Friday, January 14, 2011

Offer,Valid Offer,Acceptance,essential,Legal rules to offer

(a) Define Offer. What are the essentials of a valid Offer?
(b) How can an offer be accepted? What are the rules regarding Communication of Acceptance?
The words ‘offer’ and ‘proposal’ are synonymous and they mean one and the same thing. Offer is the first step in the formation of contract. When a valid offer is made and accepted, contract comes into existence, provided the other essential elements are present.
Section 2 (a) of the Contract Act defines Offer as – ‘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 an offer'. 
The analysis of the definition would show that the following elements are present in an offer:
a) There is an expression of willingness to do or abstain from doing something;
b) The expression is from one person to another;
c) The expression is for seeking the assent of that other person.
The person making the offer is called the ‘offerer’ and the person to whom the offer is made is called the ‘offeree’. An offer to be valid must satisfy the following conditions. They are the essentials of a valid offer or essentials of valid Acceptance:1.Offer may be express or implied: An offer may be made either by words or by conduct. When an offer is made by words, written or spoken, it is called an express offer. When the intention to make an offer is gathered from the conduct of the person, it is called an implied offer.
2.Offer must contemplate of giving rise to legal consequences: If the offer does not intend to give rise to legal consequences, it is not a valid offer in the eyes of law. An offer made jocularly or in jest is not a valid offer. It must be the intention of the person making the offer that if the offer is accepted, it should give rise to a binding contract between them. In business transactions, it is assumed that the parties intend to create relations and the breach of the agreement should be followed by legal consequences. On the other hand, in domestic or social agreements, it is assumed that the parties do not intend to give rise to legal consequences.
3.The terms of the offer must be certain: If the terms of the offer are not certain or definite, it is not a valid offer. It is rightly observed that unless all the material terms of the contract are agreed, there is no binding obligation. Therefore, the terms of the offer must not be loose or vague. They should not be capable of different or various interpretations and it must be possible to correctly ascertain the intention of the parties.
4.Offer must be distinguished from invitation to make offer: An offer is different from ‘invitation to offer’. In the case of invitation to offer, the person sending his invitation is merely calling upon the others to place their offers. There is no offer from his side, but he is expecting offers. His intention is merely to circulate the information that whosoever is willing to transact with him on the terms laid down in the invitation, he is ready to deal with him. Thus, goods displayed in the shop with the price marked on them are an invitation to offer. Similarly, an advertisement for sale of goods by auction, quotations, catalogues of prices are all examples of invitations to offer. 5.Offer may be general or specific: An offer is said to be general when it is made to an unascertained body of individuals. It is made to the public at large and anyone may accept the same. A specific offer is made to a definite person or persons and hence can be accepted only by the same person or persons. Where A offers to B to sell his scooter for Rs.10, 000/-, it is a case of specific offer. When A offers a reward of Rs. 500/- to whosoever finds his lost scooter, it is a general offer.
6. Every offer must be communicated: Offer must be communicated to the offeree; otherwise it is not effective in the eyes of law. There cannot be any acceptance without the knowledge of offer. Thus, where A finds an article lying on a street and restores it to the owner without any knowledge about the reward offered by the owner, he cannot claim the reward from the owner because there was no communication of offer to him.7. Communication of special terms: This rule is in a way an extension of the above rule. It requires that the special terms of the offer must be specifically brought to the notice of the person to whom it is made; otherwise they are not binding on the acceptor. Where a person buys a traveling ticket from a tourist company for his journey by bus, the tourist company is under obligation to provide the bus service till the journey is complete. In case the bus suffers from breakdown, the company cannot claim that in such event it is not responsible to make alternate arrangement. The company can take such defence if such term was brought to the notice of the tourist at the time when he bought the ticket.
Acceptance: A contract comes into existence when a valid offer is validly accepted. Section 2 (b) of the Contract Act states that, ‘when the person to whom the offer is made signifies his assent thereto, the offer is said to be accepted. (An offer when accepted becomes promise) A valid acceptance must be in conformity with the following rules:1.Acceptance must be given by the person to whom the offer is made: An offer can be accepted only by the person or persons to whom the offer is made; no one else can accept the offer. In simple words, if A intends to contract with B and therefore makes an offer to B, C cannot intervene and accept the offer made to B, without the consent of A. Similarly, an offer to class of persons, can be accepted by any member of that class or group only and not by any other person not belonging to that group.2. Acceptance must be absolute and unconditional: The acceptance must be of the whole offer and without any change in the terms of the offer. A conditional or qualified acceptance is no acceptance in the eyes of law. Even a slight deviation from the terms of the offer would make the acceptance invalid. In fact, a conditional acceptance by itself is a counter-offer and not an acceptance. If A offers an article to B for Rs. 100/-, the acceptance by B to buy the article for Rs. 90/- is no acceptance in the eyes of law.3. Acceptance must be communicated in some reasonable manner, unless the manner is prescribed in the offer itself: If the offerer prescribes any particular mode of acceptance, the acceptance has to be effected in that manner alone. Any other mode of acceptance would not do. The offerer can insist that the acceptance must be expressed in the mode prescribed by him and if not, the acceptance will not bind him, even though the mode prescribed by him may be funny or ridiculous. Where no mode is specified in the offer, acceptance must be communicated in a reasonable manner. What is reasonable manner would depend on the facts of each case.
4. Acceptance must be communicated within reasonable time, unless the time is stipulated in the offer itself: If the terms of the offer stipulate certain period within which the offer has to be accepted, the acceptance must be effected within the time so stipulated. If the acceptance is not communicated within the time stipulated in the offer, it will not bind the offerer since it is no acceptance in the eyes of law. Where no time is specified in the offer for its acceptance, the acceptance must be communicated within a reasonable time. What is a reasonable time would depend on the facts of each case.
Legal Rules Relating to Offer:
1. It must contain definite, unambiguous & certain & not loose & vague terms.2. It must intend to give rise to legal relationship. A social invitation, even if it is accepted, does not create legal relationship because it is not so intended.3. It must be distinguished from a quotation of an invitation to offer.4. An offer may be made to an individual or addressed to the world at large. An offer Is called a specific offer when it is made to a particular person.5. Offer must be made with a view to obtaining the assent. The offer to do not to do something must be made with a view of obtaining the assent of the addressed party & not merely with a view of disclosing the intention of making an offer.6. An offer must be communicated to the offeree.

4 comments:

  1. im gona get 10 marks coz of this...thanks dude..:D

    ReplyDelete
  2. thanx for the essentials....these all are very important

    ReplyDelete