Offer / Proposal:

section 2 a says that “when one person signifies to another his willingness to do or
abstain from doing anything, with a view to obtaining the assent of that to such act or
abstinence, he is said to make a proposal.”
How The Can be Offer Made:
An offer can be made by express words, spoken or written.
An offer can also be made by conduct of parties.
As an offer can be made to a specific person or group of persons or to the public at
large.
Example: A says to B “will you buy my house for Rs. 2,00000? Here A is making an
offer to B by signifying his willingness to sell his house to B Rs. 2,00000 with a view to
obtaining assent of B.
Acceptance:
Section 2b says that “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.”
Example: if b above agrees to buy A’s house for Rs. 2,00000 he can be said to have
accepted A’s offer.
Types of offer:
Express Offer: Face to face offer….written offer
Implied Offer: Through conduct of the offeror i.e. bus company, rail service etc.
Specific Offer: Offer to a particular person
General Offer: Offer made to public at large.
Standing Offer: Continuous offer. E.g. mobile phone packages
Cross Offer: Offer made by two different persons to each other.
Counter Offer: Acceptance of offer but subject to some terms and conditions.

Essentials of an Offer:
Offer must be:
i. Made with a view to obtain acceptance. (section 2a)
ii. With the intention of creating legal relations. A social invitation even if accepted
does not create legal relations as the offeror does not intend to create legal
relations.
Example: an agreement to go together to picture or for a walk is not an offer,
agreements between husband and wife living together are of social nature.
iii. Clear, unambiguous, definite and certain and must not be loose, vague or
ambiguous (section 29).
iv. Distinguished from (a) mere declaration of intention (b) an invitation to offer or to
treat.
Invitation to offer is merely a circulation of information by a person of his
willingness to treat with any person who on such information is willing to open
 negotiation with him and is not an offer. E.g. Prospectus for admission, display of
goods in shelf with price tags, catalogue, quotation, price list, advertisement,
invitation to tenders etc.
v. Free from stress as offer under stress is no offer.
vi. Announcement on speaker
vii. Shelf prices are not offer.
viii. Communicated to the offeree.
ix. Made with terms and conditions on which the offer is being made.
x. In the nature of request.
Acceptance how made:
Offer and acceptance does not always need to be expressed orally or in writing. Any
mode which can express an intention to agree would be sufficient e.g. by saying yes,
ok, node of head, by performing the act called for etc.
Acceptance Express or Implied:
Acceptance is express when it is communicated by words spoken or written and is
implied when gathered from conduct.
Example:
a. Acceptance by conduct: A trader receives an order from a customer and
executes the order by sending the goods. This is acceptance through conduct.
For example, by going to a doctor for a checkup, a patient agrees that he will pay a fair
price for the service. If one refuses to pay after being examined, the patient has
breached a contract implied in fact.
b. Implied Acceptance: A enters a bus for traveling to his destination and takes a
seat. This is implied acceptance on the part of A.
Who can accept offer?
a. only specific person to whom offer is made.
b. When offer is not made to a specific person rather to general public then any
member of public may accept the offer.
c. Where a product in large quantities is advertised in a newspaper or on a poster, it
is as an offer, however, if the person who is to buy the advertised product is of
importance, for instance because of his personality, etc., when buying land, it is
regarded merely as an invitation to treat.
Essentials of valid Acceptance:
1. Acceptance must be absolute and qualified. Section 7, 1 and without any
variation. Possession date varied.
2. Acceptance must be communicated to offeror.
3. acceptance must be in prescribed manner. Section 7, 2.
4. As per the mode prescribed or stated in the offer.
(c) Promisor And Promisee: The person making the proposal is called the "promisor"
and the personaccepting the proposal is called the "promisee":
(d) Reciprocal Promises: Promises which form the consideration or part of the
consideration for
each other are called reciprocal promises:
Consideration:
Section 2 (d) defines Consideration When, at the desire of the promisor, the promisee
or any other person (i) has done or abstained from doing or (ii) does or abstains from
doing, or (iii) promises to do or to abstain from doing, something, such act or abstinence
or promise is called a consideration for the promise
Example: A lends his book to B, who promises to return it after examinations, this
results in a benefit to B and a detriment to A, which is consideration in return of B’s
promise to return the book.

Three rules govern consideration:-

 Consideration must be real, but need not be adequate but must be lawful. For
instance, agreeing to buy a car for a penny may constitute a binding contract.
 Consideration must not be from the past. For instance, in Eastwood v. Kenyon,
the guardian of a young girl obtained a loan to educate the girl and to improve
her marriage prospects. After her marriage, her husband promised to pay off the
loan. It was held that the guardian could not enforce the promise because taking
out the loan to raise and educate the girl was past consideration.
 Consideration must move from the promisee at the desire of promisor. For
instance, it is good consideration for person A to pay person C in return for
services rendered by person B. If there are joint promisees, then consideration
need only to move from one of the promisees.

Classification Of Contract:
Valid Contract:
Valid contract is one which if fully operative in accordance with the intention of parties
and the law.
A valid contract is one which is fully enforceable by law. It must have all the essential
elements required by law. If one or more of these elements are missing then contract is
either Voidable or illegal or unenforceable.
A valid contract may become unenforceable if some rule of law renders it incapable of
proof e.g. promissory note not stamped at all or insufficiently stamped shall not be
enforceable.
Voidable Contract:
Section 2i defines Voidable Contract is an agreement which is unenforceable by law
at the option of the one (or more) of the parties thereto but not at the option of the other
parties.
It means that the contract is binding one the parties unless set aside on the ground that
the transaction was vitiated by:
For example a contract falling under section 236 is a Voidable contract i.e. a person
representing as an agent while he actually was no an agent.
Void agreements:
2g an agreement not enforceable by law is said to be void;
For example an agreement with a minor is void.
Void contracts;
2j a contract which ceases to be enforceable by law becomes void when it ceases to be
enforceable.
A void contract, also known as a void agreement, is not actually a contract and does
not create rights.
A void contract cannot be enforceable by law. Void contracts are different from Voidable
contracts, which are contracts that may be (but not necessarily will be) nullified.
An agreement to carry out an illegal act is an example of a void contract or void
agreement. For example, “a contract between drug dealers and buyers is a void
contract simply because the terms of the contract are illegal.”
of document or being time barred.
Agreement:
Section 2(e) defines as every promises and every set of promises forming the
consideration for each other is an agreement.
Difference between Contract and agreement:
A contract is an agreement between parties that will be legally enforceable.
A simple “agreement” is an arrangement between the parties which may or may not
contain the necessary elements to be enforceable before a court of law.
Sec. 10 of the Contract Act, 1872 defines what agreements are contracts? All
agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and are
not hereby expressly declared to be void.
OR
An agreement is essentially an exchange of promises between two or more parties. A
contract is a written agreement that demonstrates that all parties bound to the
agreement have consented to their respective responsibilities as to the agreement.
In other words, an agreement is an arrangement between parties regarding a course of
action. And a contract is a written expression of that agreement which, when executed
by signature or expressed in other forms of acknowledgement and legally binds the
parties to that agreement.
Or
A contract is an exchange of promises between two or more parties to do, or refrain
from doing, an act which is enforceable in a court of law. It is binding legal agreement.
It is where an unqualified offer meets a qualified acceptance and the parties reach
consensus ad idem.
The parties must have the necessary capacity to contract and the contract must no be
trifling, indeterminate, impossible or illegal.