by sachin sharma manipal jaipur

1. Offer and Acceptance
• Offer:
• Also called as proposal.
• According to sec 2(a),”a person is said to have made the proposal when he
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.”
• Essential elements:
• Made by one to another person
• Must be positive act or negative act
• Must be made with a view to obtain the consent of other person. E.g. jokingly says
• Offerer (or promisor) and offeree (or promisee)

2. • How to make an offer
• Express offer
• Implied offer
• To whom an offer is made:
• Specific offer: to a definite person; e.g to buy a car of Rs. 100000 BOULTON VS
JONES
• General offer: made to public at large; e.g. newspaper advertisement of a
missing boy (Harbhajan Lal Vs Harcharan Lal)

3. • Legal rules for the valid offer:
• Intention to create legal relationship
• Certain and unambiguous terms
• Different from a mere declaration of intention: harris Vs Nickerson ( auction)
• Different from an invitation to an offer:
• The person making an invitation invites other to make on offer to him
• Pharmaceutical society of great Britain v. boots cash chemists Ltd. ( display of goods)
• Communication:
• Must be communicated to the person to whom the offer is made.
• Lalman Shukla V. Gauri Dutt ( send servant to found his nephew and after that reward
were announced)

4. • No term the non-compliance of which amounts to Acceptance:
• Must not contain the term the non-compliance of which would amount to
acceptance.
• Communication of special terms or standard form contracts:
• Special terms must be communicated along with the offer.
• Handerson V. Stevenson ( a purchased a steamer ticketfor travelling from
Dablin to whit Haven)

5. Cross offers:
• Two offers which are similar in all respects made by two parties to each
other, in ignorance of each other’s offer are known as cross offer.
• Cross offer do not amount to acceptance of one’s offer by the other. Hence,
no contract in entered in to on cross offers.
• For example:
• X of Agra sends a letter by post to Y of Delhi offering to sell his car for RS 1 lakh. The
letter is posted in 1st January and the same day, Y of Delhi sends a letter by post to X
of Agra offering to Buy X’s car for Rs 1 lakh. These two letters cross each other. Y’s
letter is merely an offer and not the acceptance of X’s letter. Here, both the parties
are making offer and no party has accepted the offer. Therefore, no contract has
been entered into. If they want to entre into a contract, at least one of them must
send his acceptance to the offer made by the other.

6. Standing offer/ open offer/ continuing offer
• An offer of a continuous nature is known as ‘standing offer’
• It is the same thing as an invitation to an offer.
• A contract is said to have been entered only when an order is placed
on the basis of the tender.

7. Meaning of Acceptance:
• It means giving consent to the offer.
• According to section 2(b) of the Indian Contract Act, 1872,”A proposal
is said to be accepted when the person to whom the proposal is
made signifies his assent thereto. A proposal when accepted becomes
a promise.”

8. Legal rules for a Valid Acceptance:
• Absolute and unqualified:
• According to section 7(1) of the Indian Contract Act, 1872, an offer must be accepted
as it is without any reservation, variation or condition.
• For example: at an auction sale, X’s bid was provisionally accepted at an auction sale.
The acceptance was subject to confirmation, X withdrew his bid before confirmation.
It was held that X could withdraw his bid before confirmation because the
acceptance was not absolute but subject to confirmation.
• Manner:
• According to sec 7(2) of the Indian Contract Act, 1872, the acceptance of an offer
must be given in the following manner.
• If the proposal does not prescribe the manner in which it is to be accepted then the
offer must be accepted in some usual and reasonable manner.
• If the proposal prescribes the manner in which it is to be accepted. The offer must be
accepted in the prescribed manner.

9. • Communication:
• The acceptance is complete only when it has been communicated to the
offerer.
• Case: Brogden V Metropolitan Railway Co.
• X offered to supply coal to a Railway company. The manager of the company accepted
the offer and put it in the drawer of his table and forget all about it. It was held that no
contract was made because acceptance was not communicated.
• In case of acceptance made by post, the proposer becomes bound by the
acceptance as soon as the properly addressed and stamped letter of
acceptance is duly posted even if such letter of acceptance is lost or delayed
in post.

