Qs. Define Proposal or Offer. Discuss essential elements of a valid offer?

What is the
difference between a proposal and an invitation to offer?

Ans. Offer is also called "Proposal”. This is a synonym of the English-law word ‘offer’. Offer
is the first stage of any agreement or contract and from this acceptance arises proposal and
acceptance together with creates 'promise' and this constitutes the agreement.

Definition-

According to Sec 2 (a) of the Indian Contract Act 1872 defines the word 'Proposal (offer).
According to it, when one person signifies to another his willingness to do or to abstain from
doing something with a view to obtaining the assent of that other to such act or abstinence,
he is said to make a proposal.

According to Pollock- "Offer means the expression of any person of his will to become a
party of an agreement

According to Chetty- Proposal or offer is a promise to do or not to do an act".

Thus under an offer-

● One person who is called the proposer or offeror expresses his willingness or desire
to any other
person:
● Such desire or willingness is to do or not to do an act:; and
● The purpose of such desire or willingness is to obtain the assent of that other person
to do or not to do an act.

Example

One person 'A' wants to sell his vehicle for Rs 75,000/- and for that purpose he expresses
his desire to 'B', so that he can allow him to buy. Here, the desire of A can be called an offer
(proposal).

Essential elements of Offer-

A valid offer has following essential elements-

1.Presence of two parties- offer requires two persons or parties because a person can
express his willingness to do or not to do an act only before another person and the main
purpose of the offer is to obtain the assent of the other person which is only possible when
there are two persons, on proposing and other accepting. No person can make an offer to
himself.

2.Offer to do or not to do an act- offer must be in respect of doing or not doing an act, i.e. it
should not be merely a statement. The language of offer should be such that the other
person could give his assent or consent to the willingness of the offeror.
3.The purpose of offer must be to obtain the assent of any other person- the purpose of
offer must be to obtain the assent of that person to whom it is made, otherwise it shall not be
treated as lawful offer

4.Offer is definite- offer should be given a definite meaning, i.e. it should be clear. Doubtful
and unclear offers are meaningless. The origin of legal rights and liabilities between the
parties als requires the offer to be clear and unambiguous. Person giving acceptance should
clearly understand what the offeror wants.

Example

‘A’ offers ‘B’ to sell 10 bales of clothes. This offer is unclear and ambiguous because it
doesn't show which type of cloth it will be.

5.Offer should create legal obligations- the offer should be of such nature so that it may
create legal rights and obligations between the two parties. Where any offer does not create
legal rights and obligations, there such offer shall have no importance for the purpose of
contract. like an invitation for dinner or an offer for movie

Case Law

Balfour v/s Balfour

In this case, the trade was in Sri Lanka and the wife was residing in England. Husband
promised his wife that so long as she would reside in England for the improvement of her
health, he would pay a certain amount per month for maintenance. As no legal rights and
obligations are created by this offer or promise between the parties, it was not held to be
enforceable by the court. The offer is made on love and affection.

6.Communication of offer- a lawful offer also requires that it should be legally

communicated to the promise. The communication can be written or oral. It can be done
through telegraph, post telephone, fax etc. the thing required is that it comes in the
knowledge of the promise.For eg. Lalman shukla v/s Gauri Dutt.

7.Offer conditions should be clear and readable. The conditions of offer should be clear
and readable. If the conditions are not readable, the offer becomes meaningless. Let us take
an example of a lottery ticket; it has been held in the case of the Special Secretary,
Finance Department, Rajasthan Govt. v/s G. Venkatraman that if conditions mentioned at
the back of a lottery ticket are in such small letters that they cannot be read then their
performance shall be binding.

8.Offer being General or Specific- the offer may be general or specific. General offer is not
for a special person but it is for the whole world. In such an offer any person on following the
conditions of offer, can create a contract. Such offers are done generally thorough
newspapers

Case Law
Carlill v/s Carbolic Smoke Ball. Co.

In this contract Carbolic Smoke Ball Company gave an advertisement in the newspaper that
if any person consumes medicines manufactured by them thrice a day for two weeks, then
he would not suffer from influenza. Even on its consumption, if any person gets influenza
then he would be given an award of 100 pounds by the company. Plaintiff Mrs. Carlil
consumed the medicines as per direction of the company even then she got influenza. Carlil
instituted a suit against the company to get that 100 pound amount of award. An argument
made by the company that no offer was made before the plaintiff so she has no right to get
award. By rejecting the above argument and accepting the suit of plaintiff, the court held that
advertisement given newspaper is an offer for public and any person can accept this

Specific offer is for any person-special or group-special and on the following conditions of
offer it before an agreement.

For eg - "A" makes an offer to "B" to sell his vehicle. This is a specific offer which can be
accepted by 'B' only.

Difference between Proposal and Invitation to offer-

Proposal and invitation to offer are two different words and their meanings are also different.

Proposal means that one person offers to another person to do or not to do an act on which
the other person to which he is offering gives his consent. Thus in a proposal one person
places an offer to another to do or not to do an act.

While an Invitation to offer is the final desire to do or not to do an act is not expressed. In this
mere knowledge or information is obtained from each other. Following can be its examples-

● On asking rate by one, telling rate by another person: Advertisement of auction;

● Advertisement of tender,
● Rate list of the goods of the firm.
● Prospectus of the company; etc.

Case Law

Harvey v/s Facey'

In this case, the plaintiffs sent a telegram to defendants, "will you sell us Bumper Hall Pen?"
Telegraph lowest cash price. The defendants in reply telegraphed Lowest price is € 900. The
plaintiff sent another telegram to the defendants saying, "we agree to buy Bumper Hall Pen
€900." The defendants refused to sell that property. In suit, the plaintiffs contended that the
telegram from the defendants quoting lowest price as € 900 was an offer and the same had
been accepted by the plaintiffs, and the contract was complete. But the court did not agreed
with the arguments and held that intimation of the price of property was mere a reply to
plaintiff's questions and not a proposal

Difference between proposal and invitation to offer

Proposal

1. In the proposal final desire to do or not to do an act is expressed.

2. Proposal is capable of being accepted.
3. It is made with the purpose of giving assent to do or not to
do a particular act or to make it binding.
4. It has the capacity to make an agreement.
5. Acceptance of offer results in creation of legal rights and
obligations between parties.
6. Its nature is not like talking to each other.

Invitation to offer

1. In this only information for an act-special or thing-special is

obtained.
2. It is not capable of being accepted.
3. It does not have anything like obtaining consent or binding
it.
4. It does not have any such capacity.
5. It does not have anything like creation of legal rights and
obligations.
6. Its nature is like talking each other