OFFER AND ACCEPTANCE

OFFER OR PROPOSAL
• 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.
• An offer or proposal is the starting point in the formation of an
Agreement.
• An offer must fulfill 3 conditions:
➢ There must be two persons or parties
➢ One of them must express or signify his willingness to another
to do or to abstain from doing a particular thing.
➢ The another person or party expressing willingness must have
an intention to get the consent of the person to such act or
abstinance.
 TYPES OF PROPOSALS OR OFFERS

PROPOSALS

EXPRESS SPECIFIC POSITIVE

OR OR OR
IMPLIED GENERAL NEGATIVE
 RULES OF A VALID OFFER
• Terms of an offer must be clear, specific, definite, certain and
not loose or vague.
• An offer must create legal relationship.
• An offer must be communicated to the person to whom it is
made.
• Intention of the offer must be to obtain the consent or assent.
• Offer may be expressed or implied, general or specific and
also positive or negative.
• An offer must not include any term or terms of non-
compliance which may be assumed to lead to acceptance.
• A statement of price is not an offer.
• An offer is different from an invitation to an offer.
• Two identical cross offers donot constitute a contract
• An offer can be made subject any terms and conditions
 LAPSE OF AN OFFER
• by the communication of notice of revocation by the proposer
to the other party.

• by the lapse of the time prescribed in such proposal for its

acceptance, or, if no time is so prescribed, by the lapse of a
reasonable time, without communication of the acceptance;

• by the failure of the acceptor to fulfil a condition precedent to

acceptance ; or

• by the death or insanity of the proposer, if the fact of his death

or insanity comes to the knowledge of the acceptor before
acceptance.

• by subsequent illegality or destruction of subject.

 ACCEPTANCE
• When the person to whom the proposal is made signifies
his/her assent thereto, the proposal is said to be accepted.A
proposal when accepted becomes a promise.
• Acceptance is a very important stage in completion of a
contract. It leads to the conversion of a proposal into a
promise.
• An offer can be accepted only by the person or persons to
whom it is made. If it is accepted by anyone else it is not valid.
• When the offer is made to the world at large it can be accepted
by any one.
• Similarly when the offer is made to a particular group it can be
accepted by any person belonging to that particular group
 RULES OF A VALID ACCEPTANCE
• Acceptance must be absolute and unqualified. [SEC 7(1)]

• Acceptance must be in the mode prescribed or usual and

reasonable mode. [SEC 7(2)]

• Acceptance may be expressed or implied.

• Acceptance must be communicated to the offeror.

• Acceptance cannot precede an offer.

• Acceptance has to be communicated within a reasonable time

• Acceptance of the offer means all the terms and conditions have
been accepted.
• Acceptance cannot be implied from silence.

• Acceptance can be made by the agent on behalf of his pricipal

• Acceptance must be communicated before the offer lapses or

is withdrawn by the offeror.

• Acceptance must make clear an intention on the part of the

promisee to fulfill the terms of the promise given.

• A person who is subject to certain conditions or requires to

obtain the permission of some other person. Then that person
can make an acceptance only after receiving such permission
or fulfilling such conditions
 COMMUNICATION, ACCEPTANCE AND
REVOCATION OF PROPOSALS [SEC 3]
• The communication of proposals the acceptance of proposals,
and the revocation of proposals and acceptances, respectively,
are deemed to be made by any act or omission of the party
proposing, accepting or revoking by which he intends to
communicate such proposal acceptance or revocation, or
which has the effect of communicating it.
 COMPLETION OF COMMUNICATION[SEC 4]
• The, communication of a proposal is complete when it comes
to the knowledge of the person to whom it is made.
• The communication of an acceptance is complete, as against
the proposer, when it is put in 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.
• The communication of a revocation is complete as against the
person who makes it, when it is put into a course of
transmission to the person to whom it is made, so as "to be out
of the power of the person who makes it; as against the person.
to whom it is made, when it comes to his knowledge.
 REVOCATION OF PROPOSALS AND
ACCEPTANCES [SEC 5]
• A proposal may be revoked at any time before the
communication of its acceptance is complete as against the
proposer, but not afterwards.

• An acceptance may be revoked at any time before the

communication of the acceptance is complete as against the
acceptor, but not afterwards.
 HOW IS REVOCATION OF A PROPOSAL
MADE.[ SEC 6]
• (1) by the communication of notice of revocation by the
proposer to the other party
• (2) by the lapse of the time prescribed in such proposal for its
acceptance, or, if no time is so prescribed, by the lapse of a
reasonable time, without communication of the acceptance;
• (3) by the failure of the acceptor to fulfil a condition precedent
to acceptance ; or
• (4) by the death or insanity of the proposer, if the fact of his
death or insanity comes to the knowledge of the acceptor
before acceptance.
 CONSIDERATION
• Consideration is the price for which the promise of the other
party is brought.

• When at the desire of the promisor, the promisee or any other

person has done or abstained from doing; or does or abstains
from doing, or promises to do or to abstain from doing
something, such an act or abstinence or promiseis called as
consideration for the promise.

• Hence it should contain:

➢ Act of doing something
➢ An abstinence or forebearence of doing something
➢ There should be return promise
 RULES OF A VALID CONSIDERATION
• Consideration may be an act to do something or an abstinence
of doing something.
• Consideration may be in past, present or future.
• Consideration must be real and not illusionary.
• Consideration should move at the desire of the promisor.
• Consideration may move from any person, including the
promisee.
• For supporting each independent promise, there must be an
independent consideration.
• Consideration need not be adequate.
• Consideration must be something that the promisor is not
already to do.
• Consideration must be valuable in the eyes of law.
 EXCEPTION TO THE RULE OF
‘NO CONSIDERATION, NO CONTRACT’[SEC 25]
• (1) it is expressed in writing and registered under the law for
the time being in force for the registration, and is made on
account of natural love and affection between parties standing
in a, near relation to each other ; or unless
• (2) it is a promise to compensate, wholly or in part, a person
who has already voluntarily done something for the promisor,
or something which the promisor was legally compellable to
do ; or unless
• (3) it is a promise, made in writing and signed by the person to
be charged therewith, or by his agent generally or specially
authorized in that behalf, to pay wholly or in part a debt of
which the creditor might have enforced payment but for the
law for the limitation of suits.
• In any of these cases, such an agreement is a contract.
• Nothing in this section shall affect the validity, as between the
donor and donee, of any gift actually made.

• An agreement to which the consent of the promisor is freely

given is not void merely because the consideration is
inadequate ; but the inadequacy of the consideration may be
taken into account by the Court in determining the question
whether the consent of the promisor was freely given.

• No consideration is necessary to create an agency, [SEC 185]

 TYPES OF CONSIDERATION

• Present or Executed Consideration.

• Past Consideration
• Future or Executory Consideration
• Unlawful Consideration
• Illusionary Consideration