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Offer And Acceptance

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Offer And Acceptance

  1. 1. Offer and acceptance 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.
  2. 2. Legal rules regarding valid offer <ul><li>An offer may be express or implied </li></ul><ul><li>It should give rise to legal consequences and be capable of creating legal relations </li></ul><ul><li>The term of the offer must be certain </li></ul><ul><li>An offer can be made subject to any terms and conditions. </li></ul><ul><li>It should be made with a intent to obtain the assent of the other party </li></ul><ul><li>An offer should not contain a term the non compliance of which would amount to acceptance </li></ul><ul><li>Two identical cross offers do not make a contract. </li></ul><ul><li>An invitation of offer is not an offer </li></ul>
  3. 3. Invitation to offer <ul><li>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. </li></ul><ul><li>PHARMACEUTICAL SOCIETY OF GREAT BRITAIN vs BOOTS CASH CHEMISTS </li></ul><ul><li>A sees an article marked ‘price rupees twenty’ in B’s shop. He offers B Rs20 for the article. B refuses to sell saying the article is not for sale. </li></ul><ul><li>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 </li></ul>
  4. 4. Essential of offer <ul><li>It must be an expression of the willingness to do or to abstain from doing something </li></ul><ul><li>It must be made to another person </li></ul><ul><li>It should be done with a objective to obtain the assent of the other person </li></ul><ul><li>The objective of offer should be legal one </li></ul>
  5. 5. Lapses and revocation of offer <ul><li>An offer lapses after stipulated or reasonable time </li></ul><ul><li>An offer lapses by not being accepted in the mode prescribed </li></ul><ul><li>An offer lapses by rejection </li></ul><ul><li>An offer lapses by the death or the insanity of the offeror or the offeree before acceptance </li></ul><ul><li>An offer lapses by revocation before acceptance </li></ul><ul><li>An offer lapses by subsequent illegality or destruction of subject matter. </li></ul>
  6. 6. When communication is complete <ul><li>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. </li></ul><ul><li>Communication of acceptance( sec 4 para2)- </li></ul><ul><li>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 </li></ul><ul><li>As against the acceptor- when it comes to the knowledge of the proposar </li></ul>
  7. 7. Time of revocation of offer and acceptance(sec5) <ul><li>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 . </li></ul><ul><li>( 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. </li></ul>
  8. 8. Example <ul><li>A proposes by a letter sent by post to sell his to B. the letter is posted on the 1 st of the month. B accept the proposal by a letter sent by post on the 4 th . The letter reaches A on 6 th </li></ul><ul><li>A may revoke his offer at any time before B post his letter of accpetance i.e 4 th but not afterwards. </li></ul><ul><li>B may revoke his acceptance at any time before the letter of acceptance reaches A i.e 6 th but not afterwards. </li></ul>
  9. 9. Revocation of the offer by the offeror <ul><li>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. </li></ul>
  10. 10. Decided case on revocation of offer by the offeror CASE 1 <ul><li>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. </li></ul>A B
  11. 11. CASE 2 <ul><li>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 A’s offer after he knew it had been revoked by the sale of the property to C. </li></ul>
  12. 12. Case 2 offer lapses after reasonable time <ul><li>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. </li></ul>
  13. 13. Offer lapses after stipulated time or reasonable time case 1 <ul><li>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. </li></ul>
  14. 14. ACCEPTANCE <ul><li>Section 2(b) states that </li></ul><ul><li>A proposal when the person </li></ul><ul><li>to whom the proposal is </li></ul><ul><li>made signifies his assent thereto the proposal is said to be accepted </li></ul>
  15. 15. Legal rules regarding acceptance <ul><li>Acceptance must be given only by the person to whom the offer is made </li></ul><ul><li>Acceptance must be absolute and unqualified </li></ul><ul><li>It should be communicated by the acceptor </li></ul><ul><li>It should be given within reasonable time or time stipulated </li></ul><ul><li>Acceptance must succeed the offer. </li></ul>
  16. 16. Types of offer <ul><li>General & specific offer </li></ul><ul><li>Express & implied offer </li></ul><ul><li>Positive &negative offer </li></ul><ul><li>Cross offer </li></ul>
  17. 17. General and specific offer Specific offer can be accepted only by person to whom it was made General offer can be accepted by any person having notice of the offer by doing what is required under the offer Specific offer made to some specific person General offer made to the whole world at large
  18. 18. Carbolic smoke ball Company advertisement I want reward Carlill vs Carbolic smoke ball company,(1983)IQB256
  19. 19. Decided case <ul><li>Carbolic smoke ball company advertised in the newspaper that whosever would take smoke balls ,manufactured by it ,according to the printed instructions would not contract influenza. The company offered a reward of $100 to anyone who contracted influenza after taking its smoke balls according to the printed instructions .It was added that $1000 was deposited with alliance bank to show the sincerity of the company. one Mrs.carlill used the smoke balls according to the directions given but contracted influenza. It was held that the offer was general one ,and Mrs.carlill had accepted it by acting according to the advertisement and therefore the company could not get away from responsibility by saying that it was a mere puff. She was entitled to get reward. </li></ul>
