OFFER AND ACCEPTANCE

Offer and acceptance are one of the essentials

for the formation of a legally binding contract.
 Offer:
"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”
 Acceptance
• A promise or act on the part of an offeree
indicating a willingness to be bound by the
terms and conditions contained in an offer.
 Essentials of Valid Offer
• The offer must be communicated to the other party. According to
section 4 of the Act, the communication of a proposal is complete
when it comes in the knowledge of the person to whom it is
made.
• The terms of the offer must be definite and clear
• The offer must be capable of creating legal relationships.
• The offer must be made with a view to obtain acceptance.
 An invitation to receive offer is not an offer. Following are
invitation to receive offer hence shall not be treated as offer.
o Catalog or price list displayed by a shopkeeper
o Inviting tenders through an advertisement
o Inviting applications for employment
Revocation or Termination of Offer
1. Notice of Revocation
2. Lapse of Time
3. Failure to fulfill condition
4. Death or insanity of Offeror
5. Revocation by Offeree
6. Counter offer
7. Death or insanity of Offeree
8. Subsequent Illegality
9. Destruction of Subject Matter
10.Prescribed Manner
 Essentials of Valid Acceptance
1. Acceptance by the Offeree only
2. Absolute and Unconditional
3. Prescribed Manner
4. Communication of Acceptance to the Offeror
5. Express or Implied
6. Acceptance after Offer
7. Reasonable Time
• Communication of Offer, Acceptance
and Revocation
ILLUSTRATIONS:
(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.
(b) B accepts A's proposal by a letter sent by post. The
communication of the acceptance is complete; as against
A, when the letter is posted; as against B, when the letter
is received by A.
(c) A revokes his proposal by telegram. The revocation is
complete as against A, when the telegram is dispatched.
It is complete as against B when B receives it. B revokes
his acceptance by telegram. B's revocation is complete as
against B when the telegram is dispatched and as against
A when it reaches him.