To form a Contract, there must be an Agreement. To form an Agreement, there must be a valid Offer by one Party (called Offerer or Proposer) and valid Acceptance by the other Party (called Acceptor or Promisee)
Indian Contract Act – Offer and Acceptance
Offer (प्रस्ताव) aur Acceptance (स्वीकार)- सरल हिंदी में समझे
Indian Contract Act – Offer and Acceptance – Listen in English
Indian Contract Act – Offer
Offer is a final proposal by one person to another, without any intention of further negotiations. The offer may be to do something, or not to do something (called negative Offer). In legal eyes. not to do something, is also a doing. For example, I say, I won’t sue you. This is an offer.
The offer or Proposal, may be expressed different forms, such as a letter, newspaper, fax, email and even conduct, as long as it communicates the basis on which the offeror is prepared to contract.
The offer made by the offerer, when accepted by the other party to whom the offer is made, completes the agreement (promise)
For example, X says to Y, I want to sell my Maruti Car to you at Rs 1 Lac on immediate cash payment. This is an Offer made by X to Y.
Offer is a proposal made by one party to another, to enter into an agreement. Agreement is also referred as Promise.
Parties to Offer : There are at least 2 parties involved in an offer
- Offeror : The person making the offer (known as Offeror or Proposer)
- Offeree : The person to whom offer is made (called the Offeree or Proposee)
When the Offeree accepts the offer, he is called acceptor or Promisee.
There may be more than one offerer (called Joint Offerers), or more than one offeree (called Joint offeree).
Ex. P offers to X, Y & Z, in a gathering, to sell his maruti car at Rs 1,00,000. Here there is one offerer (P) and multiple offerees, X, Y & Z.
Ex. X, Y & Z, each had 100 pcs of CDs of an old film. They all came together to P, who is reputed trader of CDs, offering P to sell their CDs. P agrees to buy all of their CDs from all of them. Here there are multiple offerers (X, Y & Z) to sell CDs and only one Offeree (P) to buy CDs
Indian Contract Act – Offer
Offer (प्रस्ताव) – सरल हिंदी में समझे
Indian Contract Act – Offer – Listen in English
Indian Contract Act – Characteristics of Offer
A valid offer must have following essential Characteristics
- Readiness & Intention to enter into a contract: The Party making the offer must have Intention to enter into a contract .
Ex. A says to B, I will sell the car to you at Rs. 2 Lac. It is a valid offer.
In this offer, A is ready and willing to enter into a contract. The offer is intended to get acceptance of B.
Ex. A says to B, I am thinking of selling the car to you at Rs. 2 Lac. It is not a valid offer from A.
In this offer, there is no readiness or intention on part of A to enter into a contract.
In commercial agreements, intention to create legal obligation is presumed.
- Willingness to perform: It must indicate the willingness of the person to do (as proposed in the Offer). In this offer, A will sell his Car to B, on getting acceptance by B.
- Communication : An offer must be communicated to the offeree, otherwise the Offer is not complete and hence not valid. Any act done in ignorance of offer, does not constitute a contract.
Ex. A writes a letter to B about his offer to him, but keeps the letter in drawer. The offer is not valid as it is not communicated to the Offeree.
Let us suppose, A writes a letter to B about his offer to him, but keeps the letter in drawer. C, who knows B, accidentally reads the letter. The offer is not valid as it is not communicated by A (the Offerer) to B, (the offeree).
It will not be a valid offer by A to B, even if B somehow comes to know about the offer through some other ways.
In this case, keeping the letter in drawer does not indicate clear intention of A to make the offer to B. He might have thought of making the offer, but did not fix up his mind, and kept it in drawer. It becomes valid offer, when A (or his authorized representative), gives (or sends) the letter to B.
Ex. X declares reward to find his lost son. Y finds his son without knowing of the reward. Y cannot claim the reward as the offer was not communicated to him.
This is a case of General Offer (we will explain General Offer afterwards). In this case, the offer is communicated only to those persons, who have heard of the offer of X. Those, who have not heard about the X’s offer of reward, there is no valid offer by X to them.
- Clear & Specific : An offer must be specific, clearly defined and not ambiguous.
