Presentation on Offer & Acceptance

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    Legal Environment ofBusiness Chapter 2 Offer and Acceptance

    by

    Dr Nazrul Islam

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    The Proposal Or Offer

    When one person signifies toanother his willingness to do or toabstain from doing anything, with aview to obtaining the assent of thatother to such act or abstinence, he

    is said to make a proposal.

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    The Proposal Or Offer, Contd.,

    Example M says to N that he is willing tosell his motorcycle to him for tk.20,000. This is an offer.

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    The essentials of a proposal (i) It must be an expression of the willingness to

    do or to abstain from doing something

    (ii) The expression of willingness to do or toabstain from doing something must be toanother person.

    (iii) The expression of willingness to do or toabstain from doing something must be madewith a view to obtaining the assent of theother person to such act or abstinence.

    The Proposal Or Offer, Contd.,

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    A mere statement of intention is not anoffer.

    Example I may sell my motorcycle if I can gettk. 14,000 for it. This is a mereintention to offer.

    But if M says to N, Will you buy mymotorcycle for tk. 14,000? It is aproposal or offer.

    The Proposal Or Offer, Contd.,

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    Rules Regarding a Valid Offer

    1. An offer may be express or implied. 2. An offer must contemplate to give rise

    to legal consequences and be capable of

    creating legal relations.3. The terms of the offer must be certain

    and not loose or vague.

    4. An invitation to offer is not an offer.5. An offer may be specific or general. 6. An offer must be communicated to the

    offeree.

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    7. An offer should not contain a term thenon-compliance of which would amount toacceptance.

    8. An offer can be made subject to anyterms and conditions.

    9. Two identical cross-offers do not make acontract.

    Rules Regarding a Valid Offer,Contd.,

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    An offer may be express or

    implied Example 1 X writes to Y that he offers to sell his house

    to him for tk. 80,000. There is an expressoffer.

    Example 2

    The Citi Bus Company runs buses on differentroutes to carry passengers at thescheduled fares. This is an implied offer bythe Citi Bus.

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    An offer must contemplate togive rise to legal consequences

    and be capable of creating legalrelations

    Example

    An offer to a friend to dine at theofferors place, or an offer to ones wifeto show her a movie is not a valid offer

    and as such cannot rise to bindingagreement.

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    The terms of the offer must becertain and not loose or vague

    Example

    X purchased a horse from Y and promisedto buy another, if the first one proveslucky. X refused to buy the second one.

    Y could not enforce the agreement, as itis loose and vague. (Taylor vs. Portington)

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    An invitation to offer is not anoffer

    Example

    There is a self -service system in a shop.A customer selects the goods and takesthem to the cashier for payment. Thecashier totals the price and accepts the

    amount. The contract, in this case is made,not when the customer selects the goods,but when the cashier accepts the offerby accepting the payment.

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    An invitation to offer is not anoffer, Contd.,

    More Example

    An advertisement for sale of goods byauction does not amount to an offer tohold such sale.(Case: Harries vs Nickerson)

    Quotations, catalogues of prices or displayof goods with prices marked thereon donot constitute an offer.(Case: Grainger &Son vs Gough)

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    An invitation to offer is not anoffer, Contd.,

    More Example(s)

    A notice that goods will be sold by tenderdoes not amount to an offer.

    It is only an attempt to ascertain whetheran offer can be obtained within such amargin as the seller is willing to adopt.(Case: Spencer vs Harding).

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    An offer may be specific orgeneral

    Example 1

    M makes an offer to N to sell his bicyclefor tk. 500, there is an specific offer and Nalone can accept it.

    A general offer is one which is made tothe world at large or public in general andmay be accepted by any person.

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    An offer may be specific orgeneral, Contd.,

    Example 2

    Carbolic Smoke Ball Company issued anadvertisement in which the company offered topay $100 to any person who contracts influenza,after having used their Smoke Balls threetimes daily for two weeks. Mrs Carlill, on the faithof the advertisement, bought and used the Ballsaccording to the directions, but she neverthelesssubsequently suffered from influenza. She suedthe company for the promised reward. Thecompany was held liable.

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    An offer must be communicatedto the offeree

    ExampleG sent his servant L in search of his

    missing nephew. Subsequently Gannounced a reward for informationconcerning the boy. L brought back themissing boy and claimed the reward,

    without having known of the reward. Held,there was no contract between L and G andthe reward cannot be claimed.(Case:Lanmon vs Gouri Dutt)

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    An offer should not contain aterm the non-compliance of which

    would amount to acceptance ExampleAn offeror cannot say that if acceptance isnot communicated up to a certain date, theoffer would be presumed to have beenaccepted. If the offeree does not reply,there is no contract, because no obligationto reply can be imposed on him, on theground of justice.

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    An offer can be conditional Example 1T, who could not read, took an excursionticket on the railway. On the front of theticket was printed for conditions seeback. One of the conditions was that therailway authority would not be liable forpersonal injuries to passengers. T wasinjured by a railway accident.Held, T was bound by the conditions andcould not recover any damages.

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    An offer can be conditional,Contd.,

    Example 2M delivered one new sari to a laundry forwashing. On the back of the printed receipt itwas stated that the customer would beentitled to recover only 15% of the market-price of the article in case of loss. The sariwas lost owing to the negligence of thelaundry.

    In a suit by M, it was held that the termwas unreadable. Such a term would give apremium on dishonesty and its against thepublic interest.

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    Two identical cross-offers do not

    make contract ExampleOn 15 October, 1989 A wrote to Boffering to sell him 100 tons of iron at tk.8 ,800 per ton. On the same day, B wroteto A offering to buy 100 tons of iron at tk.8 ,800 per ton. The letters crossed in thepost.There was no contract between A & B.

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    Lapse and Revocation of Offer

    1. An offer lapses after stipulated orreasonable time.

    2. An offer lapses by not being accepted

    in the mode prescribed, or if no mode isprescribed, in some usual andreasonable manner.

    3. An offer lapses by rejection.4. An offer lapses by the death or

    insanity of the offeror or the offereebefore acceptance.

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    Lapse and Revocation of Offer.

    Contd., 5. An offer lapses by notice or

    revocation.6. Revocation by non-fulfillment of acondition precedent to acceptance.

    7. An offer lapses by subsequent illegalityor destruction of subject matter.

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    After the expiry of reasonabletime

    Example 1

    On 8th June, M offered to take shares in Rcompany. He received a letter of allotmenton 23rd November. M refused to take theshares.

    Held, M was entitled to refuse as the offerhad lapsed by delay in acceptance.(Ramsgate Victoria Hotel Co. vs Montefiore)

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    After the expiry of reasonabletime, Contd.,

    Example 2

    An offer made by telegram suggests that areply is required urgently and if the ofereedelays the communication of his acceptanceeven by day or two, the offer will be

    considered to have lapsed.

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    An offer lapses by rejection

    An offer lapses if it is rejected by theofferee.

    The rejection may be express or implied. Implied rejection is one:

    (a) where either the offeree makes acounter offer or (b)