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1. Offer Phase
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2. Offer Phase
Offer
• An offer is a manifestation of willingness to
enter into a bargain, which justifies
another person in the understanding that
his or her assent to that bargain is invited
and will conclude the transaction.
• Offeror is the party who makes the offer
• Offeree is the party who receives the offer
and is asked to accept it

3. Offer Phase
How Parties Reach Agreement

4. Offer Phase
An oral contract is created by word
of mouth and comes into existence
when two or more people form a
contract by speaking to each other.
Sometimes, however, it is desirable
to put contracts in writing.
Oral or Written

5. Offer Phase
Invitation To Treat
• An invitation to treat is a preliminary
statement expressing a willingness to
receive offers.
• It is therefore a statement made by a party
inviting offers which that party is then free to
accept or reject.
• An invitation to treat always precedes any
offer.
• e.g Advertisements, self-service, Auctions
mere statements of price.

6. Offer Phase
Offer
• If the offer is for a Bilateral Contract then
it entice a promise for a promise.
Components of an offer for bilateral
Contract:-
• The offeror's promise
• Consideration for offeror’s promise (that is
offeree’s promise)
• The offeror is making promise to induce
offeree’s promise

7. Offer Phase
• If the offer is for a Unilateral Contract then
entice offeror’s promise for offeree’s
performance.
Components of an offer for Unilateral Contract:-
• The offeror's promise
• Consideration for offeror’s promise (that is
offeree’s performance)
• The offeror is making promise to induce
offeree’s performance
Offer

8. Offer Phase
Unilateral vs Bilateral
• I will pay you $1000 if you will work for me for
a year.
• I will paint your house for $1500.
• I promised to pay you $500 for your promise
to refrain smoking.
• I’ll lease you this apartment for $750 a month.
• If you pay me $1000, I will sell you my tractor

9. Offer Phase
Offer VS Preliminary Negotiations
• A manifestation / demonstration of willingness
refers to the outward actions of the negotiating
parties as understood by the third person
watching the parties.
• This nonparticipant, who is evaluating whether
the manifestation of willingness has occurred is
referred as Reasonable Person.
• The reasonable person’s standard is the
measure used by an unbiased nonparticipating
hypothetical observer and is called Objective
Standard.

10. Offer Phase
• Early contracts used Subjective standard while
now restatements use Objective standard for the
law of contracts.
• Subjective Standards evaluate
communications by asking how the person
making the communication would interpret them
and not how a reasonable person would
interpret.
• Subjective Standards refers to meeting of minds
while objective standards refers to manifestation
of assent.
Offer VS Preliminary Negotiations

11. Offer Phase
• The manifestation by the offeror must be
sufficient to justify an understanding by the
offeree that his or her assent to that bargain is
invited and will conclude it.
• When the offeree asents, a contract will be
formed and the offeror will be bound by the
contract.
• Acceptance by the offeree will seize any
addition, deletion or modification to the terms of
the contract by the offeror.
Offer VS Preliminary Negotiations

12. Offer Phase
The Advertisement
• Advertisement is an open offer to general
public , however, does not preclude it from
being an offer because its not being made to
a specific party.
• Advertisements are not offers but merely
invitations to bargain.
• It does not have “Promissory Language” or
they leave terms open for negotiation that’s
why advertisement do not create power in the
offeree to accept and form a contract.

13. Offer Phase
The Auction
• An Auction may be either “With Reserve” or
“Without Reserve”.
• In an Auction with reserve, the seller (through the
auctioneer) may withdraw the property at any time
until the auctioneer announces the completion of
the sale.
• Here the seller seeks the offers from potentials
bidders through auctioneer and then evaluates
the bidder’s offer and either accepts it or rejects it
by withdrawing the property from the auction.
• Since the seller is not the offeror he may also bid.

