Name:- Nirban Chakraborty

Roll no:- 2083079

Subject:- Law of Contract

Topic:- Offer and Acceptance

OFFER AND ACCEPTANCE IN CONTRACT
INTRODUCTION
In our everyday life we get involved in various transactions, these transactions are
performed under specific agreements which are agreed upon by the parties which will be
involved in the transaction, in the same sense. But for any agreement to take place an
Offer needs to be made by one of the parties in the first place and only when the offer is
accepted (Acceptance of the offer) by the other party it forms an agreement and only the
agreements which are Legally Binding form a contract. In an offer a person conveys his
or her willingness to do or abstain from doing anything, in order to obtain the assent of
the other part to do such act or abstain from doing it. When the party to whom the offer is
made gives assent to it, the offer is said to be accepted. An offer when accepted becomes
a promise. The promise from two parties to one another is known as an agreement. In the
Indian Contract Act of 1872 the Section 2 contains the proper definition of Offer and
Acceptance. The Act also deals with the various problems and difficulties which arise
due to violation of the rules while making or accepting an Offer.

The terms of Offer and Acceptance are correlated in our day

to day life as every time that we buy something from a regular store we accept the
storekeeper’s invitation to an Offer. Treitel defines an offer as "an expression of
willingness to contract on certain terms, made with the intention that it shall become
binding as soon as it is accepted by the person to whom it is addressed", the "offeree". As
per the Indian Contract Act 1872 there are various modes of making an Offer and so there
are various modes of accepting it .There are various situations which arises when an offer
can be declared as void .Not all people are allowed to make an offer or accept it like
under the Indian Contract Act an offer made by a minor or a person of unsound mind is
not applicable. If an offer is made between two parties belonging to two different nations
then the terms and the validity of the offer is contained under the International Public
Law or the International Private Law.

An offer and an acceptance are the basics of forming an

agreement, if there is no offer or invitation to an offer made by any of the parties then the
foundation of the contract is not formed. Moreover if the offer made by a party is not
accepted by the other party then it cannot proceed further to form a proper contract.

There are various factors which govern the procedures of making an offer and its
acceptance which will be discussed in this paper.
OFFER
According to the Indian Contract Act 1872 in Section 2 (a) an Offer is defined as

“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.”

In legal terminology a person making an offer is termed as an offeror, whereas the person to
whom an offer is made is an offeree. Looking at the statutory definition of an offer there are two
elements which govern it. A person can either do something for the other party or can abstain or
stop doing something for the other party. Two situations given below illustrates the two elements
of an offer the first one talks about the positive action and the second one describes a negative
action;

 First Case: - X wants to sell his car to Z for 2 lakh rupees. (Here X, who is an offeror,
actively does something to make a proposal.) Z accepts the offer by paying him 2 lakh
rupees for the car. (Similarly Z, who is the offeree accepts X’s proposal and actively does
something for X).
 Second case: - X promises Z that he would not enter the agricultural sector .( Here X
acting as an offeror abstains from doing something ).Z in return promises not to invest in
the packaging industry.( Z acting as the offeree accepts X’s proposal and promises to
abstain from doing another thing)

According to Anson “An offer is an intimation, by words or conduct, of a willingness to enter

into a legally binding contract, and which in its terms expressly or impliedly indicates that it is to
become binding on the offeror as soon as it has been accepted by an act, forbearance, or return
promise on the part of the person to whom it is addressed.”

Kinds of offer
Under the Indian Contract Act of 1872 there can be various kinds of offer;

