ASSIGNMENT

NO 1

BUSINESS LAW

SUBMITTED BY: FARRUKH WAQEE

SUBMITTED TO: ABDUL GHAFFAR KHAN

BBA-4B

DATE: 13th October, 2010

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Oct. 13

OFFER AND ACCEPTANCE:

OFFER:

DEFINITION:

Offer means to express a desire to enter into an agreement or contract with another party.

Example: it means that a person has a desire to exchange something with the other person in
terms of a contract and has some worth.

Mr. X has a desire to sell a commodity for the lowest price to Mr. Y.

ESSENTIALS:

i) Express or implied: An offer should be expressed orally or written and implied by

gestures or actions.
Example: Mr. X says Mr. Y that he will sell his washing machine for 5000” it is
expressed.
City government runs buses on the roads following different routes to carry
passengers” it is implied.

ii) Must create legal relation: an offer must have a legal intention to create a legal
relationship with the offeree otherwise there will be an agreement. If an offer does
not give rise to legal obligations between the parties it is not a valid offer in the
eye of law.
Example: Mr. X invites Mr. Y to a dinner party and he accepts the invitation. Y
does not turn up at the dinner party. X cannot sue Y 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.

iii) Definite and clear: an offer must be clear to the offeree and must be
understandable to the offeree. If the terms of an offer are not definite and clear it
cannot be called a valid offer.
Example: if Mr. X has two motorbikes, He offers Mr. y to sell his one bike for a
certain price then it is not a legal and valid offer because there is an ambiguity in
the offer that which motorcycle the Mr. x wants to sell.

iv) Different from invitation to offer: invitation is an action of inviting other parties
to make an offer. Accepting an offer creates a contract while accepting an
invitation creates an offer.

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Example: its best example can be any advertisement to sell goods by auction
which allows the seller to accept bids and choose which to accept.

v) Specific or general: offer must be specific or general means it is given to a

specific person or the public.
Example: Saleem promises to give Rs.100 to Hamid, if he brings back his missing
dog. This is a specific offer and can only be accepted by Hamid.
Saleem 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.

vi) Must be communicated to the offeree: the offer must be communicated to the
offeree means the person who is offered must understand the offer and all the
terms of the offer. 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.
Example: A person’s dog is lost and he announces a reward in the newspaper for
the finder.
A man without reading the newspaper returns his dog and after a short time he
comes to know about the reward and he claims the reward. But the person refuses
to reward him for he was not communicated.

vii) No negative condition: offerer must not set any negative condition means any
condition that can make the contract void is not acceptable.
Example: Mr. X makes an offer for a certain time period and he claims that if he
doesn’t get the acceptance or refusal during the given time period from the offeree
the offer will be considered accepted.

viii) May be subjected to any condition: there may be some conditions that are easily
accepted and understood by the offeree.
Example; Mr. X offers a car to Mr. Y and gives a condition that until all the dues
are not clear, the documents of the car will not be handed over to Mr. Y.

ix) No cross offer: a cross offer can be the rejection of a standing offer in the form of
a new offer.
Example: Mr. X sells his car for 10,000 and Mr. Y gives him 8,000 for it.

REVOCATION OF OFFER:

i) Notice by offerer: An offer may be revoked by the offeror by giving a notice of

revocation to the other party before it is accepted. Notice of revocation will take
effect only when it comes to the knowledge of the offeree.

