OfferLegal Environment of Business

Prepared By

Manu Melwin Joy

Assistant ProfessorIlahia School of Management Studies

Kerala, India.

Phone – 9744551114Mail – manu_melwinjoy@yahoo.com

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Definition

• As per Section 2 (a) of thecontract Act, “When oneperson signifies toanother his willingness todo or abstain from doinganything, with a view toobtaining the assent ofthat other to such act orabstinence, he is said tomake an offer”.

Example

• When A expresses his willingness to sell motorcare for Rs 10,000 with a view to get B’sacceptance, A is said to make an offer.

Definition• The word offer of the Englishlaw is synonymous to the wordproposal of the Indian ContractAct.

• The person making the offer iscalled the offeror and theperson accepting the proposalis called the offeree.

• Offer is made either by wordsspoken or by words written.This is expressed offer. An offeris made by conduct orbehavior. This is implied offer.

Essential Characteristics of a valid offer

• The terms of an offer mustbe clear and certain or atleast capable of being madecertain.

• Offer must be communicatedto the offeree.

• An offer must be made withan intention of creating legalobligations.

• Invitation to an offer is not anoffer.

Essential Characteristics of a valid offer

• Special terms attached to anoffer must be communicated.

• An offer may be to an individualor to the public at large.

• Offer may be expressed orimplied.

• Offer must be made with a viewto obtaining the assent of theother party

• Offer may be conditional.• Offer should not contain a term,the non compliance of whichwould amount to acceptance.

Essential Characteristics of a valid offer

• The terms of an offer mustbe clear and certain or atleast capable of beingmade certain.– Example – A agrees B ahundred tons of oil. There isnothing whatsoever to showwhat kind of oil wasintended to be sold. Hencethe agreement is void foruncertainty and vagueness.

Essential Characteristics of a valid offer

• Offer must be communicatedto the offeree.

– Example – In Fitch Vs Snedakar,a person gave informationwithout knowing that anaward was offered for it andclaimed the awardsubsequently. It was held thathe was not entitled to theaward since he was not awareof the same.

Essential Characteristics of a valid offer

• An offer must be madewith an intention ofcreating legal obligations.

– Example – A invited B for adinner and when B came,dinner was not ready. Bcould not enforce it since itis just a social agreement.

Essential Characteristics of a valid offer

• Invitation to an offer is notan offer.

– Example – When a merchantsends his quotation, it is notan offer but is only aninvitation on his part of hisreadiness to transactbusiness on those terms.

Essential Characteristics of a valid offer

• Special terms attached toan offer must becommunicated.

Essential Characteristics of a valid offer

• An offer may be to anindividual or to the public atlarge.– Example – In Carlil Vs CarbolicSmoke ball company, thecompany has offered byadvertisement a reward of $100 to anybody contractinginfluenza after using theirsmoke ball. Mrs Carlil did andshe was entitled for $ 100since it was a general offer andshe accepted it.

Essential Characteristics of a valid offer

• Offer may be expressed orimplied.

– Example – A writes to B thathe is prepared to sell hishouse for Rs. 2 Lakhs. This isan express offer. If a personhires a taxi, it is implied thathe has to pay the fare.

Essential Characteristics of a valid offer

• Offer must be made with aview to obtaining theassent of the other party

• Offer may be conditional.

• Offer should not contain aterm, the non complianceof which would amount toacceptance.

Kinds of offers

• General offer – If an offer isaddressed to anunascertained body ofindividuals, it is calledgeneral offer.

• Special offer – If an offer isaddressed to a definiteindividual or body ofindividuals, it is called aspecific offer.

Example

• A issues a public advertisement that he wouldgive Rs 100 to anyone who brings back hismissing dog, it is a general offer.

• A promises to give Rs 100 to B if he bringsback his missing dog, it is a special offer.

Kinds of offers

• Standing offer – An offerfor a continuous supply of acertain article at a certainrate over a definite period iscalled a standing order.

– Example – A, by means of anoffer agrees to supply coal toB at a particular price for aperiod of two years. It is astanding offer.

Kinds of offers

• Counter offer– A counterorder is rejecting theoriginal offer and making anew offer.

– Example – A offers to sell hishouse for Rs 2 lakhs to B. Baccepts to purchase it for RsOne lakh. This is a counteroffer.

Kinds of offers

• Cross offer – When twoparties make identical offerto each other in ignoranceof each other’s, such offer iscalled cross offer.

– Example – A by letter offersto sell his car to B for Rs50,000. B by letter offers A tobuy the same car for Rs.50,000. It is a cross offer.

Lapses of offer

• Revocation by communicationof notice.

• By lapse of prescribed time.

• Death of the offeror.

• Insanity of the offeror.

• Non- Fulfillment of conditions.

• Offer not accepted accordingto the mode prescribed.

• Rejection by a counter offer.

• Definition of Offer.

• Essential elements of a valid offer..

• Kinds of offer.