 Counter Offer: - (It falls under Section 7 of the Indian Contract Act.) When an additional
condition is added to the original offer by the offeree or the terms of the offer are
modified and sent back to the offeror it results into a counter offer. In the Moolji Jaitha
And Co. vs Seth Kirodimal the Kerala High Court stated that Section 7 of the Indian
Contract Act enacts the same rule that in order to convert a Proposal into a promise the
acceptance must be absolute, i.e., that an acceptance with a variation is no acceptance; it
is simply a counter-proposal .
  Cross Offer: - (It falls under Section 9 of the Indian Contract Act.) When two offers are
made simultaneously made by two parties to each other in ignorance of each others offer
it is known as a cross offer.
 Advertisements: - It is an Invitation to an offer by the offeror to the general concerned
public.
 Transactions by machine:-When the transaction is effected through a machine as the
product purchased cannot easily be retrieved from the buyer’s property. In such cases the
display is likely to be an offer.
 Tenders:-An announcement inviting tenders is not normally an offer; unless
accompanied bywords indicating that the highest or the lowest tender will be accepted, it
is a mere attempt to ascertain whether an acceptable offer can be obtained.
 Auctions:-Where goods are put up for sale by auction upon an advertised condition that
the sale shall be ‘without reserve’ the auctioneer thereby indicates to prospective buyers
that the bid of the highest bona fi de bidder will be accepted, and that the goods will not
at any stage be withdrawn.

Termination of the offer

Once the acceptance has been communicated to the offeror, it cannot be recalled or undone.
But until an offer is accepted, it creates no legal rights, and it may be terminated at any time.
Termination of the offer may come about in a number of ways: it may be revoked before
acceptance, or the offeree may reject the offer. Also, an offer may lapseby the passage of
time or be determined by the death of the offeror or offeree.
(a) Revocation of the offer:-The law relating to the revocation of an offer may be summed
up in two rules: (1) an offer may be revoked at any time before acceptance; and (2) an offer
is made irrevocable by acceptance.
(b) Rejection of the offer:-An offer will be held to have terminated once it has been rejected
by the offeree.172 The rejection need not be express, provided that the offeror is justified in
inferring that the offeree does not intend to accept the off er.173 It would seem, therefore,
that a rejection would not operate so as to destroy the power of acceptance until it comes to
the notice of the offeror.
(c) Lapse of the offer:-An offer may be considered to have lapsed owing to the passing of
time. If the offer was to be made in a specified time limit and the offer is not made within the
stipulated time period the offer can be revoked or in the case when there is no specified time
limit then also the offer can be revoked.
(d) Effect of death:-In principle, an offeree cannot accept after being informed of the death
of the offeror. An acceptance communicated to the offeror’s personal representatives will not
bind them, unless the offer is one which could not have been revoked by the offeror during
his lifetime.
ACCEPTANCE
According to the Indian Contract Act 1872 in Section 2 (b) an Acceptance is defined as

“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.”

According to Anson”If a contract is to be made, the offeree must accept the offer. Acceptance of
an offer is the expression, by words or conducts, of assent to the terms of the offer in the manner
prescribed or indicated by the offeror.”

There are two conditions which need to be fulfilled during acceptance to form a valid contract;
 The acceptance given by the offeree should be absolute.
 The acceptance should be unconditional.

A partial or conditional acceptance does not qualify as a valid acceptance and fails to form a
promise or an agreement between the parties.

The contract is complete only when once the parties have given consent to be bound by the terms
of the contract.

An offer is said not to be accepted in cases of;

(i) Counter-offer and rejection:-A counter-offer amounts to a rejection of the offer,

and so it results in the complete rejection of the offer made by the offeror.
(ii) Change of terms:-A sudden change of terms of the offer by the offeror , or a demand
to change the terms by the offeree results in a revocation of the offer.
(iii) Battle of the forms:-In modern commercial practice, a particular problem has arisen
which is that of the ‘battle of the forms’. A firm may, for example, offer to buy goods
from another on a form which contains or refers to its standard conditions of trade.
The seller ‘accepts’ the offer by a confirmation on a form which contains or refers to
its (the seller’s) standard conditions of trade. These may differ materially from those
of the buyer. It may then deliver the goods.
(iv) Equivocal or qualified acceptance:-The acceptance must assent unequivocally and
without qualification to the terms of the offer.

