OFFER Offer: The first building

block of a contract
 WHY ARE OFFER AND
ACCEPTANCE RULES
IMPORTANT?
 Why are the offer and acceptance rules important?
 Whether a agreement was formed? - Promissory theorists view the law of
contract as one of self-imposed obligations. Thus, an agreement is at the core of
the formation of a contract.
 What was the scope of the agreement? - Mirror rule (clear and unequivocal offer
to be matched by an equally clear and unequivocal acceptance)
 If so, when was it formed? – from when does the obligation come into being?
 Where was it so formed?
 OFFER / PROPOSAL
 Section 2(a): 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
 “One person…to another”- Involvement of at least two parties
 “Signifies to another” – communication of the willingness – any prescribed mode?
 Willingness to do or to abstain from doing anything – positive or negative obligation
 With a view to obtaining the assent of that other - an objective manifestation of an
intent to be bound made with a view to obtaining the acceptance of the other
 Terms of offer must be certain and clear
 OFFER / PROPOSAL
 Section 2(b): 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(c): The person making the proposal is called the ‘promisor’, and the
person accepting the proposal is called the ‘promisee’
 Proposal + Acceptance / Consent = Promise
 Offeror/ Proposer becomes the Promisor
 Offeree / Person accepting proposal becomes the Promisee
 OFFER / PROPOSAL AND
INVITATION TO OFFER
 Proposal / offer is to be distinguished from a mere statement of intention which is not
intended to require acceptance and which is only an invitation to make offers
 How do we distinguish between the two? – depends on the intention of the offeror:
 Whether he intends to be bound as soon as the offeree signifies his consent - OFFER
 Offeror is merely expressing his willingness to enter into negotiations or does not intend
to conclude a bargain until he has made a further manifestation of assent - INVITATION
 One needs to assessee whether there is a final declaration of readiness to undertake an
obligation upon specified terms and conditions
 So how is the intention judged? – objective test as opposed to a subjective one
 Merely using the words ‘offer’ / ‘invitation to offer’ is not conclusive of the nature
 PHARMACEUTICAL SOCIETY OF GREAT
BRITAIN V. BOOTS CASH CHEMISTS
(SOUTHERN) LTD. , [1952] 2 QB 795
 Relevant facts: Defendants had a self-service system for the retail sale of drugs.
There was a printed notice at the entrance ‘Boot’s Self-Service’. Each customer
selected articles from the shelves, put it in the wire basket and walked to the cashier
desk where the articles were scrutinized and payment accepted. The chemists’ dept
was under the personal control of a registered pharmacist. The certificate of
registration of the pharmacist was displayed prominently at the cash desk. He was
authorized to disallow sale of any drugs, if he so deemed fit. Petitioner is
responsible for implementing the Pharmacy and Poisons Act, 1933.
 Issue: Whether the sale to the petitioners was effected in accordance with
Section 18(1)(a)(iii) of the Pharmacy and Poisons Act, 1933? When was the
sale effected – when customer picks up drug or upon acceptance at cash
desk under supervision of pharmacist?
 PHARMACEUTICAL SOCIETY OF GREAT
BRITAIN V. BOOTS CASH CHEMISTS
(SOUTHERN) LTD. , [1952] 2 QB 795
 Section 18 (1) (a) (iii) of the Pharmacy and Poisons Act, 1933:
It shall not be lawful - (a) for a person to sell any poison included in Part I of
the Poisons List, unless - (i) he is an authorized seller of poisons; and (ii) the sale