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Example: A person offers his house to second person for Rs.100000. Before
second person accepted the offer, first person withdrew his offer by informing
second. There will be no contract as the offer has been revoked before its
acceptance.

ii) Lapse of time: if a time is set for an offer to be fulfilled and the offeree is not
informed within the time or the offeree doesn’t make any response within the time
given then the contract will be considered void.
Example: Mr. X applied for the shares. Company allotted shares on 18th October
and received his application on 13th November. Because X for certain reason
couldn’t apply for shares in the right time. The contract would be considered void.

iii) Failure to fulfill condition: An offer is revoked when the offeree fails to fulfill a
condition precedent to the acceptance of the offer.
Example: Aslam offers to sell a mobile phone to shahid on a condition that shahid
pays 2000 before a certain date. If shahid fails to pay the required amount within
the given time, the offer should be considered void.

iv) Notice by offeree: An offer may be considered void when offeree gives a notice
of revocation to the other party before it is accepted. Notice of revocation will
take effect only when it comes to the knowledge of the offerer.
Example: Shahid offers his house to Saleem for Rs.855000. But Saleem doesn’t
accept his offer by informing shahid. There will be no contract as the offer has
been revoked before its acceptance.

v) Death or insanity of offerer: An offer is revoked by the death or insanity of the

offeror, if his death or insanity comes to the knowledge of the offeree before
acceptance.
Example: Shahid offers his house to Saleem for Rs.855000. But shahid dies in a
car accident. There will be no contract as the offer has been revoked before its
acceptance.

vi) Death or insanity of offeree: An offer is revoked by the death or insanity of the
offeree, if his death or insanity comes to the knowledge of the offerer before
acceptance of the offer.
Example: Shahid offers his house to Saleem for Rs.855000. But Saleem dies in a
car accident. There will be no contract as the offer has been revoked before its
acceptance.

vii) Counter offer: An offer is revoked if a counter-offer is made to it. A counter offer
is an offer (by the offeree) given in response to an offer (by the offerer).
Example: Asad offers his watch to Zain for Rs.500. Zain instead of saying yes,
offers only Rs.350. Asad's offer is revoked and there is no contract.

viii) Subsequent illegality: offer will be considered void if it is found to be against the
law or breaking the law.

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Example: A company sells a building to the person. After a certain time the
person comes to know that the building is the property of government and he
claims. The contract would be considered void.

ix) Destruction of subject matter: offer will be considered null if the object that was
considered to be the center of the offer or offer was made on it is destroyed.
Example: Mahmood decided to sell his car to Jawed. But after a certain time the
car got struck with the truck. There will be no contract.

x) Failure to accept according to manner: An offer must be accepted according to the

manner provided by the offerer otherwise it would be considered void.
Example: X wants to buy something from Y in a given time period. But Y fails to
provide that thing in the time given. Offer will be void.

ACCEPTANCE:

DEFINITION:

When the person to whom the proposal is made signifies his approval, the proposal is
said to be accepted.

ESSENTIALS:

i) Given by offeree: An offer made to a particular person can be accepted by him

alone. If any other person accepts it, there is no valid acceptance.
Example: X wants to sell his property to Y. Only Y can accept this offer, but
the nephew of cannot accept the offer.

ii) Absolute or unconditional: An acceptance must be absolute and unconditional.

It must correspond with all the terms of the offer.
Example: Mr. X offers to sell his site to Mr. Y for Rs.100000 but Mr. Y
accepts to purchase it for Rs.80000 then the contract is void.

iii) In prescribed manner; If the offerer prescribes the manner of acceptance, the
acceptance must be made in accordance with the manner prescribed.
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Example: X wants to buy something from Y in a given time period. But Y

fails to provide that thing in the time given. Offer will be void.

iv) Communicated to the offerer: Acceptance should be communicated to the

offerer. The offeree 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.
Example: Offeree can send telegram to the offerer that his offer has been
accepted.

v) Express or implied: Acceptance may be express or implied. It is express when

it is communicated by words, spoken or written or by doing some required
act. It is implied when it is gathered from the surrounding circumstances or
the conduct of the parties.

vi) Follow the offer: acceptance should follow the offer and not precede it. There
can be no acceptance without an offer. The offeree must be aware of the
proposal at the time of acceptance.

vii) Within reasonable time: the offer must be accepted within a reasonable time.
Otherwise, the proposal will lapse. If the offeror has prescribed a time within
which offer must be accepted, it must be accepted within the prescribed time.

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