14. Offer Phase
• In Auction without reserve , the seller (through
the auctioneer) is the offeror and the bidders are
the offerees.
• After the auctioneer calls for bids on the
property, the seller cannot withdraw the propety
if a bid is made within a reasonable time.
• Each bid is an acceptance conditioned on there
being no higher bidder. Therefore seller must
sell to the highest bidder.
• As seller is the offeror , so he can’t bid.
The Auction

15. Offer Phase
Elements of An Offer
• An offer is made when the offeror creates the
power in the offeree to accept it and form a
contract.
• The Offeror creates this power in the offeree
when the offeror determines there is nothing
remaining to negotiate.
• Elements of a contract:-
– Offeror’s promise
– Consideration of offeror’s promise
– Promise for promise / performance

16. Offer Phase
When a “Promise” is Really a Promise
• A promise is an unequivocal assurance that
something will or will not be done.
“I may sell my car to you” is not an unequivocal
and therefore is less than a promise.
“I will sell you my car” is an unequivocal assurance
and is a promise.
• The unequivocal assurance could be to refrain
from doing something as well as to do
something.
“I will not sell my car Nabeel”

17. Offer Phase
The illusory Promise
• The phrase “illusory promise” is a misnomer
because an illusory promise is not promise.
• It is less than a promise ands does not create
the power in the offeree to accept an offer.
• An illusory promise is not an unequivocal
assurance that something will or will not be
done.
“I may sell you my car”
“I will work for you next Monday if I feel like it”
No Commitment, No promise

18. Offer Phase
• The phrase indefinite is a misnomer beacuase
indefinite promise is not a promise.
• An indefinite promise omits terms essential in
enabling the court to determine an appropriate
remedy in the event the promise is breached.
“I promise to sell you a cow for your promise to
pay $750”
It indefinite promise because the seller does not
designate / specify the cow out of a herd .
The Indefinite Promise

19. Offer Phase
Uniform Commercial Code
• If the transaction involves a sale of goods,
Article 2 of the unifrom commercial code
governs, section 2-204 provides the following
statement as to indefiniteness:-
“Even though one or more terms are left open a
contract for sale does not fail for indefiniteness if
the parties have intended to make a contract
and there is a reasonably certain basis for giving
an appropriate remedy”

20. Offer Phase
• Gap fillers are those terms supplied by Article 2
of the UCC that supplement the terms supplied
by the contracting parties.
• Gap fillers include provissions as to price, place
of delivery, time for shipment or delivery,
payment or running of credit, warranty of title
etc.
• Under UCC the parties can conclude a contract
for sale even though the price is not settled. In
such case price reasonable at the time for
delivery.
Gap Fillers

21. Offer Phase
• Consideration is the price that offeror expects to
receive for his or her promise.
• The price is not limited to dollars and cents only
but also the other constituent parts.
• i.e I promise to sell you my car for “your promise
to pay $5000”
• It can be anything that law recognizes as
consideration. It could be a promise to barter.
“I promise to sell you my car for your promise to
roof my house.”
Consideration for the Offeror’s Promise

22. Offer Phase
• Every contract has two considerations (one for
offeror other for offeree ).
• Following are some consideration related
problems:-
– The promise to make a future gift
– Adequacy of consideration
– Motive obligation as consideration
– Moral obligation as Consideration
– Sham consideration
Consideration for the Offeror’s Promise

23. Offer Phase
Promise to induce the Consideration
• Offeror promises to induce the consideration for his
promise
• The offer anticipates a “bargained for exchange”
• “Bargained for exchange” does not require hard
bargaining with prolonged negotiations.
• The offeror must seeking the the offeree’s promise of
performance.
• The offeror’s promise should be to entice the
consideration.

24. Offer Phase
Past consideration
• Past consideration is a timing issue.
• In an offer the offeror must make his or her
promise to induce the offeree to promise or
perform .
• In this case offeree has already promised or
performed so offeror would not be making his or
her promise to induce the offeree to promise or
perform.
• The issue of past consideration more often
occurs when the offeror is aksing the offeree to
perform rather than to promise.