is effected on premises duly registered under Part I of this Act; and (iii) the sale
is effected by, or under the supervision of, a registered pharmacist.
 Argument of the petitioners: According to Sale of Goods Act, property in the
drugs passes once the customer picks them up from the receptacle. Self-service
system connotes an offer to sell.
 Defendants were not called upon to argue.
 PHARMACEUTICAL SOCIETY OF GREAT
BRITAIN V. BOOTS CASH CHEMISTS
(SOUTHERN) LTD. , [1952] 2 QB 795
 Somervell L.J. :
 This was just like in any other shop. Example of a book shop is given.
 If petitioner’s argument was to be upheld it would mean that he / she could not
change his mind to substitute a product with some thing he spotted later on.
 Self-service afforded the customers the convenience to choose, substitute and
then finally go up to the cash desk for making offer. There was appropriate
supervision as mandated under the Act.
 The self-service system constitutes an invitation to offer and not an offer.
 Appeal fails.
BUS TICKET EXAMPLE
 LEONARD V. PEPSICO, 88 F.
SUPP. 2D (1999)
 What was the discrepancy between the advertisement and the catalogue / order
form?
 What is the general rule relating to advertisements? Does it constitute an offer?
 Could there be an exception to such general rule? On what grounds?
 Reasonable person analysis – analysis of cost of Harrier Jet
 FOOD FOR THOUGHT
 Does an auctioneer’s request for bids sound like an offer or an invitation to offer?
 Tenders for supply of particular goods indicating that the lowest bidder will be
accepted – Offer
 Tender detailing procedure and terms with no stipulation that lowest bidder will
be chosen – is this still an offer?
 Tender for supply of goods, as and when required, without the quantity being
specified – continuing / standing offer (acceptance is by supplying the goods /
finding the dog) [example from Carlill]
 Transactions with a vending machine? Example, customer inserting coins for
coffee
 KINDS OF OFFER: GENERAL
& SPECIFIC
 Difference between general and specific offer – can you think of examples?
 Who is the offer addressed to? - An individual / specified group of persons or to the
world at large?
 Why would this assume importance?
 Offer and Counter Offer
 Offer and Cross Offer
 Standing Offer
CARLILL V. CARBOLIC SMOKE
BALL CO., [1893] 1 QB 256
Part of the advertisement issued:
“100l. reward will be paid by the Carbolic Smoke Ball Company to
any person who contracts the increasing epidemic influenza, colds,
or any disease caused by taking cold, after having used the ball three
times daily for two weeks according to the printed directions
supplied with each ball. 1000l. is deposited with the Alliance Bank,
Regent Street, shewing our sincerity in the matter.”
 CARLILL V. CARBOLIC SMOKE
BALL CO., [1893] 1 QB 256
 The advertisement is addressed to the world at large – general offer
 Acceptance is signified by performance of conditions (example: advt to find a
lost dog)
 Intimation of acceptance can be given after performance – continuing offer
 Are the terms of the advertisement vague? How would an ordinary person read
this advertisement? – disease to be contracted within a reasonable time after the
usage as per directions / disease to be contracted during the usage
 How were the promisors to supervise the usage – if a person chooses to make
extravagant promises, he probably does so because its worth it for him
 What was the consideration here?
CARLILL V. CARBOLIC SMOKE
BALL CO., [1893] 1 QB 256
Fair notice is normally due
When the bargained-for action is through.
With the marvelous ball,
There's no notice at all,
'Til its purchaser catches the flu.

