallen into bad Ram was the son of an ex- colleague of Amar. Ram’s family had fallen into bad times. They had accumulated a lot of debts. Ram was studying in the final times. They had accumulated a lot of debts. Ram was studying in the final year of college. He was going around meeting people his father had known year of college. He was going around meeting people his father had known and soliciting money as donation, so as to be able to finish his education. and soliciting money as donation, so as to be able to finish his education. Amar was a kind person. He told Ram that he would give him Rs5000. Ram Amar was a kind person. He told Ram that he would give him Rs5000. Ram pleaded and said that if Amar could give him Rs10000, he would not have to pleaded and said that if Amar could give him Rs10000, he would not have to go any further to collect money. Amar agreed to give him Rs10000go any further to collect money. Amar agreed to give him Rs10000

While Amar was in the process of obtaining the money to give to Bharat and While Amar was in the process of obtaining the money to give to Bharat and Ram, the phone rang. It was Amar’s stock broker. He informed Amar that on Ram, the phone rang. It was Amar’s stock broker. He informed Amar that on a particular purchase and sale order Amar had a loss of huge amount of a particular purchase and sale order Amar had a loss of huge amount of money. He had to pay to the broker Rs9 lakh, within a week. Amar was very money. He had to pay to the broker Rs9 lakh, within a week. Amar was very upset. In result he refused to pay the money agreed to Ram and Bharat.upset. In result he refused to pay the money agreed to Ram and Bharat.


questionsquestions

Was there an agreement between Amar and Was there an agreement between Amar and Bharat?Bharat?

Was there an agreement between Amar and Was there an agreement between Amar and Ram?Ram?

should agreements be fulfilled?should agreements be fulfilled?

Offer And Acceptance

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