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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.