10. • By whom:
• If acceptance is communicated by an unauthorized person, it will not give rise to
legal relations.
• Case: POWELL VS LEE: P applied for the post of a head master in a School.
• To whom:
• If acceptance is communicated to an unauthorized person, it will not give rise to legal
relations.
• Case: Felthouse V. Bindley: f offered by a letter to buy his nephew’s horse for $30
saying “ if I hear no more about him, I shall consider the horse mine.” the nephew
sent no reply at all but told B his auctioneer, not to sell that particular horse as he
intended to sell that horse to F. B sold he horse by mistake. It was held that F will not
succeed because his nephew had not communicated his acceptance to him.

11. • Time limit:
• The acceptance must be given with in the time prescribed or within a
reasonable time.
• Before lapse of offer:
• The acceptance must be given before the offer lapses or is withdrawn.

12. Provisions relating to communication of offer
and Acceptance:
• The communication of offer and acceptance must complete so as to
bind the concerned parties because as soon as the communication is
complete, the parties loose the right of withdrawal or revocation.
• Provisions relating to communication of offer and acceptance are as
under:
• When is communication of offer is complete:
• Its completed when it comes to the knowledge of the person to whom it is made.
• In case of post, its communication is completed when it reaches the offeree.
• Example : lost nephew. [Lalman Vs Gauri Dutt]

13. • When is communication of acceptance is complete:
• The communication of acceptance is compete at different times for the
proposer and acceptor.
• The rules regarding the communication of acceptance are as under:
• As against the proposer: when it is put in a course of transmission to him, so as to be out
of the power of the acceptor. In case acceptance made by the post, the proposer
becomes bound by the acceptance as soon as the properly addressed and stamped letter
of acceptance is duly posted even if such letter of acceptance is lost or delayed in post.
• As against the acceptor: when it comes to the knowledge of the proposer. In case of
acceptance made by post, the acceptor becomes bound by the acceptance only when
the letter of acceptance is actually received by the proposer.
• Position of contracts over telephone/telex/fax

14. Provisions Relating to Revocation of offer and
Acceptance:
• Revocation: means ‘taking back’ and ‘withdrawal’.
• What is the time limit with in which the offer can be revoked:
• According to section 5 of the Indian Contract Act, a proposal may be revoked
at any time before the communication of its acceptance as against the
proposer, but not afterwards.
• Offer can be revoked before the letter reached to the offeree at any time
• Important points:
• Revocations must always be expressed
• Revocation must move from the offerer himself or a duly authorized agent.
• Notice of revocation of a general offer must be given through the same channel by which
the original offer was made.
• Offer cannot be revoked even if the letter of acceptance is lost or delayed in transit.

15. • What is the time limit with in which acceptance can be revoked:
• An acceptance can be revoked at any time before the letter of acceptance is actually
received by the proposer.
• Thus an acceptor may revoke his acceptance by a speedier mode of communication
which will reach before the letter of acceptance is received by the proposer.
• Acceptance is to offer what a lighted match is to a train of gunpowder.
• Gunpowder=offer and lighted match=acceptance.
• Simultaneous delivery of letter of acceptance and the telegram containing
revocation of acceptance:
• If both the things are delivered on the same time then which one is read first that is
to be happened but it is generally presumed that telegram is to be read first.

16. • No revocation in case of contract over telephone or telex of fax: due
to instantaneous communication.
• When is communication of revocation complete: the communication
of revocation is complete at different times for person who makes it
and the person to whom it is made. The rules regarding the
communication of revocation are as under:
The communication of revocation is
complete….
When does the communication of
revocation complete
As against the person who makes it When it is put in a course of transmission
to the person to whom it is made so as to
be out of the power of the person who
makes it.
As against the person to whom it is made When it comes to his knowledge

17. When does an offer come to an end:
• By Revocation: a proposal may be revoked at any time before the
communication of acceptance is complete as against the proposer but not
afterwards
• By lapse of time: an offer lapses if it is not accepted with in the fixed time
or with in reasonable time.
• An offer to buy sahres of a company was made in june but the acceptance was
communicated in November. It was held that offer to buy shares had lapsed because
it was not accepted with in a reasonable time. [Ramsgate Victoria Hotel Co. V.
Montefiore]
• By death or insanity of the offeror or offeree: an offer lapses by the death
or insanity of the offerer if the fact of his death or insanity comes to the
knowledge of the acceptor before he makes his acceptance.
• An offer also comes to an end by the death or insanity of the offeree if the offeree
dies or becomes insane before accepting the offer because an offer can be accepted
only by the offeree and not by any other person.

18. • By failure to accept condition precedent
• By counter offer
• By not accepting in the prescribed mode or usual mode.
• By rejection of offer by offer
• By subsequent illegality or destruction of subject matter of the offer