The Indian Contract Act, 1872

Proposal/Offer
Section 2(a)

“When one person signifies to another his willingness to do or to abstain from

doing anything with a view to obtain the assent of that other to such act or

abstinence, he is said to make a proposal.”

What Constitutes an Offer?

1. Offeror must express his willingness to be bound by the offer

2. The willingness must be expressed with a view to obtain the assent

3. An offer can be positive as well as negative

How is an Offer made?

Rules of a Valid Offer
Rule 1- Capable of Creating Legal Relationship

Rule 2- Certain, Definite and not Vague

An acceptance to a vague, indefinite offer cannot create contractual relationship

Example:

A says to B, “I will sell you a car”

(A owns 3 different cars)

Rule 3: Express or Implied

Rule 4

Must be distinguished from an invitation to offer, a mere statement of intention,

a mere communication of information

A) A declaration of intention:

A mere declaration by a person that he intends to do something gives no right

of action to another

Example:

An advertisement for a concert or auction sale

Harris v. Nickerson

• An auctioneer advertised in a newspaper that a sale of office furniture

would be held

• A broker came from a distant place to attend that auction, but all the

furniture was withdrawn

• The broker thereupon sued the auctioneer for loss of his time and money

• Held, a declaration to do a thing did not create a binding contract and

therefore the broker could not recover his expenses

B) An Invitation to make a Offer or do Business

Rule 5- Must be Communicated

• An offer, to be complete, must be communicated to the person to whom it

is made, otherwise there can be no acceptance of it

• An acceptance of an offer in ignorance of the offer, is no acceptance and

does not confer any right on the acceptor

Lalman Shukla v. GauriDutt

• G (Gauridutt) sent his servant L (Lalman) to trace his missing nephew

• He then announced that anybody who traced his nephew would be entitled

to a certain reward

• L traced the boy in ignorance of this announcement. Subsequently when

he came to know of the reward, he claimed it

• Held, he was not entitled to the reward, as he did not know the offer

Rule 6- To Obtain the Consent/Assent of the Offeree

Offer must be made with a view to obtaining the assent of the other party

addressed and not merely with a view to disclosing the intention of making an

offer

Rule 7- May be Conditional

An offer can be made subject to any terms and conditions by the offeror

Example:

• Lumpsum payment

• Cheque

• Advance Payment

Rule 8

Offer should not contain a term the non-compliance of which may be assumed to

amount to acceptance

Where A writes to B, “I will sell you my horse for ₹5,000 & if you do not reply, I shall

assume you have accepted the offer,” there is no contract if B does not reply.

Rules of a Valid Offer

1. Capable of creating legal relationship

2. Certain, definite and not vague

3. Expressed or Implied

4. Must be distinguished from an invitation to offer

5. Must be communicated

6. To obtain the consent/assent of the offer

7. May be conditional

8. Offer should not contain a term the non-compliance of which may be

assumed to amount to acceptance.