By Asok Nadhani

2.1 Offer

i.      Offer is a proposal made by one party to another, to enter into an agreement. The person making the offer is known as Offeror or Proposer and the person to whom it is made is called the Offeree or Proposee. When the Offeree accepts the offer, he is called acceptor or Promisee.

ii.    In general terms, a proposal showing the readiness of a person to enter into a contract is called as an 'offer'. It is the final expression of willingness by a person to be bound by the terms of his offer, should the other party (to whom offer is made) chooses to accept it.

iii.   As per section 2(a), offer is defined as "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.”(or offer)

2.1.1 Characteristics of Offer

1.     An Offer must be capable of making legal relationship on acceptance.

Ex. A asks B to attend a friendly dinner. B agrees. This is not a contract as there is no intention of legal relationship.

2.     Offer must be definite, unambiguous and capable of being performed by the offeree.

Ex. A says to B, I offer sell 100 kg of oil. This is not a valid offer if A deals in different kinds of Oil, as the type Oil is not specified.

3.     A mere declaration of intention is not an offer.

Ex. A said to B ‘I like to sell my car’. This is not an offer.

4.     Invitation to do business is not an offer.

Ex. Display of goods in shop window is not an offer on the part of shopkeeper. Seller of the goods is not bound to sell the item displayed.  Similarly, a quotation, or a price list sent to a prospective buyer does not constitute an offer on the part of seller.

5.     Offer must be communicated.

Ex. A offered reward for his lost dog. B, without knowing about the reward, found the dog in the street while coming and returned to A. B cannot claim the reward.

6.     A Tender when accepted is an offer.

Ex. A releases an advertisement of Tender for construction of a Tank. B submitted his Tender Papers. Held, A is bound to accept B’s Tender papers for work award.

7.     Offer cannot contain terms of non compliance as acceptance.

Ex. A wrote to B, ‘I offer to sell 100 Tons of Coal at Rs.12000/Ton. If I do not hear from you within 7 days, I will treat that you have accepted the offer’. B did not reply. A cannot assume B’s silence as acceptance.

8.     A statement of price is not an offer.

9.     An offer must not thrust burden of refusal on the offeree.

10.   Offer cannot contain a term or condition, the non compliance of which would amount to acceptance.

 2.1.2 Classification of Offer

1.     As per Mode :

a.     Express Offer: When the offeror expressly states & communicates the offer.

Ex. ‘I want to sell my Maruti 800 car at Rs.1 lac’, is an express offer.

b.     Implied Offer: When the offer is not expressly communicated, but is implied by the conduct of the offeror.

Ex. A carrier running public bus service to carry passenger for specific fare on fixed route. This is an implied offer.

2.     As per Offeree:

a.     Specific Offer: When an offeror makes the offer to a specific offeree only. A specific offer can be accepted by the specific person only whom the offer is made to, only after the offer comes to his knowledge.

Ex. A says to B, ‘I may sell my Maruti 800 car to you at Rs.1 lac’, is a specific offer.

b.     General Offer: When the offer is made to world at large, without specifying any particular offeree. A general offer can be accepted by any person eligible to accept the offer, only after the person comes to the knowledge of the offer and accepts the conditions of the offer.

Ex. A advertises, ‘I want to sell my Maruti 800 car at Rs.1 lac’, is a general offer.

3.     Cross Offer

When two parties exchange similar offer on ignorance of each other’s offer, it is called a cross offer. In this case, the agreement is not complete because there is no acceptance of each one’s offer, as each is ignorant of other’s offer.

In a cross offer, a contract comes into existence when any of the parties accepts the offer of the other.

4.     Counter Offer

A contract is complete when the offeree accepts the offeror’s offer unconditionally. But when the offeree agrees to accept an offer subject to some conditions, offeree’s conditional acceptance is called a Counter Offer (not an acceptance). In such case, the original offer of the offeror gets invalidated and ceases to exist. The Offeree’s Counter Offer becomes a new offer. If the counter offer is accepted by the original offerer, it becomes a contract in which the counter offeror becomes the offeror and the original offeror becomes the acceptor.

Ex. A posts a letter to B offering him to sell his Maruti car at Rs.1 Lac. B on the same day, before getting A’s letter, posts a letter to A offering him to buy his Maruti car at Rs.1 Lac. A receives B’s letter and accepts the offer. B’s letter does not amount to acceptance of A’s offer (so no contract is created) but A’s acceptance to B’s offer makes the contract complete.

Ex. A offers to B to sell his Maruti car at Rs.1 Lac. B, on receiving the offer, tells A that he agrees to buy if A gets the car painted Red. As soon as B makes the counter offer, A’s offer gets lapsed and is not more valid. No contract can come into existence on A’s offer. Later on A agrees to paint the car Red and sell it to B at the same price as offered earlier. B agrees to this. Now a contract comes into existence on the basis of the new offer of B (to buy painted Car) and acceptance of A (to deliver painted car) to the offer of B. Now, B becomes the offerer and A becomes the Acceptor. 

For more details, refer to Mercantile Law, by Asok Nadhani, BPB Publications, www.bpbonline.com, bpbpublications@gmail.com