HOW IS AN OFFER MADE

1) COMMUNICATION OF THE PROPOSAL

The definition of a proposal lays emphasis upon the requirement that the willingness to make
a proposal should be signified. To signify is to convey, declare or indicate. What it means is
that the offer should be communicated to the party for who it is intended. The process of
proposal is complete when the communication is complete. Section 3 consists of the accepted
ways of communication

An offer can be made by (a) any act or (b) omission of the party proposing by which he
intends to communicate such proposal or which has the effect of communicating it to the
other (Section 3). An offer can be made by an act in the following ways:

(a) by words (whether written or oral). The written offer can be made by letters,
telegrams, telex messages, advertisements, etc. The oral offer can be made either in
person or over telephone.
(b) (b) by conduct. The offer may be made by positive acts or signs so that the person
acting or making signs means to say or convey. However silence of a party can in no
case amount to offer by conduct. An offer can also be made by a party by omission
(to do something). This includes such conduct or forbearance on one’s part that the
other person takes it as his willingness or assent.

An offer implied from the conduct of the parties or from the circumstances of the case is
known as implied offer.

Examples
(1) Aproposes, by letter, to sell a house to Bat a certain price. This is an offer by an act by
written words (i.e., letter). This is also an express offer.
(2) Aproposes, over telephone, to sell a house to Bat a certain price. This is an offer by act
(by oral words). This is an express offer.
(3) Aowns a motor boat for taking people from Bombay to Goa. The boat is in the waters at
the Gateway of India. This is an offer by conduct to take passengers from Bombay to Goa.
He need not speak or call the passengers. The very fact that his motor boat is in the waters
near Gateway of India signifies his willingness to do an act with a view to obtaining the
assent of the other. This is an example of an implied offer.
The communication, acceptance and revocation of proposals and acceptances, respectively,
are deemed to be made by any act or omission of the party proposing, accepting or revoking,
by which the party intends to communicate such proposal, acceptance or revocation, or which
he has the effect of communicating it. Thus, a proposal may be communicated in any way
which has the effect of laying before the offeree the willingness to do or abstain.1
It may, for example, be done by words of mouth2

For example, A wants to sell his Television to B for Rs/-10000 and if B wishes to purchase
the same, it amounts to proposal by A for the sale of the television. This intention of
obtaining the assent of the other party can be either implied or express. The Act lays down
how the communication of proposal can be made. Section 3 says – “The communication of
proposals, the acceptance of proposals, and the revocation of proposals and acceptances,
respectively, are deemed to be made by any act or omission of the party proposing, accepting
or revoking, by which he intends to communicate such proposal, acceptance or revocation,
or which has the effect of communicating it.”Hence, the definition clearly states that an offer
may be communicated by the offeror by any act or omission by which the offeror –

1. Intends to communicate such offer;

2. Which has the effect of communicating the offer.

Therefore, an offer can be made by words spoken, or by writing or conduct in a manner,

which carries the effect of communicating the offer to the offeree. An express offer is made
by some positive act by the offeror or it may also be implied from the conduct of the offeror.
Section 9 further validates the aforementioned statements. It runs as – “In so far as the
proposal or acceptance of any promise is made in words, the promise is said to be express.
In so far as such proposal or acceptance is made otherwise than in words, the promise is
said to be implied.”

Implied Proposals

1 Ram Krishan Singhal v Executive Engineer, ILR (1991) 1 DEL 275.

2 P. Syamala v R. Gopinathan, (2004) 1 CTC 117.
People generally express their desire to do or not to do something in actions. As stated in the
American Law Institute journal, “Words are not the only medium of expression, conduct may
often convey as clearly as words a promise, or an assent to a proposed promise”. An offer and
acceptance need not always be formal, nor does the law of contract of any sort require that
consent to a contract must be in writing. This was said in the case of P. Poppa v Karia
Gounder, where the validity of an oral contract was questioned along with the issue of time
being an essence of the contract.3 Therefore offers or acceptances can be derived by people’s
acts or even omissions.

Offer that is conveyed through conduct is called an implied offer and an offer that is
expressed through words, written or spoken, is called an express offer. An acceptance may
likewise be made expressed or impliedly as section 9 declares.

EXPRESS AND IMPLIED PROMISES

Promises that are conveyed in words are called express promises and those conveyed in
actions and conduct are called implied promises.

A contract implied in fact requires meeting of minds. The courts have to refuse to read an
implied term into a contract which is silent on the point or did not clearly indicate the nature
of terms.

For example:

An auction bid is an implied offer to buy. Similarly consuming eatables at a self serve
restaurant is also an implied offer. Both of which conjure a implied promise to pay for the
benefits enjoyed.

A perfect illustration of a contract arising out of implied conduct is the case of Upton-on-
Severn RDC v Powell;4

3 P. Poppan v Karia Gounder, (2002) 2 CHN 40.

4 Upton-on-Severn RDC v Powell (1942) 1 ALL ER 220 (CA).
There was a fire at the defendant’s farm. He believed that he was entitled to the free services
of Upton Fire brigade and, therefore, summoned it. The Brigade came and put out of the fire.
It then turned out that the defendant’s farm was not within free service zone of the Upton,
which therefore, claimed compensation for the services. The court had said, “The truth of the
matter is that the defendant wanted the services of Upton; he asked for the services of Upton
and Upton, in response to that request, provided the services. Hence the services were
rendered on an implied promise to pay for them”.

In the same way this can also be seen in Example 2 as in the case of Steven v Bromley &
Son. 5

Where the charterer of a ship chartered for loading steel billets, instead loaded general
merchandise, for which the rate of freight was higher, he was held to have done so under an
implied promise to pay higher rate, here the ship owner forgot about it and it remained
under the use of the other party.

The Supreme Court said that a silent agreement arose under which current charter becomes
applicable. This can also be seen in the case of Haridas Ranchordas v Mercatile Bank of
India ltd6 where the customer of a bank did not object to the charge of compound interest on
him and it was considered by the bank that he impliedly accepted it.

In another case we also see the rules of a yacht club regatta provided that the competitors
would be liable for damage done by fouling, they were held bound to each other by the rules
and where one of them fouled and sank the yacht, he was held liable.7 This shows that in
order to know whether an agreement has risen, regard must be taken to all the circumstances
in total where the parties had contracted and not merely to the formality of offer and
acceptance. Sometimes a sequence of events may exhibit an agreement, though offer and
acceptance are indiscernible.

ACCEPTANCE- Express and implied.

When an offer is accepted it results in an agreement. Without acceptance of the offer a

contract between two parties cannot arise. Here is the definition of acceptance according to

5 Steven v Bromley & Son, (1919) 2 KB 722 (CA).

6 Haridas Ranchordas v Mercantile Bank of India Ltd, (1919-20) 47 IA 17.
7 Clarke v Earl of Dunraven (The Satanita), 1897 AC 59 (HL).
the Indian Contract Act, 1872] – “When the person to whom the proposal is made signifies
his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a
promise.”

Once the offer is made and accepted both the parties become bound by the agreement and not
before that. When the proposal or acceptance is made in any other way than words then the
promise is deemed to be implied. Acceptance must carry the effect of communication even if
it is implied. Acceptance can also be made in words either written or spoken. The most
important thing in either case is that acceptance must be communicated to the offeror either
by the offeree or by some duly authorized agent on his behalf. Also, performance of the
conditions of the proposal is acceptance of the proposal. Under certain circumstances,
offeree’s silence, along with his conduct also amounts to acceptance. This is known as
‘agreem