Exchange of Offer and

Acceptance
Formations of Contract
All contracts are made by the process of of a lawful offer by one party and the lawful
acceptance of the offer by the other party. X says, “will you buy my Toshiba laptop for Birr
20,000?. This is an offer If Y says “yes”, the offer is accepted and a contract is formed.
Proposal : -
An “offer” involves the making of “proposal”. The term proposal is defined as a situation
whereby one person signifies to another his willingness to do or to give something, with the
view of to obtaining the assent of that other to such act.
Offer: - A proposal is called an “Offer”. The person making the proposal or the offer is
called the Offeror. The Promisor or the person making the offer is called the offeree.
Acceptance: - When the person to whom the proposal is made signifies his assent thereto,
the proposal is said to be accepted. The person accepting the proposal or the offer is called
the ‘Promisee’ or the ‘Offeree’
Ex. X offers to sell his bicycle to Y at the price of 5,000 Birr. This is the a proposal. X is the promisor or
the offeror. Y is the promise or the offeree. If Y agrees to buy the bicycle at the price stated; Y becomes
the promise or acceptor.
Types of Offer: -
i. Specific Offer : This is a type of offer made to specified person of specific group of persons.
ii. General Offer: - is a type of offer made to general subject without being specific to persons or
group.
Rules of Offer
1. Offer should be Communicated either be Express by words, spoken or written and by
conduct or Implied: - if X offers Y to Sell his mobile phone with an amount of Birr 10,000.
2. An offer may be made to a definite person; to some definite class of persons; or to the world
at large
3. The terms of the offer must be certain, definite unambiguous and not vague
If X says to Y, “I will give some money if you find my cellphone. This is not an offer which can be
accepted because the amount of money to be paid is not certain.
4. A mere declaration of intention is not an offer ; Ex. Auction, price catalogue etc.
Acceptance:-
The offer can be accepted by the person or persons for whom the offer is
made. If the offer made to a particular person can only be accepted by him or
them because he is or they are the only person or persons intended to accept.
Rules of Acceptance:-
i. If there is some variation even on unimportant point, between the terms of
the offer and acceptance, there is no contract.
ii. The acceptance with variation is not Acceptance
iii. Seeking Clarification is not an Acceptance
iv. It has to be expressed
v. Silence does not amounts to acceptance
vi. The mode of acceptance :
Revocation of Offer
i. Withdrawal of offer before acceptance
ii. By lapse of time
iii. Expiry of reasonable time
iv. Death or incapacity of the offeror
v. Counter offer
vi. Refusal
An agreement which is not satisfy essential elements of a contract may be either
void or voidable. An agreement not enforceable at law is called void or void ab
initio. A void agreement has no legal effect.