Part1 Offer and Acceptance

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    TMH Copyright 2010 1

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    Chapter 13

    T

    ime and Place of Contract

    TMH Copyright 2010

    Chapter 2 to 7Introduction to Contract Law

    2

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    Contract Law is commonsense

    Law and Business have been there for long.

    Courts decided disputes of traders on the basis of

    commonsense and justice- Common law.

    Principles formulated by the courts got used fromcase to case.

    Traders assimilated the court decisions either to takeadvantage of them or neutralize their effect.

    TMH Copyright 2010 3

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    Key Themes in Contracts

    1. Offer, acceptance and formation of agreements

    2. Consideration

    3. Setting aside of bad contracts

    4. Damages and Compensation

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    Chapter 2: Summary

    The State, through law, imposes itself on the subjects. The

    impositions have to be followed.

    Beyond the impositions of the law, individuals are free todo what they like. Contracts fall within this domain of

    individual freedom.

    Consideration is the material benefit that the parties to a

    contract exchange. Only agreements with consideration

    are enforceable. Such agreements are called contracts.

    TMH Copyright 2010 5

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    cont

    Contracts tainted with illegality or suffering from

    other vice are not enforced.

    In the case where a party to a contract does not meethis obligations, the suffering party is awarded

    damages.

    TMH Copyright 2010 6

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    Chapter 3: Summary

    Agreements are formed when two minds become one,

    that is, the parties are consensus ad idem.

    An offer can be accepted to form an agreement orrejected to quash it.

    An offer must be firm, unambiguous and clear.

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    cont

    Offer and acceptance can be expressed (spoken orwritten in words) or implied in gestures, bodylanguage, actions, commissions and omissions.

    Non-written contracts are as valid as writtencontracts.

    An agreement is formed on the acceptance of anoffer.

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    cont

    The communications preceding an offer can be aimed

    at soliciting offers. For this reason, these are called

    invitation to offer.

    In understanding any communication, it is not

    important what the person actually meant (subjective

    intention) but what the communication would mean

    to an external, reasonable person (objective

    viewpoint).

    TMH Copyright 2010 9

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    Everyday Experiences

    10TMH Copyright 2010

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    Customer: Give me a cup of tea.

    Shop: Yes

    Are the offer and acceptance express or implied?

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    Customer: Give me two AA Sony batteries.

    Attendant: Sorry, we are out of stock.

    Are the offer and acceptance express or implied?

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    Customer: Give me two AA Sony batteries.

    The attendant picked up the batteries from a shelf, put

    it in a bag and gave to the customer.

    Are the offer and acceptance express or implied?

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    Pre-recorded voice on the customer service of a

    satellite television service: For the sports add-on

    package, press 1.

    The customer pressed 1 on the phone pad.

    Are the offer and acceptance express or implied?

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    A mail to a customer from a credit card company:

    We are pleased to have sanctioned a loan of Rs.5000 to

    you. To avail the loan, kindly sign below and send it backto us. The amount would be credited to your credit cardaccount.

    The customer signed the form and sent it back.

    Are the offer and acceptance express or implied?

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    Auction

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    Case: Auction

    Himalaya Private Limited owns a shopping mall. It

    advertised in the newspapers for the interested

    persons to come to its office for an auction of the

    space for advertising. The auction was conducted bythe Administrative Officer of the company.

    Several bids were made. The last bid was by Gyan for

    Rs. 1.90 lakhs, followed by the striking of hammer by

    the Administrative Officer.

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    Auction

    The last act before the formation of an agreementbetween the auctioneer and Gyan is by the auctioneerin striking the hammer. The auctioneer impliedlyaccepts the offer made by Gyan. Thus, in an auction,if there are no further terms, the bidders offer and theauctioneer accepts.

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    Tender

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    Tender

    Sigma Communications Limited, a call centre, fortransportation of its employees, advertised in thenewspapers informing interested persons to submittenders for supplying two Qualis cars with drivers

    for a year. The interested persons were to type in, on asheet of paper the relevant details, including theiraddress and the tender amount. Six persons appliedfor the tender. The tenders were opened in front ofeveryone and the details of the persons and the tender

    amount was noted. The bid of Ramesh was thelowest. Sigma, however, changed its mind andawarded the contract to a reputed travel agency.

    TMH Copyright 2010 21

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    Questions for Exploration

    Has an agreement been formed between Ramesh andSigma Communications Ltd.?

    In the arrangement, who makes an offer andacceptance?

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    Price List

    A caf in an office campus has displayed a price listdeclaring the price of a sandwich to be Rs. 40. Theaverage sale of sandwich in a day was 100 pieces.

    A person demands 200 sandwiches. The caf did nothave the stock to serve 200 sandwiches and thus,declined the request of the customer. The customerclaims that the caf is bound to serve him.

    Is the price list an offer? Has the customer acceptedthe offer to gain the right to be served 200sandwiches?

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    cont

    Price list is only an invitation to offer.

    A person requests the caf for one sandwich. The caf

    declined to serve him as the caf had run out ofsandwiches. The customer claims that the caf isbound to serve him.

    TMH Copyright 2010 24

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    cont A caf in an office campus has displayed a price list

    declaring the price of a sandwich to be Rs. 40. Aperson requests the caf for a sandwich. The caf toldthe person that the sandwich would be for Rs. 50 asthe price was raised that morning itself. A newdisplay board was being painted.

    The customer claims that the caf is bound to servehim a sandwich for Rs. 40.

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    Pamphlet

    A retail store published and distributed pamphlets,

    showing pictures of a popular brand of washing powder:

    1 Kg. priced at Rs. 60 is being sold this Saturday andSunday for only Rs. 40.

    The store had made a mistake in sending the draft to the

    printer. It intended to print Rs. 50, not Rs. 40. The storerefused to sell at the advertised price while the customers

    claim the store was bound to sell at the advertised price.

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    Shop window

    A sports store had put a cricket bat of a particularmake and size with a price sticker in its shop window.

    A customer demanded 10 bats. The store had only 3bats and requested the customer to come the nextweek. The customer lives in another city and wascatching a flight that evening. He claims he has a

    right to be given 10 bats.

    Is the display in shop window an offer from the store?

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    Shop window

    A sports store had put a cricket bat of a particularmake and size with a price sticker in its shop window.

    A customer demanded the very bat in the shopwindow as the store was inaugurated by a famouscricketer and he had held the bat in his hand. Thestore is willing to sell a bat of the same description

    but not the one put on display. The customer claimsthat the display of the bat with a price sticker in theshop window is an offer to sell that very p