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What is proposal/offer

• The words “proposal and offer” are synonymous and are used interchangeably.

• Definition: 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. (sec 2(a)

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2. Essential of an Offer

i. Must be an expression of willingness to do or to abstain from doing something.

ii. Must be to another person.iii. Must be made with a view to obtaining

the assent of the other person to such act or abstinence.

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3. Example

• “Do you intend to sell your motorbike”?– is not a proposal.

• If A says to B, “will you buy my motorbike for Rs. 40,000, is a proposal.

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4. Legal Rules Regarding a Valid Offer

1. An offer may be express or implied.

Examples: • X writes to Y that he offers to sell his

house to him for Rs.80,000. (Express)• A Transport Corporation runs buses on

different routes to carry passengers at the scheduled fares. Its an implied offer by T.C.

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Rules-Cont

2. An offer must be capable of creating legal relations. (again, moral and domestic agreements excluded).

3. Terms of the offer must be certain and not loose/vague.

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Rules--Cont

4. An invitation to offer is not an offer.• In the case of an “invitation to treat”, the

person sending out the invitation does not make an offer but only invites the other party to make an offer.

• Quotations, catalogues of prices or display of goods with prices marked thereon do not constitute an offer.

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Rules--Cont

5. An offer may be “ specific or general”.Illustrations:-a. Where A makes an offer to B to sell his bicycle

for Rs.2,000, there is specific offer.b. An offer made to the world at large, i-e offers

of reward made by way of advertisement to general public, for rendering of certain services, or the restoration of lost article.

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Rules--Cont

6. An offer must be communicated to the offeree.

a. An offer is effective only when it is communicated to the offeree.

b. Doing any thing on ignorance of offer can never be treated as its acceptance due to lack of consensus of will.

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Rules--Cont

7. An offer can be made subject to any terms and conditions.

• An offeror may attach any terms and conditions (permitted by law) e.g. “mode of acceptance” to the offer he makes. The Offeree will have to accept all the terms of the offer.

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Rules--Cont

8. 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 contract.

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Rules--Cont

• Illustration:-• On 15 Oct, 1998, A wrote to B offering to

sell his 100 tons of iron at 10,000 per ton. On the same day, B wrote to A offering to buy 100 tons of iron at 10,00 per ton. The letter crossed in the post.

• Contract was not concluded b/w A and, because the offers were simultaneous, so no acceptance of each other’s offer.

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Lapse and Revocation of Offer

1. An offer lapses after stipulated or reasonable time period. (sec 6(2)

(Ramsgate Victoria Hotel)

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Revocation of Offer

2. An offer lapses by not being accepted in the mode prescribed, or if no mode is prescribed, in some usual and reasonable manner.

3. An offer lapses by rejection.a. Express:- by words spoken or written,b. Implied:- i- counter offer by offeree, ii-

conditional acceptance by offeree.

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Revocation of an offer

4. An offer lapses by the death or insanity of the offeror or the offeree before acceptance.

• If the offeror dies or becomes insane before acceptance, the offer lapses provided that the fact of his death or insanity comes to the knowledge of the acceptor before acceptance. (sec 6(4)

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Revocation of offer

5. An offer lapses by revocation.• An offer may be revoked, at any time

before acceptance, by the communication of notice of revocation by the offeror to the other party. (sec 6(1)

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Revocation of offer

6. Revocation by non-fulfillment of a condition precedent to acceptance.

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

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Revocation of offer

7. An offer lapses by subsequent illegality or destruction of subject matter.

• Illustration:- where an offer is made to sell 10 bags of sugar 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.