Offer: An Introduction
From work contracts to insurance plans, contracts are a big part of our daily lives. When we download an app or purchase a movie ticket, we often enter into contracts without even realising it. An oral or written agreement between two or more parties is referred to as a contract. A contract may be entered into by private individuals, businesses, nonprofit organisations, or governmental bodies. The beginning of a contract involves an offer made by one party, an acceptance made by another, and a consideration exchanged (something of value). Let’s examine the offer component.
Proposal/ Offer
A proposal or offer made by one party to another starts the full process of entering into a contract. To get into an agreement, the proposal needs to be approved.
A proposal is defined as “when one person will signify to another person his willingness to do or not do something (abstain) to obtain the assent of such person to such an act or abstinence,” by Section 2(a) of the Indian Contract Act 1872.
Definition
The term “promiser” or “offeror” refers to the one presenting the offer or proposition. Additionally, the one who accepts an offer is known as the “acceptor” or “promisee.”
The offeror must state if he is willing to perform an act or not. Merely being willing is insufficient. Or simply feeling compelled to act or not act won’t qualify as an offer.
An offer may be made in response to a request or not. It might be a commitment to perform a certain act or to refrain from performing any act or providing any service. Both offers are legitimate
A Valid Offer's Requirement
These are a few of the requirements that allow the offer to be accepted.
1] The offer needs to establish legal ties:
A contract that establishes legal relations and spells out the ramifications for non-performance must result from the offer. Therefore, a social contract that doesn’t establish legal links isn’t going to be accepted. Let’s take an example where A extends a dinner invitation to B and it isn’t accepted.
2] Offers must be specific rather than ambiguous:
The offer or proposal’s terms must be quite explicit and unambiguous. The terms will not amount to a legitimate offer if they are ambiguous or imprecise. Consider the following proposal, for instance: A proposes to sell B fruits for 5000 rupees. Since the kind of fruits and their precise amounts are not specified, this offer is invalid.
3] The offeree must be informed of the offer:
A proposition must be properly conveyed to the offeree to be accepted. If the offeree is unaware of the offer, they cannot accept the proposition. Regarding this, Lalman Shukla v. Gauri Dutt is a well-known case study. It is made very clear that accepting without knowing about the proposition is not the same as accepting.
4] The offer might be conditional:
An offer may be subject to conditions, but acceptance cannot. Any terms or restrictions that the offeror feels are essential may be included in the offer. Thus, if B pays half of the price beforehand, A may offer to sell him the products. B can now choose to accept these terms or make a counterproposal.
5] There cannot be a negative condition in the offer:
The offer will not automatically be accepted if any of its terms are broken. Therefore, it cannot state that something shall be deemed accepted if approval is not conveyed by a specific deadline. Example: A offers B $5,000 for the sale of his cow. The offer will be deemed accepted if it is not withdrawn by Monday. This deal isn’t legitimate.
6] An offer may be general or specific:
As previously seen, the offer may be made to one or more particular parties. Alternatively, the offer may be made to the entire public.
7] Offers can be made explicitly or implicitly:
An offer might be made by the offeror with words or even by his actions. An oral contract, which is an offer made through verbal communication, is referred to as an explicit contract. Additionally, an implicit contract is created when an offer is made based on the behavior and acts of the offeror.
Classification of the Offer
Certain kinds of offers may depend on factors like time, purpose, design, etc. Let’s examine the categorization of the offer.
Express Offer
It is possible to make an offer verbally or in writing. We refer to this as an Express offer.
As an illustration
“Will you purchase my car for Rs 2,00,000?” asks ‘A’ to ‘B’.
Implied Offer
An offer might be inferred from the parties’ conduct or situation.
We call this an implied offer.
As an illustration
When a transport business runs a bus on a specific route, they are implicitly making an offer to convey people for a set fee.
General Offer
No particular party makes a generic offer. It is one that the whole population makes. As a result, anybody in the public is free to accept the offer and is entitled to the benefits or consideration.
As an illustration
“A” places an advertisement in the newspaper promising a prize of Rs. 2 lakh to anyone who locates his missing kid. After reading it, “B” phones “A” to let him know about his missing kid after locating the youngster. As a reward, “A” is now obligated to pay “B” 2 lakh.
Specific Offer
It is an offer extended to a certain individual or group of individuals, and only they have the option to accept it.
For example “A” proposes to “B” to sell his house. As a result, only “B” is eligible to accept the unique offer that is made to a specific individual.
Case Laws
Carlill v. Carbolic Smoke Ball Company (1893):
Background: This is a classic case that deals with the concept of unilateral contracts and the acceptance of an offer by performance.
Summary: The Carbolic Smoke Ball Company advertised that their product could prevent influenza, and they promised to pay £100 to anyone who used the smoke ball as directed and still contracted influenza. Mrs. Carlill used the smoke ball but still got sick. When she claimed the reward, the company refused to pay.
Legal Significance: The court held that the advertisement was a unilateral offer, and Mrs. Carlill accepted the offer by performing the conditions stated in the advertisement. This case is often cited to illustrate the principle that an offer can be accepted by performing the requested act.
Harvey v. Facey (1893):
Background: This case is often referred to when discussing the distinction between an offer and an invitation to treat.
Summary: The defendant telegraphed the plaintiff expressing a willingness to sell his property but did not state a price. When the plaintiff replied asking for the lowest price, the defendant refused to sell.
Legal Significance: The court held that the initial communication was not an offer but an invitation to treat. An offer only arises when there is a clear intention to be bound by specific terms. This case emphasizes the importance of distinguishing between offers and preliminary negotiations.