Ex. X says to Y, I will buy you the book at Rs 100, when I am able to find it in the bookstore. This is not a valid offer as the terms of the offer are not specific and clear.
Characteristics of Offer – (प्रस्ताव) ke (तत्व) – सरल हिंदी में समझे
Indian Contract Act – Invalid offer
In some cases, it may look like that a Party has made a valid offer, but actually the offer is not valid as it does not fulfill the essential requirements of a valid offer. For example, following instances, though appearing like an Offer, are not valid Offer
- Declaration of intention: Mere declaration of intention is not an offer.
Ex. A says to B, I am thinking of selling the car at Rs. 2 Lac. It is a not a valid offer. It does not show the final willingness or the readiness of the offerer, to enter into a contract
- Invitation: Invitation to do business is not an offer.
Ex. Display of goods in shop window is not an offer on the part of shopkeeper. Seller of the goods is not bound to sell the item displayed. Similarly, a quotation, or a price list sent to a prospective buyer does not constitute an offer on the part of seller. These are treated as invitation to make an offer by the intending offeror (explained later).
Ex. Price Lists sent to prospective buyer do not constitute Offer on part of seller.
- Negative terms of compliance: Offer cannot contain terms of non compliance as acceptance. It cannot place burden on part of the Offeree.
Ex. A wrote to B, ‘I offer to sell 100 Tons of Coal at Rs.12000/Ton. If I do not hear from you within 7 days, I will treat that you have accepted the offer’. This cannot be treated as Valid Offer.
Characteristics of Offer
Invalid offer – Avaidha (प्रस्ताव) – सरल हिंदी में समझे
Characteristics of Offer – Listen in English
Indian Contract Act – Classification of Offer
Offer may be classified in various ways as follows:
प्रस्ताव के श्रेणीविभाग – सरल हिंदी में समझे
Classification of Offer as per Mode :
- Express Offer: Expressly stated & communicated by both the Parties. When the offeror expressly states & communicates the offer,
Ex. ‘I want to sell my Maruti car at Rs.1 lac’, is an express offer.
- Implied Offer: Not expressly communicated by both the Parties. When the offer is not expressly communicated, but is implied by the conduct of one or both the Parties. It is also sometimes referred as Tacit (Tacit means silent) offer.
Ex. A carrier running public bus service to carry passenger. This is an implied offer for carrying intending passenger, on fixed route, at specific fare.
प्रणाली के अनुसार प्रस्ताव के श्रेणीविभाग – सरल हिंदी में समझे
Classification of Offer as per Offeree:
- Specific Offer: Made to a specific offeree. When an offeror makes the offer to a specific offeree only. A specific offer can be accepted by the specific person only whom the offer is made to.
Ex. A says to B, ‘I offer to sell my Maruti car to you at Rs.1 lac’, is a specific offer.
- General Offer: Made to world at large. : When the offer is made to world at large, without specifying any particular offeree, it is known as General Offer. A general offer can be accepted by any person eligible to Accept the offer, only after the person comes to the knowledge of the offer and accepts the conditions of the offer.
Ex. A advertises, ‘I offer to sell my Maruti car at Rs.1 lac’, is a general offer.
- Open Offer : Standing Offer, or Continuing Offer. Sometimes a specific or general offer, called Open Offer (or Standing Offer, or Continuing Offer), in which an offer is not made each time (it is kept open). For example, in the crop season, the buyer may give an open offer to supply agricultural goods (like paddy, wheat) at prevailing market price (or specified price). Such offer may be for specific Party (only for a specified party) or General (any party may supply).
प्रकृति के अनुसार प्रस्ताव के श्रेणीविभाग – सरल हिंदी में समझे
Classification of Offer as Per Nature
- Cross Offer : Exchange of similar offer. When two parties make similar offer on ignorance of each other’s offer. In this case, the agreement is not complete because there is no acceptance of each one’s offer, as each is ignorant of other’s offer.
In a cross offer, a contract comes into existence when any of the parties accepts the offer of the other.
Ex. A offers to sell his car to B at Rs 20,000. Without knowing A’s offer, B offers to buy A’s Car at Rs 20,000. This is Cross Offer as it is similar and between same parties. As soon as any party accepts either of the offer, a contract emerges on the basis of the Offer that is accepted, and The other offer which is not accepted lapses.
