OFFER AND ACCEPTANCE

Legal Rules as to Offer 1. Offer must be such as in law is capable of being accepted and giving rise to legal relationship.

A social invitation, even if it is accepted, does not create legal relations because it is not so intended. An offer, therefore, must be such as would result in a valid contract when it is accepted.

2. Terms of offer must be definite, unambigous and certain and not loose and vague. if the terms of an offer are vague or indefinite, its acceptance cannot create any contractual relationship.

Examples :-

(a) A says to B, "I will sell you a car." A owns three different cars. The offer is not definite.

But if the agreement contains a machinery for ascertaining a vague term,s the agreement is not void on the ground of its being vague.

4. An offer may be distinguished from: (ii) An invitation to make an offer or do business Display of goods by a shopkeeper in his window, with prices marked on them, is not an offer but merely an invitation to the public to make an offer to buy the goods at the marked prices.

Likewise, quotations, catalogues, advertisements in a newspaper for sale of an article, or circulars sent to potential constomers do not constitute an offer. They are instead an invitation to the public to make an offer.

A person in case the prices of the gods are marked, cannot force the seller to sell the goods at those prices. He can, at the most, ask the seller to sell the goods to him, in which case he would be making an offer to the seller and it is up to the seller to accept the not.

Offer must be communicated.

An offer, to be complete, must be communicated to the person to whom it is made. Unless an offer is communicated to the offeree by the offeror or by his duly authorised agent, there can be no acceptance of it.

An aceptance of an offer, in ignorance of the offer, is no acceptance and does not confer any right on the acceptor.

Offer must be made with a view to obtaining the assent. The offer to do or not to do somethign must be made with a view to obtaining the asent of the other party addressed and not merely with a view to disclosing the intention of making an offer.

Offer should not contain a term the non-compliance of which may be assumed to amount to acceptance. Thus a man cannot say that if acceptance is not communicated by a certain time, the offer would be considered as accepted.

For example, where A writes to B,"I will sell you my horse for Rs. 5,000 and if you do not reply, I shall assume you have accepted the offer," there is no contract if B does not reply. 'B is under no obligation to speak.

However, if B is in possession of A's horse at the time the offer is made and he continues to use the horse thereafter, B's silence and his continued use of horse amount to acceptance on his part of the terms of A's offer.

A statement of price is not an offer. A mere statement of price is not construed as an offer to sell [Harvey v. Facey, (1893) App. Cas 552].

Cross Offers

When two parties make identical offers to each other, in ignorance of each other's offer, the offers are cross offers.

In such a case, the Court will not construe one offer as the offer and the other as the acceptance and as such there can be no concluded contract [Tinn v. Haffmann, (1873) 29 L.T. 271].

Legal Rules as to Acceptance

1. It must be absolute and unqualified, i.e., it must conform with the offer. An acceptance, in order to be binding, must be absolute and unqualified [Sec. 7 (1)]

in respect of all terms of the offer, whether material or immaterial, major or minor. If the parties are not ad idem on all matters concerning the offer and acceptance, there is no contract.

2. It must be communicated to the offer. To conclude a contract between the parties; the acceptance must be communicated in some perceptible form. A mere resolve or mental determination on the part of the offeree to accept an offer, when

there is no external manifestation of the intention to do so, is not sufficient [Bhagwan Dass Kedia v. Girdhari Lal, A.I.R (1966) S.C 543]. In order to result in a contract, the acceptance must be a "matter of fact".

3. It must be according to the mode prescribed or usual and reasonable mode. If the acceptance is not according to the mode prescribed, or some usual and reasonable mode (where no mode is prescribed) the offeror may intimate to the

offer within a reasonable time that the acceptance is not according to the mode prescribed and may insist that the offer must be accepted in the prescribed mode only. If he does not inform the offeree. he is deemed to have accepted the acceptance [Sec. 7(2)].

4. It must be given within a reasonable time. If any time limit is specified, the acceptance must be given within that time. If no time limit is specified, it must be given within a reasonable time.

5. It annot precede an offer. If the acceptance precedes an offer, it is not a valid acceptance and does not result in a contract.

6. It must show an intention on the part of the acceptor to fulfill terms of the promise. If no such intention is present, the acceptance is not valid.

7. It must be given by the party or parties to whom the offer is made.

8. It must be given before the offer lapses or before the offer is withdrawn.

9. It cannot be implied from silence. the acceptance of an offer cannot be implied from the silence of the offeree or his failure to answer, unless the offeree has by his previous conduct indicated that his silence means that he accepts.

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 offeror. when the parties are at a distance and the offer and acceptance and their revocation are made through post, i.e., by letter or telegram, the rules contained in Secs. 3 to 5 apply. these rules are as follows:

Mode of Communication (Sec. 3)

The communication of offer, its acceptance and their revocation respectively are deemed to be made by any (a) act, or (b) omission, of the party offering, accepting

or revoking. such act or omission must' however have the effect of communicating such offer, acceptance or revocation. In other words, offer, acceptance or revocation may be communicated by words spoken or written, or by

conduct. thus installation of a weighting machine at a public place is an offer, putting of a coin in the slot of the machine is the acceptance of the offer, and switching off the machine amounts to revocation of the offer.

