Offer

By Asok Nadhani

2.1.5 Invitation to Offer

  i.    In case of General offer, sometimes an invitation is made to public at large to make offer. Such an offer to invite offer is called an invitation to offer and is not an offer itself.

ii.    When the invitee to offer responds to the invitation of the inviter, it becomes an offer by the invitee. The inviter to offer is not bound to accept the offer.

iii.    An invitation to offer is different from an offer. An offer is the last expression of willingness by the offeror to be bound by his offer when the other party decided to accept it. When the party fails to express his last willingness, but only proposes certain terms on which he is ready to negotiate, he does not make an offer, but invites. Only the other party can make the offer on those terms. Thus there is difference between the offer and invitation to offer.

iv.    Some examples of invitation to offer:

a.     Display of goods by shopkeeper in display window or on selves.

Ex. A picks up the goods from a self-service shop and goes to the cash counter to pay for the Item. The salesman, coming to know that it is the last piece on the shelf, refuses to sell. Held, the shop is not bound to sell the Item. A’s act amounts to an offer to buy the item at the tag price. It is open to the shopkeeper to sell or not to sell the Items on the shelf.

b.    Price chart displayed in a Hotel front office or Menu Card in a Restaurant.

c.     Brochures showing the products specifications and prices.

d.    Issue of prospectus inviting public to subscribe.

e.     Employment advertisement specifying qualifications and pay scales.

f.      An advertisement for concert or an auction.

g.    Special Discount offers.

  

2.1.5.1 Tender

Tender is an invitation to offer. A tender may be:

a.     Specific: An offer to supply a definite quantity of goods and services. The Offeree may accept any tender (generally the lowest one), which results in a contract.

Ex. X Ltd. Company invites tenders for the supply of 110 bottles of oil. A Ltd., B Ltd. and C Ltd. company submit there tenders. C ltd. company’s tender is accepted. The contract is formed between X Ltd. and C Ltd. as soon as the tender is accepted.

b.    Standing: Here the offer is made to supply goods periodically or as per requirements of the Offeree. A separate acceptance is not made each time for supply of goods.

2.1.6 Distinction between an Offer and Invitation to Offer

Offer	Invitation to Offer
1. In an Offer, the person gives a proposal     showing the readiness to enter into an     contract.	1. In Invitation to Offer, the person invites the public    at large to make an offer. Invitation to Offer is a    pre-stage to Offer.
2. An offer is made to enter into a contract     through acceptance of the offer.	2. Invitation to Offer is made to receive offers.
3. The offer, if acted upon (i.e. on acceptance)     becomes a contract.	3. An invitation to offer, if acted upon, becomes an    offer.
4.  Offer is made to individual either in general or     in specific.	4.  Invitation of offer is made in general (e.g. public notice).
5.  In case of offer, there are two or more parties.	5.  In case of invitation of offer, there is only one party.

2.1.7 Communication of Offer (sec.4)

i.      In legal terms, an offer comes into existence only when its communication is complete, i.e it reaches the person to whom it is made.

ii.    Until the latter person has knowledge of the proposal made to him, he cannot accept such proposal since the offer is not complete.

iii.   Completion of communication of offer:

a.     On the part of the offerer: The communication of Offer is complete when the process of communication starts beyond his control (e.g. when he posts a letter of offer).

Ex. A posts a letter containing an offer to B on 1^st Nov, which reaches B on 3^rd Nov. On part of A (the offerer), the communication is complete on 1^st Nov, when the letter is posted. On part of B (the offeree), the communication is complete when the letter reaches him (i.e on 3^rd Nov).

b.    On the part of the offeree: The communication of Offer is complete when he receives the communication of offer (e.g. when he receives a letter of offer).

Ex. A posts a letter containing an offer to B on 1^st Nov, which reaches B on 3^rd Nov. On part of A (the offerer), the communication is complete on 1^st Nov, when the letter is posted. On part of B (the offeree), the communication is complete when the letter reaches him (i.e on 3^rd Nov).

c.     Communication of general offer is not required. A general offer may be accepted by any person, who has knowledge of the offer; and fulfils the terms and conditions of the offer.

2.1.8 Revocation of Offer (sec. 6)

i.      Revocation means ‘taking back’, ‘withdrawal’, etc. An offer may be revoked by the offeror at any time before acceptance, but not after that.

Ex. A sends an offer to B by post on 1^st Nov. B writes a confirmatory letter on 5^th. A may revoke the offer before 5^th.

ii.    An offer can be revoked by the offeror anytime. Where the offeror informs the offeree that the offer shall remain open for a certain period, the revocation of the offer shall be valid, even before the expiry of such period. However, revocation is effective only if it is made before the offer is accepted. In case of contracts by post, an offer can be revoked at anytime before the communication of acceptance is complete against the offeror, i.e., before the letter of acceptance is duly posted by the offeree.

Ex. A sends a letter to B proposing to sell his house. B sends his acceptance by post. A can revoke the offer at any time before or at the moment when B posts his letter of acceptance, but not afterwards.

iii.   Revocation of offer should be express and notice of revocation must be given through same channel by which original offer was made.

iv.   A communication of revocation is complete:

a.     As against offeror– When the communication of revocation is put in course of transmission, as to be out of his control.

b.    As against offeree – When the communication of revocation comes to the knowledge of offeree. On revocation, the offer ceases to exist and cannot be accepted any more.

2.1.8.1 When an offer can not be revoked

An offer is said to have lapsed (ceases to exist) and hence cannot be removed in the following cases:

i.      Lapse of time

a.     An offer does not remain in existence for an indefinite period. It remains in existence for the period specified in the offer or for a reasonable period, if no period is specified in the offer.

b.    Thus, an offer must be accepted within the time specified in the offer. After expiry of the specified time, the offer lapses. However, if no time is specified in the offer, the acceptance must be given within reasonable time. After expiry of the reasonable time, the offer lapses.

ii.     Non-fulfilment of condition precedent

The Offerer may impose some terms and conditions in the offer. If an offer requires fulfilment of some condition before the offer can be accepted, the offer shall lapse if such condition is not fulfilled.

iii.    When a Counter Offer is made, the original offer gets lapsed.

2.1.9 Cessation of Offer

An offer comes to an end in the following cases:

      i.    When the offeree rejects the offer. The offeree may expressly reject the offer or the rejection may be implied from the act or conduct. Once the offer is rejected, the offer ceases to exist and cannot be accepted later on.

    ii.    By communicating the revocation before the offer reaches the offeree.

   iii.    By lapse of specified time. If the offer is not accepted within the time specified by the offerer. If no time is specified, within reasonable time.

   iv.    By non fulfilment of a condition precedent to acceptance, or the offer is not accepted in the prescribed or in proper manner.

     v.    When a counter offer is made, the original offer lapses.

   vi.    By death or insanity of offerer. However, if the acceptor accepts the offer without the knowledge of death or insanity of the offerer, the acceptance is valid.

  vii.    Subsequent illegality or destruction of the subject matter. If, after making of an offer, the subject matter of the offer is destroyed or the performance becomes impossible or unlawful, the offer lapses.

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