OFFER & ACCEPTANCE

INTRODUCTION
Offer and acceptance analysis is a traditional approach in contract law used to determine whether an agreement exists between two parties. Agreement consists of an offer by an indication of one person (the "offeror") to another (the "offeree") of the offeror's willingness to enter into a contract on certain terms without further negotiations. A contract is said to come into existence when acceptance of an offer (agreement to the terms in it) has been communicated to the offeror by the offeree and there has been consideration bargained-for induced by promises or a promise and performance. The offer and acceptance formula, developed in the 19th century, identifies a moment of formation when the parties are of one mind. This classical approach to contract formation has been weakened by developments in the law of estoppels, misleading conduct, misrepresentation and unjust enrichment. Section 2(a) of Indian contract act defines offer as when one person signifies to another his willingness to do or to abstain from doing something with a view to obtaining the assent of other, such act or abstinence is said as proposal.

Legal rules regarding valid offer

An offer may be express or implied It should give rise to legal consequences and be capable of creating legal relations The term of the offer must be certain 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 party An offer should not contain a term the non compliance of which would amount to acceptance Two identical cross offers do not make a contract. An invitation of offer is not an offer

Invitation to offer
Display of goods by a shopkeeper in his window, with prices marked on them, is not an offer but merely an invitation to the public to make an offer to buy the goods at the marked the prices. PHARMACEUTICAL CHEMISTS SOCIETY OF GREAT BRITAIN vs BOOTS CASH

A sees an article marked price rupees twenty in Bs shop. He offers B Rs20 for the article. B refuses to sell saying the article is not for sale. Held A cannot force B to sell him the article at Rs20. Marking of price of an article amounts to an invitation to offer and not an offer

Essential of offer
It must be an expression of the willingness to do or to abstain from doing something It must be made to another person It should be done with a objective to obtain the assent of the other person The objective of offer should be legal one

Lapses and revocation of offer

An offer lapses after stipulated or reasonable time An offer lapses by not being accepted in the mode prescribed An offer lapses by rejection An offer lapses by the death or the insanity of the offeror or the offeree before acceptance An offer lapses by revocation before acceptance An offer lapses by subsequent illegality or destruction of subject matter.

When communication is complete

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

Communication of acceptance( sec 4 para2)As against the proposer-when it is put into course of transmission to him so as to be out of the power of the acceptor As against the acceptor- when it comes to the knowledge of the proposer

Time of revocation of offer and acceptance(sec5)

Revocation of offer(sec5 para1)- A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer but not afterwards. (Revocation of acceptance sec5 para2)- An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

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

may revoke his offer at any time before B post his letter of acceptance i.e 4th but not afterwards. B may revoke his acceptance at any time before the letter of acceptance reaches an i.e 6th but not afterwards.

Revocation of the offer by the offeror

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

Decided case on revocation of offer by the offeror CASE 1

In cooke .v. Oxley(1790)3 T R 653 ,A offered to sell 266 hogshed at a certain price and promised to keep it open for acceptance by B till 4 PM of that day .Before that time A sold them to C ,B accepted before 4PM but after the revocation by A .it was held that the offer was already revoked.

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

Case 2 - offer lapses after reasonable time

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

Offer lapses after stipulated time or reasonable time case 1

In Head V. Diggon, 3M and R.97 a seller on Thursday offered wool to a buyer and gave him three days in which he had to accept .The buyer accepted the offer on Monday but the seller after waiting for three days had sold the wool. It was held that the offer had lapsed by Monday morning by its express terms and the seller was not bound.

ACCEPTANCE
Section 2(b) states that a proposal when the person to whom the proposal is made signifies his assent thereto the proposal is said to be accepted

Legal rules regarding acceptance

Acceptance must be given only by the person to whom the offer is made Acceptance must be absolute and unqualified It should be communicated by the acceptor It should be given within reasonable time or time stipulated Acceptance must succeed the offer.

Types of offer
General & specific offer Express & implied offer Positive &negative offer Cross offer

General and specific offer

General offer made to the whole world at large

Specific offer made to some specific person

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

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

Express and implied offer

When an offer is expressed by words spoken or written it is termed as an express offer. Implied offer means an offer made by conduct. when one person allows the other to perform certain acts under such circumstances that nobody would accept them without consideration it will amount to an offer by conduct and the permission of the party ,who is benefited by such performance ,will amount to his acceptance .such an acceptance will be asked to pay for it. A bus company runs buses between India gate to kahsmiri gate. there is implied offer from the bus company to take any person on the route who is prepared to pay the prescribed fare. the offer will be said to be accepted by a passenger as soon as he takes seat in the bus. A bid at an auction is an implied offer to buy. Similarly consuming eatables at a self service restaurant, both create implied promise to pay for the benefits enjoyed.

Positive and negative offer

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

Cross offer
Two offer similar in all respects, made by one party to the other ,in ignorance of each others offer, are termed as cross offers. they shall not constitute acceptance of ones offer by the other. Example of cross offer Sham made an offer to ram to sell his car for Rs20000 through post. on the same time ram made an offer to buy shams car in Rs18000 through post ,without info of the offer of sham. Such an offer is known as cross offer. and offer of ram do not constitute acceptance. TINN vs. HOFFMANN

A offers by a letter to sell his car to B for Rs 15000. B at the same time offers by a letter to buy As car for Rs 15000. The two letters cross each other in the post. Is there a contract between A and B? No cross offer do not form any contract.

Communication of offer and acceptance

Communication of offer(sec 4): The communication of the offer complete when it comes to the knowledge of the person to whom it is made Example: A sends a proposal in the mail to B and if the mail lost, it can be held that the communication of the proposal is not complete. Communication of acceptance (sec4): Communication of acceptance is complete when it put in course of transmission to him as to be out of the power of the acceptor to withdraw same and when it comes to the knowledge of the proposer.

Legal rules regarding acceptance

Acceptance must be given only by the person to whom the offer is made. Acceptance must be absolute and unqualified Acceptance must be expressed in some usual and reasonable manner ,unless the proposal prescribes the manner in which it is to accepted. Acceptance must be communicated by the acceptor. Acceptance must be given within a reasonable time and before the offer lapses and /or revoked. Acceptance must succeed the offer.