When is communicatino complete (Sec. 4) ?

Communication of offer (Sec. 4, para 1). the communication of an offer is complete when it comes to the knowledge of the person to whom it is made.

Example. A proposes, by a letter, to sell! a house to B at a certain price. the letter is posted on 10th July. It reaches B on 12th July.

the communication of the offer is complete when B receives the letter, i.e., on 12th July.

Communication of acceptance (Sec. 4 para 2). The communication of an acceptance is complete -

- as against the proposer when it is put into a course of transmission to him, so as to be out of the power of the acceptor.

- as against the acceptor when it comes to the knowledge of the proposer.

Example: B accepts A's proposal, in the above case, by a letter sent by post on 13th instant. The letter reaches A on 15th instant. The communication of the acceptance is complete, as against A, when the letter is posted, i.e., on 13th, as against B, when the letter is received by A, i.e., on 15th.

Practical Problems

1. Are the following offers valid ?

a) A garment store gave the following advertisement in a newspaper: "Special sale for tomorrow only. Men's Night Suits reduced from Rs. 200 to Rs. 100.

b) P says to Q. "J will sell you a camera. " P owns three different types of cameras of various prices.

c) an auctioneer displays a refrigerator before a gathering in an action sale.

d) A advertises in The Statesman that he would pay Rs. 200 to anyone ho finds and returns his lost dog.

(Hint: In cases (a), (b) and (c) there is no offer. In case (d) there is a valid offer. Any person can accept it by performing the act with knowledge of the reqard (Fitch v. Snecdker).)

2. A tells B in the course of a conversation with him that he will give Rs. 10,000 to anyone who marries his daughter with his concent. B marries A's daughter with A's consent. Is he entitled to recover this amount? (Hint: No, as what A tells B is a statement of intention (Re Ficus).

3. A sees a rate book displayed in a shop. It is labelled "first Edition Rs./ 15. "A enters the shop and puts Rs. 15 on the counter and asks for the book. the bookseller does not agree to sell saying that the real price of the book is Rs. 50 and that it had been marked as rs. 15 by mistake. Is the bookseller bound to sell the book for 15?Hint: No [Pharmaceutical society of Great Britain v. Boots Cash Chemists.].

4. A sent a telegram to B, "Will you sell your car? Quote. lowest price. "B sent a reply "Lowest price Rs. 25,000". A sent a second telegram to B, "I agree to buy your car for Rs. 25,000". B thereafter refuses to sell (a) Can A compel B to do so ? (b) Is there a contract between A and B?

Hint: (a) No. (b) No (Harvey v. Facey).

5. A sent a letter to B offering to sell his house to B. the next day, A wrote another letter revoking his offer. Meanwhile B had accepted A's offer by return of post. what is B's remedy, if any, against A: (c) If A's letter of revocation reaches B

before B's letter of acceptance reaches A' (b) If B's letter of acceptance is lost in the post; (c) If B's letter of acceptance is posted an hour after the posting of A's letter of revocation? Hint: In all the three cases there is a concluded contract between A and B, i.e., as soon as the letter of acceptance is posted by B (Sec. 4.)

6. B offered to sell his house to A for Rs. 50,000. A accepted the offer by post. On the next day. A sent a telegram withdrawing the acceptance which reached B before the letter.

(a) is the revocation of acceptance valid? (b) Would it make any difference if both the letters, communicating acceptance and the telegram communication revocation of acceptance, reach B at the same time?

Hint: (a) Yes, (b) If A opens the telegram first (and this would be normally so in case of a rational person) and reads it, the acceptance stands revoked. If he opens the letter first and reads it, revocation of acceptance is not possible as the contract has already been concluded (Sec. 4).

7. On the 5th of a month A makes an offer to B, by a letter which reaches B on the 6th. On the 7th B posts his letter of acceptance. Meanwhile, on the 6th A posts a letter to B revoking the offer. On seeing it B sends a telegram to A on the 8th confirming the acceptance given through his letter of the 7th . discuss the legal effects of the three letters and the telegram.

Hint: The contract is concluded between A and B on 7th when B posts the letter of acceptance. It is assumed that the letter of A revoking offer reaches B after B has posted the letter of acceptance. the telegram only confirms acceptance already given (Secs. 4 and 5.)

8. A offers, by a letter, to sell a certain article to B who receives the letter the next day. B immediately posts his letter of accetance. the same evening A posts a letter revoking the offer. A's letter of revocatino and B's letter o acceptance cross in the post. Is there a contract between A and B?

Hint: Yes (Secs. 4 and 5)

9. A offers by a letter to sell his car to B for Rs. 15,000. B. at the same time offers by a letter to buy A's car for Rs. 15,000. the two letter cross each other in the post. Is there a concluded contract between A and B?

Hint: No (Tinn v. Haffmann).

10. S offers to sell B is car for Rs. 50,000 I; standing nearby, says, "I will take it if B does not take it. "B is not interested in the car. (a) Does a contract arise between S and T ? (b) What will be the position if T says to S "Here is the money, I take the car."

Hint: (a) No (b) S may or may not accept T's offer.