Offer or Proposal The process of making an agreement commences with offer.

Offer is a proposal by one party to another to enter into a legally binding agreement with him. Proposal is defined as When one person signifies to another his willingness to do or to abstain from doing anything in order to obtain the assent of another to such act or abstinence. The person who makes the offer is called the offeror, proposer or promisor and the person to whom it is made is known as the offeree or promise. General Offer The offer made to the World at large is called as general offer, but the contract is not made with all the World. Contract is made only with that person who comes forward and performs the conditions of the proposal. The offer of this kind can be referred to,in the Lalman v Gauri Dutt and Carlill v Carbolic Smoke Ball co. Specific Offer An offer is made to be specific when it is addressed to a definite person or body of persons. Express offer An express offer is one which is made by words, spoken or written. A offers to sell his pen to B for Rs. 20 Implied Offer An implied offer is one which is gathered from the conduct of the parties or the circumstances of the case. Ex: When a transport company runs a bus on a particular route, there is an implied offer by the transport company to carry passengers for a certain fare. A bid at an auction is an implied offer to buy. Consuming eatables at a self service restaurant, both create implied promises to pay for the benefits enjoyed. Essentials of Valid Offer 1. There is a distinction between Offer and Invitation to treat An offer should be distinguished from an invitation to offer. Every expression to enter into a contract may not amount to an offer. When a man advertises that he has got a stock of books to sell, or houses to let, there is no offer to be bound by any contract. Such advertisements are offers to negotiate-offers to receive offers. On the other hand, an offer is final expression of willingness by the offeror to be bound by his offer should the other party choose to accept it. So, quotations, catalogues, advertisement in a newspaper for sale of an article of goods displayed by the shopkeeper in a shop window or on shelves do not constitute an offer. They are instead an invitation to the public to make an offer. Harvey v. Facey is an illustration of invitation to treat. Catalogues and display of goods, A shopkeepers catalogues of prices is not an offer ; it is only an invitation to the intending customers to offer to buy at the indicated prices.

Announcement of hold auction, an auctioneers announcement that specified goods will be sold by auction on a certain day is not an offer to hold the auction and he will not be liable to persons travelling up to the place if he changes his mind and does not hold the auction. 2. Communication of the offer must be complete An offer is effective only when it is communicated to the offeree. Since a contract requires identity of minds, and if the offeree is not aware of the offer it cannot be considered as acceptance. Thus, the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. This was seen in the Lalman v Guru Dutt, defendants nephew absconded from home. He sent his servant in search of the boy. When the servant had left, the defendant by handbills offered to pay Rs. 501 to anybody discovering the body. The servant came to know of this offer only when he had heard already traced the missing child. He, however, brought an action to recover the reward. But his action failed. This can be explained through the judgement, In order to constitute a contract, there must be an offer and there can be no acceptance of an offer and there can be no acceptance unless there is knowledge of the offer. 3. Offer must be capable of creating Legal Relations To constitute an offer, the offeror must intend to create a legal obligation. Social invitation, even through it is accepted, does not create legal obligations. To offer friend a dinner, does not involve a legal action. To create a contract there must be a common intention of the parties to enter into legal obligations, the case of Balfour v. Balfour has become well known as an illustration of this principle: The defendant and his wife were enjoying leave in England. When the defendant was due to return to Ceylon, where he was employed, his wife was advised, by reason of her health, to remain in England. The defendant agreed to send her an amount of pound 30 a month for the probable expenses of maintenance. He did send the amount for some time, but afterwards differences arose which resulted in their separation and the allowance fell into arrears. The wifes action to recover the arrears was dismissed. The above does not constitute a contract , it is an arrangement which is made between husband and wife, these are not contracts because parties did not intend that they shall be attend by legal consequence. In the case of arrangements regulating social matters it follows almost as a matter of course that that the parties do not intend legal consequences to follow. In the case of agreements regulating business relations it follows almost as a matter of fact that the parties intend legal consequences to follow. This does not however, mean that in family or social matters there cannot be a legally binding contract. McGregor v McGregor is an illustration of a binding engagement between a husband and a wife. Here a husband and wife withdrew their complaints under an agreement by which the husband promised to pay her an allowance and she to refrain from pledging his credit, the agreement was held to be a binding contract.

4. Offer must be definite Agreement, the meaning of which is not certain, or capable of being made certain, are void. So no contract can come into existence if the terms of the offer are vague and uncertain. In Taylor v Portington a contract for the lease of a house for three years at pound 85 per annum if the house was put into thorough repairs and the drawing rooms handsomely decorated according to the present style. The court refused specific performance on the ground that the terms were indefinite. ( meaning of decoration according to present style seems vague) 5. Offer must differ from statement Statement or mere intention for a future course of action cannot be called as offer. A father wrote to his would be son in law that his daughter would have a share of what he left after the death of his wife. It was held that the letter was a mere statement of intention not an offer. Lapse of Offer (a) If the offeror communicates a notice of revocation to the offeree. (b) If the offeree does not accept the offer within the prescribed time. If no time is fixed, the offer lapses after a reasonable time. (c) If the acceptor fails to fulfil the conditions in the offer. (d) If the offeror or the offeree dies before the acceptance of the offer. Revocation of Offer (taking back or withdrawal of offer) (a) By communication to the offeree at any time before the offer is accepted. (b) Even if the offer is made for the specified time, the offeror is free to withdraw the offer before the expiration of the period specified provided it has not been accepted till then.