Ch # 2.

Offer, acceptance and revocation Page 9

Ch # 2 OFFER, ACCEPTANCE AND REVOCATION

INTRODUCTION TO CONTRACT

Proposal / Offer
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.

Promise
When the person to whom the proposal is made signifies his assent to it, the proposal is said
to be accepted. A proposal, when accepted becomes a promise.
- The person making the proposal is called the promisor / offereor
- The person accepting the proposal is called the promisee. / offeree

Agreement
Every promise and every set of promises forming the consideration for each other is an
agreement.

Contract
An agreement enforceable by law is a contract.

Proposal + Acceptance = Promise

Promise + Consideration = Agreement

Agreement + Enforceability = Contract

(Legal Obligation)

Parties to an agreement must be bound to perform their promises and in case of default by
either of them, the parties can go to court for its enforceability (i.e. legal obligation)

Express and Implied Promises

▪ If proposal or acceptance is made in words, promise is said to be express (oral or written).

▪ If proposal or acceptance is made otherwise, the promise is said to be implied. (from actions)
Ch # 2. Offer, acceptance and revocation Page 10

OFFER

Proposal / Offer
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.

Essentials of an offer

▪ Offeror cannot make offer to himself

▪ Certain and definite

▪ Conditional
- An offer may be subject to some condition.
- If there are special terms in an offer, they must be specifically communicated to offeree.

▪ Invitation of an offer1
- An intention of a person to invite others with a view to enter into an agreement.
- Purpose of such invitation is to circulate information of his readiness to do transaction
- Such intentions are not considered offers.
-
▪ Communication
- Offer must be communicated to offeree.
- Communication is complete when it comes to the knowledge of offeree
- If offer is made by post, its communication will complete when letter reaches offeree.
- Offer can be made by words spoken or written or through conduct of the person.

Lapse of an offer

An offer is lapsed in following ways:

▪ Revocation of offer before acceptance
▪ Lapse of time
- Lapse of time specified in the offer
- Lapse of reasonable time (if no time is specified)
▪ Death or insanity of the offeror
(if fact of his death or insanity comes to the knowledge of the acceptor before acceptance)
▪ Non-fulfillment of condition precedent to the offer
▪ Counter offer is made (i.e. an offer by offeree in response to the original offer)
▪ Non-acceptance / Expressly Rejection by the offeree

An offer once accepted becomes a contract and cannot be revoked

Ch # 2. Offer, acceptance and revocation Page 11

ACCEPTANCE

Acceptance
When the person to whom the proposal is made signifies his assent to it, the proposal is said
to be accepted

Essentials of acceptance
▪ Acceptance must be Absolute and unconditional
- If any condition is imposed on acceptance, then it would be called counter offer.
▪ Acceptance must be communicated Communication
- Acceptance may be complete when it is communicated to the offeror.
- An offer can be accepted by words spoken or written or through conduct of the person.
- In cannot be in the form of negative confirmation
(i.e. if not accepted within specific time then it will be presumed to have been accepted)
- Communication is complete against proposer when it is put in course of transmission.
- Communication is complete against acceptor when it comes to knowledge of proposer.
▪ Acceptance should be made in reasonable mode
- Acceptance should be made in the manner specified
- Where no mode is specified, acceptance should be made in a usual manner.
- If acceptance is not made in manner prescribed in proposal, offeror shall insist for that.
- If he fail to insist within reasonable time it is deemed that he has accepted performance
▪ Acceptor must be aware of the proposal at the time of acceptance
▪ Acceptance must be given before lapse of an offer

REVOCATION OF OFFER AND ACCEPTANCE

Timing of revocation
Timing of revocation of an offer - A proposal may be revoked at any time before acceptance or
the communication of its acceptance is complete as against the proposer, but not afterwards.
Timing of revocation of an acceptance - An acceptance can be revoked at any time before the
communication of the acceptance is complete as against the acceptor, but not afterwards.

Communication of revocation
As against the person who makes it
When it is put in a course of transmission.

As against the person to whom it is made

When it comes to the knowledge of the revokee.