  20. 20. Harbhajan lal vs. harcharan lal <ul><li>In this case a young boy had run away from his father’s house. the father issued a pamphlet stating ,anybody who finds trace the boy and bring him home will get Rs500.Harbajan Lal who knew of the reward, found out the boy at a Railway station Dharamshala ,and took to the police station. It was held that the handbill was a general offer and therefore he was entitled to the reward. </li></ul>I HAVE FOUND THE BOY
  21. 21. LALMAN vs GAURIDATTA <ul><li>It was held that the reward for the missing child cannot be claimed by a person who traced the child without any knowledge of the announcement. There was no contract between the two in the first place because the proposal never came to the knowledge of the announcement. There was no contract between the two in the first place because the proposal never came to the knowledge of the person who found the child and thus he could never accept it. </li></ul>I want reward
  22. 22. Express and implied offer <ul><li>When an offer is expressed by words spoken or written it is termed as an express offer. </li></ul><ul><li>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. </li></ul>
  23. 23. Example of implied offer <ul><li>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. </li></ul><ul><li>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. </li></ul>auct ion Acceptor Of offer Bidder Is an offeror
  24. 24. Positive and negative offer <ul><li>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. </li></ul>
  25. 25. Cross offer <ul><li>Two offer similar in all respects, made by one party to the other , in ignorance of each other’s offer, are termed as cross offers. they shall not constitute acceptance of one’s offer by the other. </li></ul>
  26. 26. Example of cross offer <ul><li>Sham made an offer to ram to sell his car for Rs20000 through post. on the same time ram made an offer to buy sham’s car in Rs18000 through post ,without info of the offer of sham. </li></ul><ul><li>Such an offer is known as cross offer. and offer of ram do not constitute acceptance. </li></ul>
  27. 27. Example of cross offer <ul><li>TINN vs HOFFMANN </li></ul><ul><li>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 A’s car for Rs 15000. The two letters cross each other in the post. Is there a contract between A and B? </li></ul><ul><li>No cross offer do not form any contract. </li></ul>
  28. 28. Communication of offer and acceptance <ul><li>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 </li></ul><ul><li>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. </li></ul><ul><li>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 come to the knowledge of the proposer. </li></ul>
  29. 29. Legal rules regarding acceptance <ul><li>Acceptance must be given only by the person to whom the offer is made. </li></ul><ul><li>Acceptance must be absolute and unqualified </li></ul><ul><li>Acceptance must be expressed in some usual and reasonable manner ,unless the proposal prescribes the manner in which it is to accepted. </li></ul><ul><li>Acceptance must be communicated by the acceptor. </li></ul><ul><li>Acceptance must be given within a reasonable time and before the offer lapses and /or revoked. </li></ul><ul><li>Acceptance must succeed the offer. </li></ul>
  30. 30. Check your memory <ul><li>Harish says in conversation to suresh that he will give Rs.10000 to a person whosoever marries his daughter .Alok marries Harish’s daughter and files a suit to recover Rs10000.will he succeed ? </li></ul>
  31. 31. solution <ul><li>No ,Harish has expressed his wish only ,and has never made an offer with a view to obtaining the assent of the other party. </li></ul><ul><li>Secondly there was no offer to Alok or Suresh </li></ul><ul><li>It was neither general offer nor specific offer. </li></ul>
  32. 32. Check your memory again <ul><li>Amar had two visitors in his office one evening, Bharat and Ram. Bharat ran an event mgmt service. Amar had hosted a party the previous evening to celebrate his son’s birthday. Bharat had done the mgmt for the party. Bharat had come to Amar’s office that evening, to collect Rs20000 for having done the work. </li></ul><ul><li>Ram was the son of an ex- colleague of Amar. Ram’s family had fallen into bad times. They had accumulated a lot of debts. Ram was studying in the final year of college. He was going around meeting people his father had known and soliciting money as donation, so as to be able to finish his education. Amar was a kind person. He told Ram that he would give him Rs5000. Ram pleaded and said that if Amar could give him Rs10000, he would not have to go any further to collect money. Amar agreed to give him Rs10000 </li></ul><ul><li>While Amar was in the process of obtaining the money to give to Bharat and Ram, the phone rang. It was Amar’s stock broker. He informed Amar that on a particular purchase and sale order Amar had a loss of huge amount of money. He had to pay to the broker Rs9 lakh, within a week. Amar was very upset. In result he refused to pay the money agreed to Ram and Bharat. </li></ul>
  33. 33. questions <ul><li>Was there an agreement between Amar and Bharat? </li></ul><ul><li>Was there an agreement between Amar and Ram? </li></ul><ul><li>should agreements be fulfilled? </li></ul>