Offer/ Proposal

• An agreement arises by an offer or proposal

by one of the parties and the acceptance of
such offer by the other.
 Proposal/Offer Def.- Sec 2(a)
• Sec 2(a) - When one person signifies to
another his willingness to do or to abstain
from doing anything, with a view to obtaining
the assent of that other to such act or
abstinence, he is said to make a proposal;
 Parties
• Proposer/Offeror / Promisor
Peron who makes the offer

• Offeree/Promisee
Person who accepts such offer
 Essentials of Valid Offer
1. Terms must be definite
2. Offer must be to intended to create a legal relationship
– Balfour v. Balfour (1919) 2 K.B. 571 (Husband wife case)
– Jones v. Padavatton (1969) AII E.R. 616 (Daughter-mother
–
case)Meritt v. Meritt (1970) 2 AII ER. 760 571 (Husband wife – Property Mortgage case)

3. Offer must be to a definite person

- Definite person
- Definite class of persons
- Offer made to world at large
4. Offer must be Communicated to the offeree.
- Lalman v. Gauri Datt (1913) 11 All L.J 489 (Nephew lost)
- Williams v. Carwardine (1873) 29 LT 271 (Murderer details)
5.Offer must not impose burden on offeree
6. Terms of offer must be certain and unambiguous
7. Offer may be express or may be implied
– Sec. 9- 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.
– Wilkie v. London Passenger Transport Board (1947) 1
ALL E.R. 258 (Tramway co. or bus)
– Upton Rural District Council v Powell (1942) 1 All ER
220 (Fire brigade case)
 Kinds of Offer
1. General and Specific Offer
– Carlill v. Carbolic Smoke Ball Co. (1893) 1 QB 256 (Influenza case)
2. Counter Offer
3. Cross Offer
– Tinn v. Hoffmann (1873) 29 L.T 271 (Exchange of letters with
same offer for sale of iron)
4. Tender, Standing, Open or Continuing Offer
– Bengal Coal Co. v Homee Wadia & co. ILR (1899) 24 Bom. (SS
goods for 12 months not an Open offer)
– Rajendra Kumar Verma v. State of M.P. AIR 1972 MP (Tendu
Leaves tender)
5. Express and Implied Offer- Sec.9
– Upton Rural District Council v Powell (1942) 1 All ER 220 (Fire
brigade case)
 Invitation to an offer
Is offer and invitation to offer the same?
• No….
• A proposal or an offer has to be distinguished
from invitation to an offer
• Eg. Catalogue, OLX
 Auction Sale

• Is it an offer or an invitation to an offer

– Its mere invitation to an offer
– The offer is made by the intending buyer in form of
a bid. Such offer if accepted by the fall of the
hammer or any other customary way, will result in
contract
– Harris v. Nickerson (1873) L.R. 8 Q.B 286 (auction
cancelled. Auctioneer cannot claim travel
expenses)
• Display of goods with price tag- Offer????
– Pharmaceutical Society of Great Britain v. Boots Cash
Chemists Ltd. (1952) 2 QB 795

– (self service pharmacy reserving right to sell at cash

counter through a pharmacist)

• Price Quotation- Offer????

– Harvey v. Facey (1893) AC 552

• Advertisement an offer???
• Badri Prasad v. State of MP (AIR 1970 Sc 706)
• The Divisional Forest Officer wrote to the plaintiff:
"Kindly inform whether you are ready to pay further Rs.
17,000 for the contract of big trees......which (contract) is
under dispute at present. The contract can be given to you
on this compromise only...On receipt of your reply the State
Government will be informed.

In reply to the above letter the plaintiff wrote back

"I am ready to pay Rs. 17,000 provided my claim to have the
refund of Rs. 17,000 already paid, from the owner of the
Village or any other relief consequential to the judgment of
that case remains unaffected....Subject to those conditions I
shall pay Rs. 17,000 as required in your referred letter.".
• The Supreme Court held that by those letters
no contract had been concluded between the
plaintiff and the Government. The letter from
the Divisional Forest Officer seemed to be
merely invitation to offer rather than offer
 Tender
• Is tender an offer?
• No. The advertisement calling tenders is not a
proposal or offer but merely invitation to contractors
for making an offer..
• Submission of a tender is in the nature of offer,
which results in contract if tender is accepted
– Rajendra Kumar Verma v. St of MP AIR 1972 MP 131
– Suraj Besan and Rice Mills v. Food Corporation of India
AIR 1988 Delhi 224 (Person can withdraw, modify his
offer or tender before communication of accpetance)
– What happens if Last date of acceptance is public holiday?
 Letters of Intent
• Are letters of Intent Contract?
• A letter of intent merely indicates a party’s
intention to enter into a contract on the lines
suggested in the letter.
– Chaturbhuj Vithaldas Jesani v. Moreshwar
Parashram AIR 1954 SC 236
– DRSA v. Bindal Agro Chemicals Ltd. AIR 2006 SC
871
 Revocation of Offer
• Sec 5 Revocation of Proposals and
acceptance. —A proposal may be revoked at
any time before the communication of its
acceptance is complete as against the
proposer, but not afterwards
– Managing Committee, SGA High School v. St of
Bihar AIR 1881 Pat 271 (Secretary from Managing
committee of school Resigning and then withdrawing the
resignation)
 Revocation in case of Auction
• Withdrawal of Bids (before acceptance)
• Withdrawal of bids after acceptance
– Withdrawal will forfeit the Bid security amount
– JK Enterprises v. St. of MP (AIR 1997 MP 68)
(tendu leaves- offer sent by post-withdrawn by
fax- Invalid withdrawal-Bound by offer)
– Rajendra Kumar Verma v. St. of MP(AIR 1972 MP
131) (tendu leaves)
 Withdrawal of Tender
• Tender – forfeiture of earnest money
– St. of Maharashtra v. AP Papermils Ltd.(AIR 2006
SC 1788) (Tender submitted for Purchase of bamboo
units on last day- withdrawn before results- Govt.
forfeited earnest money- Court upheld the forfeiture )
 Revocation in contract by post
• Sec 4 – Communication of acceptance is
complete as against the proposer, when it is
put in the course of transmission to him, so as
to be out of the power of the acceptor.
 Modes of revocation of offer
• Sec. 6. Revocation how made
• A proposal is revoked—
1. by the communication of notice of revocation by the proposer
to the other party;
2. by the lapse of the time prescribed in such proposal for its
acceptance, or, if no time is so prescribed, by the lapse of a
reasonable time, without communication of the acceptance;
3. by the failure of the acceptor to fulfil a condition precedent to
acceptance; or
4. by the death or insanity of the proposer, if the fact of his death
or insanity comes to the knowledge of the acceptor before
acceptance.
1.Rejection of Offer
2. By Notice of Revocation
– Dikinson v. Dodds (1876) 2 CH. 46 (sale of land to 3rd party-
implied revocation)
3. By Lapse of Time
– Ramsgate Victoria Hotel Co. V Montefiore (1866) LR (offered to
purchase share – June: Allotment made in Nov- Not reasonable)
4. By failure to fulfill Conditions Precedent
– State of MP v. Goberdhan Dass AIR 1973 SC 1164 (tenders
invited- sale of goods- with condition- 25% to be paid)
– M/s BA & sons v. The Regional Manager, FCI Trivandraum AIR
1987 Ker 56 (sale of rice- condition for security deposit- Waiver
of condition- permitted- Contract valid)
5. By death or Insanity of the offeror
– Dikinson v. Dodds (1876) 2 CH. 46
6. Counter Offer
Thank You