25. Offer Phase
• Consideration due the offeree’s promise must be
free from an obligation already owed.
• If the offeree has a duty to perform that which
the offeror is currently seeking to induce, the
duty previously owed is pre-existing duty and
can’t be used as consideration for the offeror’s
new promise.
New promise : New duty
Pre-Existing Duty

26. Offer Phase
Conditions vs. Consideration
• It occurs when an offer is for a unilateral contract
(promise for performance)
• This is question of pure inducement, unlike past
consideration / pre-existing duty.
• “why did the offeror makes his promise?”
• What was the motive of making an offer?
• The offeree’s performance is a condition to the
offeree’s receiving a gift.

27. Offer Phase
• Under Classical law consideration for the
offeror’s promise is an essential element of an
offeror.
• Without consideration the offeror’s promise is
merely a promise to make future gift and is
unenforceable in court.
• Modern Contract Law employs several methods
to rectify this i.e Legislative & Judicial tinkering
with the classical doctrine and Introduction of
reliance as an alternative to consideration.
Alternatives to Classical Consideration

28. Offer Phase
• Legislative Tinkering:
– A legislature, by statute, may substitute a writing for
consideration.
– A statute could take one the followinf forms:
• A written promise signed by the person promising is not
unenforceable for lack of consideration.
• A written promise signed by the person promising is not
unenforceable for lack of consideration if the writing contains
an express statement, in any form of language, that the signer
intends to be legally bound.
– Rather than substitute a writing, the legislature may
alter the rule about which party has the burden of
proving consideration.
Tinkering with Classical Doctrine

29. Offer Phase
– Traditional Contract Law required the party
introducing the contract to prove offer and
acceptance, including element of consideration for the
offeror’s promise.
– The following pair of statutes shifts the burden of
proof from the party introducing the contract to the
party challenging the contract.
• A written instrument is presumptive evidence of
consideration.
• The burden of showing a want of consideration sufficient to
support an instrument lies with the party seeking to invalidate
or avoid it.
Tinkering with Classical Doctrine

30. Offer Phase
• Judicial Tinkering:-
– The legislatures have not been the only tinkerers
with the classical consideration doctrine. The
courts, at times , also have been active.
Reliance as An Alternative to Consideration:-
– Sometime Judicial tinkering has resolved only the
dispute between a specific plaintiff and defendant.
– Legislative tinkering has been limited to certain types
of transactions, such as sale of goods or has
distinguished written from unwritten promises.
– Reliance May be used as alternative to the
consideration.
Tinkering with Classical Doctrine

31. Offer Phase
• Elements of Reliance as Alternative :
– A promise by the promisor
– The promisor should reasonably expect the
promise to induce action or forbearance on
the part of the promisee
– The promise does induce such actions or
forbearance
– Injustice can be avoided only by enforcement
of the promise.
Reliance as An Alternative to Consideration

32. Offer Phase
• An offer requires an unequivocal assurance that
something will or will not be done.
No unequivocal assurance = No Offer = No
Promise = No Contract = No breach
• Still modern law covers this scenario in following
manners:
– Reliance as cause of action when there is no promise
– Restitution as Cause of action when there is no
promise.
Alternative Causes of Action ; No Offer

33. Offer Phase
• If party acts or refrain from acting because he or
she is relying on the other party’s
encouragement, a reliance interest comes into
being even though no contract caliber promise
has been made.
• In traditional law expectation interest is being
focused but several cases in recent years have
permitted recovery although the transaction
never reached the promise phase.
• Here recovery is based on reliance interest on
statements made during preliminary negotiations
Reliance as Cause of Action

34. Offer Phase
• Even though classical law emphasized the
expectation interest but it also recognizes the
Restitution interest.
• It is not based on contract, neither one that is
express nor one is implied but courts
imagination.
• It also named as “a contract implied by law” or “a
contract implied in law” or “a constructive or
quasi contract”
• It is referred as implied by law and not implied in
fact.
Restitution as Cause of Action

35. Offer Phase
• Restitution , a cause of action is based on the
policy of preventing “Unjust Enrichment”.
– A Restitution action requires:
– A benefit conferred by one party over another
– The retention of the benefit without compensating the
party conferring the benefit would unjust.
• A person who interferes in the affairs of another
by conferring an unnecessary benefit cannot
successfully seek compensation for his or her
interference , such a person called “Officious”
Restitution as Cause of Action