- Selected Poems on the Law of Contracts by Douglass Boshkof

 MAC PHERSON V. APPANA, AIR
1951 SC 184
 Facts: Appellant (first defendant) is the owner of ‘Morvern Lodge’, Youngman and
White act as intermediaries and plaintiff (first respondent) is one buyer and second
defendant is another buyer
 Different stages in the negotiation process
• Middle of 1944: Plaintiff approached White about the Lodge and made an offer for Rs
4000.
• White sent a cable to defendant: “Have enquiries Mercara bungalow if for sale, wire lowest
figure.”
• 5th Aug: Appellant’s cable: Won’t accept less than Rs 10,000/-
• 9th Aug: Youngman communicated Appellant’s quote of 10,000/- to Plaintiff
 MAC PHERSON V. APPANA, AIR
1951 SC 184
14th Aug: Plaintiff he sent the following message to Youngman:
‘I hereby confirm my oral offer of ten thousand for the bungalow. I shall be grateful if
you will kindly hurry up with consultation with your lawyers at Madras and make
arrangements to receive the money and hand over the bungalow as early as
practicable’
 26th Aug: Youngman sent to Appellant: Have offer for Rs 10,000. May I sell.
 26th Aug: White wrote saying he had an offer for Rs 11,000 which he strongly
recommended
 Appellant writes to White asking him to accept Rs 11,000 - second defendant paid
 Issue: Whether there was a concluded contract as of 14th August? Whether the
cable on 5th August constituted a counter offer or an invitation to offer?
 MAC PHERSON V. APPANA, AIR
1951 SC 184
 SC held: no concluded contract –
• 5th August communication was only an invitation to offer subject to his acceptance.
• Even Youngman asked for the appellant’s consent.
• Plaintiff also merely said that he was hereby ‘confirm(ing)’ the ‘oral offer’.
 COMMUNICATION,
REVOCATION AND
ACCEPTANCE OF PROPOSALS
Section 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.
 How can an offer be communicated?
 Is there any specific mode prescribed?
 COMMUNICATION OF A
PROPOSAL
Section 4: The communication of a proposal is complete when it comes to the
knowledge of the person to whom it is made.
Illustration (a): A proposes, by letter, to sell a house to B at a certain price.
The communication of the proposal is complete when B receives the letter.
 ‘Comes to the knowledge’
 REVOCATION HOW MADE
Section 6: A proposal is revoked—
(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 fulfill 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.
 REVOCATION IS DIFFERENT
FROM REJECTION
 Section 6 talks of revocation not rejection
 If the offeree gives a counter offer, is not a rejection on his part?
 For rejection – definite indication of an intention to reject
 Would further clarifications on the offer amount to a rejection?
 WHEN CAN A PROPOSAL BE
REVOKED?
Section 5 (1) A proposal may be revoked at any time before
the communication of its acceptance is complete as against
the proposer, but not afterwards.
Illustrations
(a) A proposes, by a letter sent by post, to sell his house to B.
(b) B accepts the proposal by a letter sent by post.
(c) A may revoke his proposal at any time before or at the
moment when B posts his letter of acceptance, but not
afterwards.
 DICKINSON V. DODDS [1876]
2CHD 463
“I hereby agree to sell to Mr. George Dickinson the whole of the dwelling- houses, garden
ground, stabling, and outbuildings thereto belonging, situate at Croft, belonging to me, for
the sum of £800. As witness my hand this tenth day of June, 1874.

£800. (Signed) John Dodds

P.S.--This offer to be left over until Friday, 9 o'clock, A.M. J. D. (the twelfth), 12th June,
1874.

(Signed) J. Dodds
 SOME INTERESTING
QUESTIONS
 Did Dodds communicate the withdrawal of the offer to Dickinson?
 Was there any intention to communicate the revocation to Dodds?
 Did the act of selling property to Allan have the effect of communicating notice
of revocation to Dickinson?
 What if the notice of revocation comes as information from a person other than
the original offeror? (the agent, in the instant case)
 Notice the dilemma of the offeree in an instance such as Dickinson v Dodds
SADHOO LAL MOTILAL V. STATE
OF MADHYA PRADESH, AIR 1972
ALL 137
 Notice that there are three petitioners in question here
 Sadhulal’s petition: Tender acceptance had been posted on 26th April while Sadhulal had
withdrawn tender offer only on 13th May
 Sadhulal denied receipt of communication – was that contention paid heed to?
 Abdul Shukoor and Shyama Charan Gupta – revocation of offers received on April 2nd
while acceptance was posted on April 3rd
 Order of acceptance by Govt on March 25th – did that alter the position?
 What were Abdul Shukoor and Shyama Charan Gupta required to pay? Why?
WHEN IS COMMUNICATION OF
REVOCATION COMPLETE?
Excerpt from Section 4:
The communication of a revocation is complete, -
As against the person who makes it, when it is put in 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
Look at illustration (c) – revocation of proposal by telegram