Offer & Acceptance

What is Offer
“When one person signifies to another his
willingness to do or to abstain from doing
anything with a view to obtain the assent
of that other to such act or abstinence,
he is said to make a proposal“
Section 2 (a)
“When the person to whom the proposal
is made signifies his assent thereto, the
proposal is said to be accepted. A
proposal, when accepted, becomes a
promise” Section 2 (b)
Indian contract Act, 1872
Types of Offer

Express Offer Implied Offer

General Offer Specific Offer

Cross Offer Counter Offer

 General Offer:
• It is an offer made to the public in general and
hence anyone can accept and do the desired
act.
• Example: A company advertised to give a
reward to anyone who is contracted by
influenza after using the medicine of the
company for a certain period according to the
printed directions. Mrs. ‘X’ purchased the
advertised medicine and contracted influenza
though using the medicine as per printed
instructions. Mrs.’X’ claimed for the reward.
• The claim was denied by the company on the
ground that offer was not made to Mrs.’X’ and
also that she had not communicated her
acceptance to an offer. It was decided that she
could recover the reward as she had accepted
the offer by complying with the terms of
offer.(Carlill v. Carbolic Smoke Ball Co.)
• Example: An advertisement given in the
newspaper announcing a reward for tracing
out a missing person. It can be accepted by
any person who trace out the missing person
and is entitled to claim the reward. (Lalman
Shukla v.Gauri Dat)
• (b) Specific Offer: When offer is made to a
definite person, it is known as specific offer
and such offer can be accepted only by that
specified person.
• Example: ‘A’ offers to sell his car to ‘B’ at a
certain cost. This is a specific offer.
• (c) *Cross Offers: When two parties exchange
identical offers in ignorance at the time of
each other’s offer, the offers are called cross
offers.
• (d) Counter Offer: When the offeree offers to
qualified acceptance of the offer subject to
modifications and variations in the terms of
original offer, he is said to have made a
counter offer. Counter-offer amounts to
rejection of the original offer.
 Legal Rule as to Offer

1. It must be capable of creating legal relationship.

2. The terms of offer must be certain.
3. The offer may be expressed or implied
4. It must be made with a view to obtaining the assent.
5. Offer should not contain a term the non compliance
of which may be assumed acceptance
 These are NOT Offers

1. A declaration of intentions.

2. An invitation to make an offer.

3. A statement of price is not an offer.

 Offer and Invitation to Offer:
• An offer is definite and capable of converting
an intention into a contract.
• Where as an invitation to an offer is only a
circulation of information, it is an attempt to
induce offers and precedes a definite offer.
• Acceptance of an invitation to an offer does
not result in the contract and only an offer
emerges in the process of negotiation.
 Lapses and Revocation of Offers
1. An offer lapses after stipulated or reasonable time

2. An offer lapses by not being accepted in mode prescribed.

3. An offer lapses by rejection.

4. An offer lapses by death or insanity of the offeror or the offerree

before acceptance.

5. An offer lapses by revocation before acceptance.

6. An offer lapses by subsequent legality or destruction of the subject

matter.
What is Acceptance
"When the person to whom the
proposal is made signifies his assent
thereto, the proposal is said to be
accepted.“
Section 2 (b)
Indian contract Act, 1872
Acceptance: An offer when accepted
becomes a promise.
 Types of Acceptance

1. Express Acceptance : when it is communicated by words spoken

or written.

2. Implied Acceptance : the conduct of parties.

 Legal Rule as to Acceptance
1. It must be absolute .

2. It must be communicated to the offeror.

3. It must be according to mode prescribed or usual mode.

4. It must be given within a specific or reasonable time.

5. It cannot precede an offer.

 Legal Rule as to Acceptance
6. Acceptor must show the intentions to fulfill terms of
promise

7. It must be made by someone to whom an offer is

made

8. It must be made before the offer lapses or withdrawn

9. It cannot be implied from silence

10. Acceptance by conduct:
When communication is complete

In case of Offer
The communication of offer is complete when it comes to the knowledge of
the person to whom it is made. Section 4 Para 1

In case of Acceptance
As against the proposer,
when it is put a course of transmission to him, so as to be out of the power
of the acceptor;
As against the acceptor,
when it comes to the knowledge of the proposer.
Section 4 Para 2
 Time of revocation
of Offer and Acceptance
Revocation of Offer
A proposal is revoked at anytime before the communication of its
acceptance is complete as against the proposer it is made.
Section 4 Para 1

In case of Acceptance
As against the proposer,
when it is put a course of transmission to him, so as to be out of the power
of the acceptor;
As against the acceptor,
when it comes to the knowledge of the proposer.
Section 4 Para 2
 Time for revocation of offer and
acceptance
• Revocation of Offer: • Revocation of Acceptance
Before the communication Before the communication
of acceptance is of acceptance is complete
complete as against the as against the acceptor.
proposer
 Revocation of an Offer
 Revocation by Communication
 Revocation by non-fulfillment of a condition by the
offeree or not being accepted in the prescribed mode.
 Revocation by lapse of Time
 Revocation by Death or Insanity
 Revocation by Destruction
 Revocation by Subsequent Illegality
 Revocation due to the occurrence of the counter offer.

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 Revocation by Communication
• An offer may be revoked by the offeror by
communicating that intent to the offeree
before the offer has been accepted.
Revocation is ineffective if acceptance has
occurred.

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 – Automatic Revocation
• If term of offer includes a definite time limit for
acceptance, offer is automatically revoked at end of
time period stated.
– Revocation by Passing of Reasonable Time
• When no time limit is set, an offer will revoke
automatically after the passing of a reasonable length
of time.
• The time element is determined by a review of
surrounding facts and circumstances.

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• Revocation by Death or Insanity
– Death or insanity of an offeror automatically revokes
an offer that has not yet been accepted.
– Revocation is immediate and communication to
offeree is not required.
• Revocation by Destruction
– Destruction of subject matter related to an offer
automatically revokes that offer.
• Revocation due to change in law
– Legislation that makes performance of an agreement
illegal automatically revokes an existing offer.

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