Offer in a Contract

Source : http://www.legalserviceindia.com
Author : Sugandha.ch
Published on : July 04, 2015


  
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Offer

An offer is the starting point of any agreement. An agreement becomes complete as soon as the offer is accepted and communicated to the person making the offer.

It is defined in Section 2(a) of Indian Contract Act 1972 as follows: “When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of the other to such act or abstinence, he is said to make a proposal.” The word ‘proposal’ used above is synonymous in English Law with ‘offer’.

The person making the proposal is called the ‘promisor’ and the person accepting the proposal is called the ‘promisee’ as per Section 2(c).

Types Of Offers

An offer can be made to a definite person or persons or to the world at large. In light of the above statement, offers can be classified into:

a. General Offer
b. Specific Offer

Specific Offer
An offer made to a definite person or persons is known as specific offers. Such offers can be accepted only by such person or persons. For example: A offers to sell B a pen for Rs. 200. Since the offer is made only to B, it is a specific offer.

General Offer
An offer made to the world at large is known as a general offer. Such offers can be accepted by anyone but the contract is not entered into with the whole world. It is made only with person who comes forward & performs the condition of the proposal.

The proposal may be for the whole world at large but be for the world at large but the number of acceptances to a proposal may be expressly or impliedly limited. For example: A advertises in a newspaper offering a reward for Rs. 900 to anyone who finds his lost dog. Such an offer can be accepted by anyone who finds and return the dog.

Carlill V. Carbolic Smoke Ball Co (1893) 1 QB 256

The leading authority on the subject of general offer is Carlill v. Carbolic Smoke Ball Co. In this case, the defendant company offered by advertisement to pay £100 to anyone who contracts the increasing epidemic influenza, cold or any other disease caused after having used the Carbolic ball according to the printed directions. It was further advertised that £100 is deposited with the Alliance Bank showing its sincerity in the matter.

In an action by plaintiff to recover the promised reward after having contracted influenza despite using the ball as per the directions, it was contended that the offer was not made to anyone in person and the plaintiff had not communicated her intention to accept. This contention was rejected and it was observed that:

1. Offer made to world at large is entered into contract with that limited persons who come forward and perform the condition.
2. Communication of acceptance in such cases is not necessary.

Where a general offer is of continuing nature, as in the above case, it will be open for acceptance to any number of people until it is retracted. But where an offer requires some information about a missing thing, like the one in illustration of lost dog above, it is closed as soon as the first information is received.

Rules Relating To Proposal’s Communication

1. Willingness should be signified
As per Section 2(a), the willingness to make a proposal should be signified by the offeree. A proposal may be communicated in any way whatsoever that has the effect of manifesting the offeree, the willingness to do or to abstain from doing an act.

In Carlill case, the willingness to enter into a contract was signified by stating that £100 have been deposited in the Alliance Bank.

2. Mode of Communication
The Act does not provide any specific mode of communication of proposal. So it may be done in any manner or form as long as same fulfils the requirement of the Act. It may be made in writing, words (express) or even by the conduct of the parties (implied).

In Upton Rural District Council v. Powell (1942), the plaintiff had asked the services of Upton and Upton in response to that request, provided the services and hence, the services were rendered on an implied promise to pay.

3. Communication when complete
An offer is complete when it comes to the knowledge of the offeree. When an offer has not been communicated to the person and he does an act in ignorance of the same, then even though it may be as per the terms of the offer, there is no acceptance, since there was no knowledge of the offer. This principle was well accepted in Lalman Shukla v. Gauri Dutt (1918).

The author can be reached at: sug.ch@legalserviceindia.com