OFFER AND ACCEPTANCEBusiness Law
At the inception of every agreement, there must be a definite offer by one person to another and its unqualified acceptance by the person to whom the offer is made. An Offer is a proposal by one party to another to enter into a legally binding agreement with him .
HOW AN OFFER IS MADE ?
Express Words, Spoken, Written When an Offer is made to a definite person, it is called a Specific Offer. (It can be Offer. accepted only by the person to whom it is made) When an offer is made to the world at large, it is called a General Offer.
WHAT CONSTITUTES AN OFFER ?
The offer must show an obvious intension on the part of the offerer to be bound by it. The offeror must make the offer with a view to obtaining the asset of the offeree to such act or abstinence The offer must be definite It must be communicate to the offeree
LEGAL RULES AS TO OFFER a) b)
Offer must be such as in law is capable of being accepted and giving rise to legal relationship. Terms of offer must be definite, unambiguous and certain and not loose and vague. An offer may be distinguished from: A declaration of intention & an announcement. An invitation to make an offer or do business Offer must be communicated Offer shouldn t contain a term the non-compliance nonof which may be assumed to amount to acceptance. A statement of price is not an offer.
Carlill v Carbolic Smoke Ball Co (1893)
Mrs Carlill read the company's advertisement in which they promised to pay 100 to anyone who caught influenza after using their Carbolic Smoke Ball as directed. The advertisement also stated that the company had deposited 1,000 at their bank to show their sincerity. Despite the purchase and use of the ball, Mrs Carlill contracted influenza and sued for her 100. One of the company's defences was that you could not address an offer to the whole world.
A Tender (in response to an invitation to offer) is an offer & may be either: A definite offer to supply specified goods or services.
Ex: Ex: Great Northern Rail vs. Witham
Sale by tender. This is a sale where a tender. party invites sealed competitive bids which must normally be submitted within a time limit. Invitations to tender are normally regarded as invitations to treat rather than offers; Spencer v Harding (1870)
But an invitation to tender may amount to a unilateral offer; Harvela Investments Ltd v Royal Trust Co of Canada (1985). In this case the defendants invited tenders and said: "We confirm that if the offer [i.e. tender] submitted by you is the highest offer received by us we bind ourselves to accept such offer." The words used were held to constitute an offer; the defendants had promised to sell to the highest bidder.
Harris v Nickerson (1873)An auctioneer advertised that certain goods were to be auctioned at a specified time and place. Harris went to the sale but the goods in which he was interested had been withdrawn from the sale. He sued the auctioneer for the loss of his time and expenses in going to the sale.
Once the bidding commences there is a unilateral offer to the highest bidder, accepted by him when he bids, consisting of a promise not to put a reserve on the goods. If the auctioneer withdraws the goods from sale, he will be in breach of contract with the highest bidder who will have a claim in damages.
When two parties make identical offers to each other, in ignorance of each other offer, the offers are cross offers.
Acceptance is the act of assenting by the offeree to an offer. It is the manifestation by the offeree of his willingness to be bound by the terms of the offer . Acceptance may be Express or Implied. Implied. -It is Express when it is communicated by words, spoken or written or by doing some required act. -It is Implied when it is to be gathered from the surrounding circumstances or the conduct of the parties.
WHO CAN ACCEPT ?
Acceptance of particular offer. When an offer is made to a particular person, it can be accepted by him alone. If it is accepted by any other person, thre is no valid acceptance. Acceptance of general offer. When an offer is made to world at large, any persons to whom the offer is made can accept it.
LEGAL RULES AS TO ACCEPTANCE
It must be absolute and unqualified i.e., it must conform with the offer. It must be communicated to the offeror. offeror. It must be according to the mode prescribed or usual and reasonable mode. It must be given within a reasonable time. It must show an intention on the part f the acceptor to fulfill terms of promise It must be given by the party or parties to whom the offer is made. It must be given before the offer lapses or before the offer is withdrawn It cannot be implied from silence
Agreement to agree in future- If the futureparties have not agreed upon the terms of their contract but have made an agreement to agree in future, there is no contract.
COMMUNICATION OF OFFER, ACCEPTANCE AND REVOCATION
An offer, its acceptance and their revocation (withdrawal) to be completed must be communicated. when the contracting parties are face to face and negotiate in person a contract comes into existence the moment the offeree gives his absolute and unqualified acceptance to the proposal made by the offerer. offerer. Distance: Telegraph, letter
Mode of communication- Offer communicationacceptance or revocation may be communicated by words, spoken or written. Ex: Weighing machine When is communication completecompletecommunication of offer. The communication of an offer is complete when it comes to the knowledge of the person to whom it is made.
Communication of revocation : Revocation means taking back it may be revocation of offer or acceptance . Time for revocation of offer and acceptance: Time for revocation of proposal- a proposalproposal may be revoke at any time before the communication of its acceptance is complete as against the prosper but not afterward.
LOSS OF LETTER OF ACCEPTANCE IN POSTAL TRANSMIT
The contract is complete even if the letter of acceptance goes astray or lost through an accident in the post. It is important that the letter of acceptance is correctly addressed, sufficiently stamped and posted. If not correctly addressed or sufficiently stamped the communication of acceptance is not complete within the meaning of sec. 4 even if it is posted.
CONTRACTS OVER TELEPHONE OR ORAL COMUNICATION
A contract by telephone has a same effect as an oral agreement entered into between the parties when they are face to face. But the offeree must make sure that his acceptance is a properly received that is heard and understood by the offerer. offerer.
WHEN DOES AN OFFER COME TO AN END ?
Revocation or lapse of offer. offer. By communication of notice of revocation by the offeror at any time before its acceptance is complete as against him. By lapse of time if it is not accepted within the prescribed time. By non-fulfillment by the offeree of a noncondition precedent to acceptance By death or insanity of the offeror provided the offeree comes to know of it before acceptance.
If an offer is not accepted according to the prescribed or usual mode If the law is changed. changed. Rejection of offer
OBJECTIVE QUESTIONS1. Which of the following result in an offer? i. A declaration of intention ii. An invitation to offer iii. An advertisement offering reward to anyone who finds the lost dog of the adviser. iv. An offer made in a joke.
2. A specific offer can be accepted by: i. Any person ii. Any friend of offerer iii. The person to whom it is made iv. Any friend of the offeree
3. Acceptance once made cannot be revoked at all. [T/F] 4. Mental acceptance is not acceptance at all. [T/F]
5. An advertisement to sell a thing by auction is: i. An offer ii. An invitation to offer iii. No offer at all iv. An obligation