A Cross Offer happens when both the parties make similar offer to each other, without knowing each other’s offer
- Counter Offer : Offeree makes conditional acceptance. A contract is complete when the offeree accepts the offeror’s offer unconditionally. But when the offeree agrees to Accept an offer subject to some conditions, offeree’s conditional acceptance constitutes a Counter Offer (not an acceptance). In such case, the original offer of the offeror gets invalidated and ceases to exist. The Offeree’s Counter Offer becomes a new offer. If the counter offer is accepted by the original offerer, it becomes an agreement. Now the counter offeror becomes the offeror and the original offeror becomes the acceptor.
Ex. A offers to B to sell his Maruti car at Rs.1 Lac. B, on receiving the offer, tells A that he agrees to buy the Car, if A gets the car painted Red (i.e B makes a Counter Offer). As soon as B makes the counter offer, A’s offer gets lapsed and is not more valid. No contract can come into existence on A’s offer. If A agrees to B’s counter offer (to buy painted car), a contract emerges on the basis of the new counter offer of B (to buy paint Car) and acceptance of A (to sell painted car). Now, B becomes the offeror (to Buy painted Car) and A becomes the Acceptor (to sell Painted Car) of the Contract to sell Painted Car.
In counter offer, the original offer lapses. The counter offer becomes a new offer with revised terms. Now the other party (who made the original offer), may Accept the revised counter offer. The revised counter offer now becomes the Offer, which, on acceptance by the other Party, forms an agreement. As soon as the Counter offer is made, the original offer dies. It cannot be revived any more, and no acceptance or agreement can be done any more, on that original offer.
So, in this case, the offer by A to sell Marui Car to B lapses. B’s counter offer to buy Red Painted Maruti car emerges as a valid offer. When A accepts the new counter offer of B to sell red painted car, the agreement to buy red painted maruti car by B, from A, is formed.
Classification of Offer
प्रकार के अनुसार प्रस्ताव के श्रेणीविभाग – सरल हिंदी में समझे
Classification of Offer – Listen in English
Distinction between Cross Offer and Counter Offer
|Cross Offer||Counter Offer|
|Ignorant of other’s Offer: Each party is ignorant of other’s offer.||Is in knowledge of other party’s offer: The party making counter offer is in knowledge of other party’s offer and revises the original offer.|
|Both party’s offer is similar||It is different from the other party’s offer:|
|The offers remain in existence: The offer remains in existence for acceptance by the other party.||Original offer dies: The original offer dies as soon as the counter offer is made.|
|No new offer: No new offer is created.||New offer :Counter offer amounts to a new offer:|
|Any party’s Offer may be accepted: Both the parties are on equal footing, any party may Accept the other’s offer.||Only the counter offer can be accepted: Only the counter offer remains alive, which can be accepted by the other party.|
Distinction between Cross Offer and Counter Offer
Cross Offer और Counter Offer का अंतर – सरल हिंदी में समझे
Distinction between Cross Offer and Counter Offer – Listen in English
Distinction between Specific Offer and General Offer
|Basis||Specific Offer||General Offer|
|Offeree||Made to a specific person: Specific Offer is made to a specific person, (or a group of persons).||Made to public at large: General Offer is made to the public at large.|
|Identity of Offeree||Offeree known to the Offerer: Offeree should be known to the Offerer at the time of making the offer.||Offeree may be unknown to the Offerer: Any person who fulfills the conditions of offer. It is not necessary for Offeree to be known to the Offerer at the time of making offer.|
|Acceptance||Specific Acceptance : It can be accepted only by the offeree whom the offer is made to.||Deemed acceptance: A stranger, by complying with conditions of offer, is deemed to have accepted the offer.|
|Example||K offers to sell his Chevrolet Car to B at Rs 3 Lacs. Only B can Accept or reject it. K may refuse to sell any other person other than B.||K says in gathering of prospective Car buyers, that he will sell Chevrolet Car to any customer at Rs.3 lakhs. Any one can Accept the offer and buy the car.|
Distinction between Specific Offer and General Offer
Specific Offer और General Offer का अंतर – सरल हिंदी में समझे
Distinction between Specific Offer and General Offer – Listen in English