The rules governing proposal and acceptance

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The rules governing proposal and acceptance

  1. 1. THE RULES GOVERNING PROPOSAL AND ACCEPTANCE1. PROPOSAL Introduction In section 2(a) of the Contracts Act 1950 provides “when one person signifies to anotherhis willingness to do or to abstain from doing anything, with a view to obtaining the assent ofthat other, he is said to make a proposal.” How a proposal could be made Section 9 of the Contracts Act, 1950 provides that, “So far as the proposal..is made inwords, the promise is said to be express. So far as the proposal is made otherwise than in words,the promise is implied.” By virtue of this section, a proposal can either be express which is inwriting or verbally or implied where implied from the conducts of the parties. Types of proposal There are two types of proposal. The first one is specific proposal. Section 2(b), “whenthe person to whom the proposal is made signifies his assent, the proposal is said to beaccepted.” The proposal is addressed to a specific person and only the addressee may accept theoffer. Second, general proposal. It such proposal is addressed generally to anyone who maysatisfy all the terms or conditions of the offer stipulated by the offeror. 1
  2. 2. Conditions of a valid proposal First, a proposal must be certain. It is a condition that a proposal must be certain, clear,complete, final and detail to avoid any obscurity or doubt. If the proposal is not clear, it is not tobe regarded as a valid proposal. Second, a proposal must be communicated. A proposal must becommunicated to the promise. Otherwise the proposal is not valid. Proposal distinguished from invitation to treat. A proposal must be distinguished from invitation to treat in order to ascertain when is theactual proposal takes place. If a person does something with the intention to make a proposal,then such act may bind the offeror if there is an acceptance by another person to such a proposal.However, if a person does something with the intention to make an invitation to treat, thenanything does by another person in response to such invitation to treat is only a proposal. Thus,there is no binding contract yet until there is an acceptance to such offer. 2
  3. 3. 2. ACCEPTANCE Introduction Section 2(b) of the Contracts Act 1950 provides, “when the person to whom the proposalis said to be accepted, a proposal, when accepted, becomes a promise.” According to this section,if the offeree agree or accepts the proposal made by offeror, there is acceptance to such proposal.Once there is an acceptance, an agreement between the parties is created. A contract exists and itis binding upon the parties. Conditions / requirement of a valid acceptance: i) Acceptance must be absolute and unqualified, section 7(a). The term absolute and unqualified means that, the acceptance must be made without anycondition or qualification. The acceptance must be made exactly on the same term of the offer,without any modification. ii) Acceptance must be communicated in some usual and reasonable manner, section 7(b) The communication of the acceptance must be usual and reasonable. The offeree cancommunicate his acceptance in any usual and reasonable mode or method, so long as the modewhich he used is the one which did not cause delay, and which brought the acceptance to theknowledge of the offerer. 3
  4. 4. Mode of acceptance i) Acceptance must be communicated, section 2(b). The general rule, is that the acceptance must communicated to the offeror. According tothis section, the phrase “signifies his assent” indicates that the offeree must communicate hisacceptance to the offeror. One more thing is silent is not an acceptance. As the acceptance mustbe communicate, thus, silence of the offeree is not valid acceptance. ii) When the offeror dispensed with the need of communication of acceptance. ( Unilateral contract ) Unilateral contract is a contract whereby the offeror is bound to the contract once aperson / offeree fulfills or complies with the conditions or requirements of the proposal asstipulated by the offeror. iii) When there is an offer to the public. If it is a general propsosal, it does not require any communication of acceptance.Performance of the condition of the proposal will be sufficient to constitute a valid acceptance. iv) Reciprocal promises, section 2(f). Reciprocal promises are promises, which form the consideration for the promises of eachother party to the contract. v) Acceptance through post ( Postal Rule ), section 4 (2) (a). Acceptance through pos is complete when the letter of acceptance is posted, even thoughit has not come to the actual knowledge or received by the offeror. 4
  5. 5. A. CASES1. PROPOSAL 1. Section 2(b), Boulton v Jones ( 1857 ) 2. Carlill v Carbolic Smoke Ball Co ( 1893 ) 3. Guthing v Lynn ( 1831 ) 4. Section 4(1), Taylor v Laird ( 1856 ) 5. Harris v Nickerson ( 1873 )2. ACCEPTANCE 1. Hyde v Wrench ( 1840 ) 2. Eliason v Henshaw ( 1819 ) 3. Powell v Lee ( 1908 ) 4. Felthouse v Bindley 5. Carlill v Carbolic Smoke Ball Co ( 1893 ) 6. Ignatius v Bell ( 1913 ) 2 FMSLR 115B. STATUTE 1. Contracts Act 1950 5
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