Communication of the acceptance

(i) Mental assent insufficient: - In case of acceptance of the offer it must be
communicated in a convenient manner to the offeree so as to form an agreement.
(ii) Communication to the offeror:-Even if there is some overt act or speech to give
evidence of the intention to accept, English law stipulates, in addition, that acceptance
is normally not complete unless and until it is communicated to the offeror.
(iii) Communication other than by offeree:-The justification for the rule requiring
communication is that the offeror is entitled to know whether a binding contract has
been concluded by acceptance. In principle, therefore, there would seem to be no
reason (other than one of certainty) why a contract should not come into existence if
the offeror is made aware or is informed that the offer has been accepted.
 (iv) Waiver of communication:-The general rule that an acceptance of an offer made
ought to be notified to the offeror is for the benefit of the offeror, who may expressly
or impliedly waive the requirement of notification and agree that an un-
communicated acceptance will suffice. Thus acceptance may in certain circumstances
be held to have been made even though it has not yet come to the notice of the
offeror.
(v) Promise for an act:-In the case of general offers and other offers which indicate
performance as a mode of acceptance so as to create a unilateral contract.
(vi) Acceptance by post or telegram:- Under the Indian Contract Act the offeror
becomes bound the moment the offeree receives the Telegram or letter but the offeree
becomes bound the moment the offeror posts the telegram or letter.
(vii) Place of contracting:-Whether the postal acceptance rule applies also determines
where a contract is made. If the means of communication is by letter or telegram, the
contract is complete when the letter is posted or the telegram is handed in, and it is
there that the contract is made. In other cases the general rule that the contract is
made when and where the acceptance is received applies.
(viii) Acceptance by silence:-In principle, it is difficult to see how the silence or inaction
of an offeree who fails to reply to an offer can operate as an acceptance, for there will
have been no communication of the acceptance to the offeror. Even if the offeror has
waived communication by indicating that acceptance by silence will suffice, it is clear
that the offeror cannot confront the offeree with the alternative of either refusing the
offer or being subjected to a contractual obligation by reason of the failure to reply.

Prescribed mode of acceptance

If the terms or the circumstances of the offer do no more than suggest a mode of acceptance,
it seems that the offeree would not be bound to this mode so long as the mode used was one
which did not cause delay, and which brought the acceptance to the knowledge of the offeror.
A departure from the usual or suggested method of communication would probably throw
upon the offeree the risk that the acceptance would be delayed, but, subject to this, an offer
delivered by hand could be accepted by post, or an offer made by post could be accepted by
telegram or telex.

Revocation of the acceptance

Since the general rule is that acceptance is not complete until it has been communicated to the
offeror, it follows that an acceptance can be revoked at any time before this occurs, provided, of
course, that the revocation itself is communicated before the acceptance arrives.
CONCLUSION
Offer and Acceptance are the two main basic points for forming a contract. A contract
only is formed between two or more parties only when there is an offer made by one of
the parties concerned and the same is accepted by the other. Thus an agreement which is
then formed by the acceptance of the offer .An agreement which is legally binding upon
both the parties results in a contract.

The Indian Contract Act of 1872 has been formulated

on the basis of the Bill which was based on a report of Her Majesty’s Commissioners
appointed to prepare a body of substantive law for India. Still there is a noticeable
difference between the contract acts present in the English Law courts and the ones which
are stated in the Indian Contract Act of 1872. The contracts are the basis of all
transactions whether at any level .The offer and acceptance to an offer governs our day to
day life in the most prominent manner because they are the main points with which all
transactions around us are conducted.

The offer of a contract can be communicated in

various ways like it can be sent by post or by rapid communication methods or by
personal interaction with the concerned party. There can also be a case of an Invitation to
an offer where an offer is made to the public in general and the acceptance of the terms of
the offer are made by the actions of the general public. In a general offer usually the
terms of the offer are not made clear to the public .Which results in a lot of
misunderstandings amongst the offerors and the offerees. Although there are strict laws
which govern the process of acceptance and making of an offer but still it results in a lot
of misunderstandings between the concerned parties in an offer because of unclear terms
of the offer and forceful acceptance of an offer by undue influence,or by coercion, or by
exercising a kind of superiority over the offeror or the offeree by the other party results in
various problematic situations in a contract. An offer must be accepted by the offeree out
of his or her own free will without being influenced by anyone in anyway so as to respect
the offer made the acceptance of the offer which would result into an agreement.
REFERENCES
 The Indian Contract Act 1872,Unique publishers
 Anson’s Law of Contract 29th Edition ,Oxford Publications
 www.Lawteacher.net
 www.wikipedia.com
 www.indiankanoon.com
  Treitel, GH. The Law of Contract (10th ed.).