Offer and Acceptance

Definition of an Offer
• According to the Indian Contract Act 1872,
proposal is defined in Section 2 (a) as “when
one person will signify to another person his
willingness to do or not do something
(abstain) with a view to obtain the assent of
such person to such an act or abstinence, he is
said to make a proposal or an offer.
 Essentials of a Valid Offer
• The offer must be made with an intention to get its acceptance
• The offer must be made with the intention of creating legal
obligation
• Terms of the offer must be definite, unambiguous, certain or
capable of being made certain.
• Mere invitation is not an offer
• Offer must be communicated by the Offeror to the Offeree
• Offer should not contain terms relating to non compliance
amounting to assumptions of acceptance.
• Special terms of an offer to be brought to the notice of the Offeree.
• Cross Offers
 Termination of an Offer
An offer can get terminated by any of the following reasons

• Expiry or lapse after a stipulated time or even after a reasonable

time.
• On death or the insanity of either of the parties, before acceptance
• When Offeree Rejects it
• When Revoked by Offeror, before acceptance
• When not accepted in the specified mode prescribed for the
purpose
• Conditional offer gets terminated when the condition is not
accepted by the Offeree.
• When Offeree makes a counter offer.
 Meaning of Acceptance
• An offer is an open call to anyone wishing to
accept the promise of the offeror and generally,
is used for products and services.
 
• Acceptance occurs when an offeree agrees to
be mutually bound to the terms of
the contract by giving consideration, or
something of value like money, to seal the deal
Essentials of Valid Consideration
 Meaning of Consideration
Consideration must be of value (at least to the
parties), and is exchanged for the
performance or promise of performance by
the other party (such performance itself
is consideration).

In a contract, one consideration (thing given)

is exchanged for another consideration
 Performance

Performance, in law, act of doing that which is

required by a contract. The effect of successful
performance is to discharge the person bound
to do the act from
anyfuture contractual liability. Each party to
the contract is bound to perform promises
according to the stipulated terms
 Few aspects of Performance
• Parties to a contract should either perform or offer
to perform
• Performance must match contractual obligations
• Performance must be done at the specified time
and place
• Mutual performance discharges a contract
• In certain cases attempted performance may also
operate as a substitute for actual performance, and
can result in complete discharge of the contract.
 Types of Performance
• Actual Performance
• Substantial Performance
• Partial Performance
• Attempted Performance
 Discharge of Contracts
• A contract may be discharged in any of the
following manners
• By performance
• By mutual consent
• By subsequent impossibility
• By operation of law and
• By breach of contract
 By Mutual Consent
• By Novation
• By Rescission (Cancellation of all or some
portions of the contract)
• By Alteration
• By Remission
• By Waiver
• By Merger
 Subsequent impossibility
• By destruction of the subject matter of the
contract
• By death or disablement of parties
• By subsequent illegality
• By declaration of war
• By non existence or non performance of a
particular state of things
 Operation of Law
• By Death
• By Insolvency
• By Merger
• By unauthorised alteration of terms of a
written document
• By Breach of Contract