Offer: Prepared By-Shubham Shree 4

OFFER
Prepared by-
Shubham shree 4
OFFER
• To form an agreement, there must be at least two elements
– offer and acceptance.
• An offer is the starting point in the making of an
agreement. Thus, offer is the foundation of any agreement.
• An offer is also called ‘proposal’.
• Sec 2(a) of Indian Contract Act, 1872 defines an 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 offer to such act or abstinence, he is said
to make a proposal.”
Offer must be distinguished from invitation to offer
• An offer is different from an invitation to offer. In the case of
invitation to offer the person sending out invitation does not make
an offer but only invites the other parties to make an offer.
• Example: Menu card of restaurant is an invitation to put an offer.
• Example : Price-tags attached with the goods displayed in any
showroom or supermarket is also an invitation to proposal. If the
salesman or the cashier does not accept the price, the interested
buyer cannot compel him to sell, if he wants to buy it, he must
make a proposal.
• Example: Job or tender advertisement inviting applications for a
job or inviting tenders is an invitation to an offer.
• Example: An advertisement for auction sale is merely an
invitation to make an offer and not an offer for sale. Therefore,
an advertisement of an auction can be withdrawn without any
notice. The persons going to the auction cannot claim for loss
of time and expenses if the advertisement for auction is
withdrawn.
Legal rules as to valid offer
1. Offer must be communicated to the offeree
An offer must be communicated to the person to whom it is made. i.e., One
can accept the offer only when he knows about it.
Acceptance in ignorance of offer confers no right. i.e., An offer accepted
without its knowledge does not confer any legal rights on the acceptor.
Lalman Shukla v. Gauri Dutt
A’s nephew has absconded from his home. He sent his servant to trace his
missing nephew. When he servant had left, A then announced that anybody
who discovered the missing boy, would be given the reward of Rs.500. The
servant discovered the missing boy without knowing the reward. When the
servant came to know about the reward, he brought an action against A to
recover the same. But his action failed. It was held that the servant was not
entitled to the reward because he did not know about the offer when he
discovered the missing boy.
2. It must be made by one person to another person
The person who makes an offer is called “Offeror” or
“Promisor” and the person to whom the offer is made is
called the Offeree” or “Promisee”.
Example-
• Mr. A says to Mr. B, “Will you purchase my car for
Rs.1,00,000?” In this case, Mr. A is making an offer to Mr. B.
Here A is the offeror and B is the offeree.
3. The offer must be certain and definite.
If the terms of the offer are vague or indefinite, its
acceptance cannot create any contractual relationship.
Example: A offered to sell to B. ‘a hundred tons of
oil’. The offer is uncertain as there is nothing to show
what kind of oil is intended to be sold.
4. The offer must be capable of creating legal relationship.
An offer must be such that when it is accepted it will create
a legal relationship. A social invitation do not create legal
relation. It must be an expression of readiness or willingness
to do (i.e., a positive act) or to abstain from doing something
(i.e., a negative act).
• It must be made with a view to obtain the consent of that
other person to proposed act or abstinence.
Example: A invited B to a dinner and B accepted the
invitation. It is a mere social invitation. And A will not be
liable if he fails to provide dinner to B.
Types of Offer
• Express offer - When the offeror expressly communicates the offer,

the offer is said to be an express offer. The express communication
of the offer may be made by words either spoken or written.
• Implied offer – when the offer is not communicated expressly. An
offer may be implied from:-
• The conduct of the parties or
• The circumstances of the case
• Specific Offer- It means an offer made to
(a) a particular person or
(b) a group of persons
It can be accepted only by that person to whom it is made
communication of acceptance is necessary in case of specific offer.
• General offer
It means an offer which is made to the public at large.
General offer can be accepted by anyone. Communication of
acceptance is not necessary is case of general offer
If offeree fulfil the terms and conditions which is given in offer
then, offer is accepted.
Carlill V. Carbolic Smoke Ball Co
• Company advertised that a reward of Rs.100 would be given to
any person who would suffer from influenza after using the
medicine (Smoke balls) made by the company according to the
printed directions.
• One lady, Mrs, Carlill, purchased and used the medicine
according to the printed directions of the company but suffered
from influenza, She filed a suit to recover the reward of Rs.100.
The court held that there was a contract as she had accepted a
general offer by using the medicine in the prescribed manner
and as such is entitled to recover the reward from the company.
• Cross offer
When two parties exchange identical offers in ignorance at the time of each
other’s offer, the offer’s are called cross offer.
Two cross offer does not conclude a contract. Two offer are said to be cross
offer if -
• They are made by the same parties to one another
• Each offer made in ignorance of the offer made by the other
• The terms and conditions contained in both the offers’ are same.
Example : A offers by a letter to sell 100 tons of steel at Rs.1,000 per ton. On
the same day, B also writes to A offering to buy 100 tons of steel at Rs.1,000
per ton.
When does a contract come into existence: - A contract comes into existence
when any of the parties, accept the cross offer made by the other party.
• Counter offer
when the offeree give qualified acceptance of the offer subject to
modifications and variations in the terms of original offer. Counter offer
amounts to rejection of the original offer.
Legal effect of counter offer:
(1) Rejection of original offer
(2) The original offer is lapsed
(3) A counter offer result is a new offer.
Example: A offered to sell his pen to B for Rs.1,000. B replied, “ I am
ready to pay Rs.950.” On A’s refusal to sell at this price, B agreed to pay
Rs.1,000. Held, there was not contract as the acceptance to buy it for
Rs.950 was a counter offer, i.e. rejection of the offer of A. Subsequent
acceptance to pay Rs.1,000 is a fresh offer from B to which A was not
bound to give his acceptance.
• Standing, open and continuous offer
An offer is allowed to remain open for acceptance over a
period of time it is known as standing, open or continuous
offer. Tender for supply of goods is a kind of standing offer.
Example: When we ask the newspaper vendor to supply the
newspaper daily. In such case, we do not repeat our offer daily
and the newspaper vendor supplies the newspaper to us daily.
The offers of such types are called Standing Offer.

Offer: Prepared By-Shubham Shree 4

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OFFER

• Express offer - When the offeror expressly communicates the offer,

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