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The
term "Contract" is derived from the latin "contractum"
which means "drawn together". It is an agreement
to do or not to do an act. It comes into existence from
the action of the parties. It creates legal rights and obligations
and it is enforceable by law. According to Section 2 (h)
of the Indian Contract Act, contract is "an agreement
enforceable by law". Salmond defines a contract as
"an agreement creating and defining obligations between
the parties".
Offer:
A proposal is an expression of will or intention to
do or not to do something. It is also called an "offer".
It is one of the essential elements of an agreement. It
is the very basis of the contract. It becomes a promise
when it it accepted. Section 2 (a) of the Contract Act defines
the proposal as "when one person signifies to another
his willingness to do or to abstain from doing anything,
with a view to obtaining the assent of that other, to such
act or abstinence, he is said to make a proposal".
The person making the proposal is called the proposer or
offeror or the promisor. The person to whom the proposal
is made is called the offeree or promisee.
for example; Sunil offers to sell his car to Padmaja for
Rs. 50000. This is a proposal. Sunil is the offeror and
Padmaja is the offeree.
An
offer may be express or implied. An offer which is expressed
by words, written or spoken, is called an express offer.
An offer which is expressed by conduct is called an implied
offer. An offer may be positive or negative. It may be in
the form of a statement or a question.
for example; Sridhar says to Radhika that he will sell his
scooter to her for Rs.20000. This is an express offer.
The Karnataka State Road Transport Corporation runs omnibuses
on various routes to carry passengers at the scheduled faresss.
This is an implied offer by KSRTC.
Essentials
of a valid offer:
1.
A valid offer must intend to create legal relations. It
must not be a casual statement. If the offer is not intended
to create legal relationship, it is not an offer in the
eyes of law.
for example; Sunil invites Sridhar to a dinner party and
Sridhar accepts the invitation. Sridhar does not turn up
at the dinner party. Sunil cannot sue Sridhar for breach
of contract as there was no intention to create legal obligation.
Hence, an offer to perform social, religious or moral acts
without any intention of creating legal relations will not
be a valid offer.
2.
The terms of an offer must be definite, unambiguous and
certain. They must not be loose and vague. A promise to
pay an extra Rs. 500 if a particular house proves lucky
is too vague to be enforceable.
for example; Sridhar says to Sunil "I will give you
some money if you marry my daughter". This is not an
offer which can be accepted because the amount of money
to be paid is not certain.
3.
An offer may be made to a definite person or to the general
public. When offer is made to a definite person or to a
special class of persons, it is called "specific offer".
When an offer is made to the world at large or public in
general, it is called "general offer". A specific
offer can be accepted only by that person to whom it has
been made and a general offer can be accepted by any person.
for example; Sunil promises to give Rs.100 to Sridhar, if
he brings back his missing dog. This is a specific offer
and can only be accepted by Sridhar.
Sunil issues a public advertisement to the effect that he
would give Rs.100 to any one who brings back his missing
dog. This is a general offer. Any member of the public can
accept this offer by searching for and bringing back Sunil's
missing dog.
4.
An offer to do or not to do must be made with a view to
obtaining the assent of the other party. Mere enquiry is
not an offer.
5.
An offer should may contain any term or condition. The offeror
may prescribe any mode of acceptance. But he cannot prescribe
the form or time of refusal so as to fix a contract on the
acceptor. He cannot say that if the acceptor does not communicate
his acceptance within a specified time, he is deemed to
have accepted the offer.
6.
The offeror is free to lay down any terms any terms and
conditions in his offer. If the other party accepts it,
then he has to abide by all the terms and conditions of
the offer. It is immaterial whether the terms and conditions
were harsh or rediculous. The special terms or conditions
in an offer must be brought to the notice of the offeree
at the time of making a proposal.
7.
An offer is effective only when it is communicated to the
offeree. Communication is necessary whether the offer is
general or specific. The offeror may communicate the offer
by choosing any available means such as a word of mouth,
mail, telegram, messenger, a written document, or even signs
and gestures. Communication may also be implied by his conduct.
A person can accept the offer only when he knows about it.
If he does not know, he cannot accept it. An acceptance
of an offer, in ignorance of the offer, is no acceptance
at all.
Let
me give a case law regarding this point;
G
sent his servant L, to search his missing nephew. Subsequently,
G announced a reward for information relating to the boy.
L traced the boy in ignorance of the announcement. L, later
on came to know of the reward and he claimed it. G refused
to give the reward. The Court held that L was not entitled
to the reward as he was not aware of the offer. (In Re:
Lalman Shukla Vs Gauri Dutt)
It
should be noted that an invitation to offer is not an
offer.
The following are only invitations to offer but not actual
offers;
1. Invitations made by a trade for the sale of goods.
2. A price list of goods for sale.
3. Quotations of lowest prices.
4. An advertisement to sell goods by auction.
5. An advertisement inviting tenders.
6. Display of goods with price-tags attached.
7. Railway time-table.
8. Prospectus issued by a company.
9. Loud speaker announcements.
Offer
and Tender:
A tender is not an offer to the public. It is in the
nature of a continuing offer. It is different from general
offer. A person who invites tenders for the purchase or
sale of goods does not make an offer. The person who submits
the tender is said to make an offer.
In
next column let us know more about the revocation of an
offer.
to
be continued...
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