According to Section 2(a) of the Indian Contract Act, 1872

“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”.

The person making the proposal or offer is called the ‘promisor’ or ‘offeror’
The person to whom the offer is made is called the ‘offeree’ and the person accepting the
offer is called the ‘promise’ or ‘acceptor’.

For a valid offer, the party making it must express his willingness ‘to do’ or ‘not to do’ something

Classification of offer:

 General offer:

It is an offer made to public at large and hence anyone can accept and do the desired act.

Section 8, anyone performing the conditions of the offer can be considered to have accepted the offer.

Until the general offer is withdrawn, it can be accepted by anyone at any time as it is a continuing offer.

Carbolic Smoke Ball Co. published an advertisement in newspapers. They promised £100 reward to
anyone who got influenza after using the smoke ball. Condition was to use the smoke ball strictly
as per printed directions. Mrs. Carlill used the smoke ball properly but still suffered from influenza.

Court held the advertisement was a valid offer to the public. By using the smoke ball, Mrs. Carlill
had accepted the offer. Therefore, the company was bound to pay £100 reward.

 Special/specific offer:

When the offer is made to a specific or an ascertained person, it is known as a specific offer.
Specific offer can be accepted only by that specified person to whom the offer has been made.

 Cross offer:
When two parties exchange identical offers in ignorance at the time of each other’s
 offer, the offers are called cross offers.
There is no binding contract in such a case because offer made by a person cannot be
construed as acceptance of the another’s offer.

 Counter offer/ conditional acceptance/ qualified acceptance

When the offeree offers to qualified acceptance of the offer subject to modifications
and variations in the terms of original offer, he is said to have made a counter
offer.
Counter-offer amounts to rejection of the original offer. It is also called as
Conditional Acceptance.

‘A’ offers to sell his plot to ‘B’ for `10 lakhs. ’B’ agrees to buy it for ` 8 lakhs. It amounts to
counter offer. It will result in the termination of the offer of ’A’. If later on ‘B’ agrees to buy
the plot for ` 10 lakhs, ’A’ may refuse.

 Standing or continuing or open offer:

An offer which is allowed to remain open for acceptance over a period of time is known
as standing or continuing or open offer. Tenders that are invited for supply of goods
is a kind of standing offer.

ESSENTIALS OF A VALID OFFER -

It must be capable of creating legal relations:

If the offer does not intend to give rise to legal consequences and creating legal
relations, it is not considered as a valid offer in the eye of law.
A social invitation, even if it is accepted, does not create legal relations because it is
not so intended.

It must be certain, definite and not vague:

If the terms of an offer are vague or indefinite, its acceptance cannot create any
contractual relationship.

It must be communicated to the offeree:

 An offer, to be complete, must be communicated to the person to whom it is made, otherwise there
can be no acceptance of it. Unless an offer is communicated, there can be no acceptance by it.

G (Gauridutt) sent his servant L (Lalman) to trace his missing nephew.

He then announced that anybody who traced his nephew would be
entitled to a certain reward. L traced the boy in ignorance of this
announcement. Subsequently when he came to know of the reward, he
claimed it. Held, he was not entitled to the reward, as he did not know
the offer.

It must be made with a view to obtaining the assent of the other party:

Offer must be made with a view to obtaining the assent of the other party
addressed and not merely with a view to disclosing the intention of making
an offer.

It may be conditional:

An offer can be made subject to any terms and conditions by the offeror.

Offeror may ask for payment by RTGS, NEFT etc. The offeree will have to accept all the
terms of the offer otherwise the contract will be treated as invalid.

Offer should not contain a term the non-compliance of which would amount to acceptance:

Thus, one cannot say that if acceptance is not communicated by a certain time the offer
would be considered as accepted.

A proposes B to purchase his android mobile for `5000 and if no reply by him in a week,
it would be assumed that B had accepted the proposal. This would not result into contract.

The offer may be either specific or general:

 Any offer can be made to either public at large or to the any specific person.
(Already explained in the heading-types of the offer)

The offer may be express or implied:

An offer may be made either by words or by conduct.

A boy starts cleaning the car as it stops on the traffic signal without being asked to do so,
in such circumstances any reasonable man could guess that he expects to be paid for this,
here boy makes an implied offer.

Basis Offer Invitation to offer

Meaning Section 2(a) of the Act, an offer is Where a party without expressing his final
the final expression of willingness willingness proposes certain terms on which he is
by the offeror to be bound by the willing to negotiate he does not make an offer,
offer should the other party but only invites the other party to make an offer
chooses to accept it. on those terms.
Intention If a person who makes the If a person has the intention of negotiating on
of the statement has the intention to be terms it is called invitation to offer.
parties bound by it as soon as the other
accepts, he is making an offer.
Sequence An offer cannot be an act An invitation to offer is always an act precedent to
precedent to invitation to offer. offer.

EXAMPLES OF INVITATION TO OFFER:

 Display of goods with price tag in shops.

 Quoting of price in response to query related to price.

 Advertisement of auction sale

 Prospectus issued by company

 Menu cards, rate cards.

In terms of Section 2(b) of the Act, ‘the term acceptance’ is defined as follows:
 “When the person to whom the proposal is made signifies his assent thereto,
proposal is said to be accepted. The proposal, when accepted, becomes a promise.
 Sir William Anson
“Acceptance is to offer what a lighted match is to a train of gun powder”

Legal rules regarding valid acceptance:

 Mere silence is not acceptance

 Time

 Must be communicted

 Conduct/implied acceptance

 Absolute and unqualified

 Prescribed mode

 Accepted by person to whom offer is made

Mere silence is not acceptance:

The acceptance of an offer cannot be implied from the silence of the offeree or his failure to
answer, unless the offeree has in any previous conduct indicated that his silence is the
evidence of acceptance.

’A’ subscribed for the weekly magazine for one year. Even after expiry of his subscription,
the magazine company continued to send him magazine for five years. And also ‘A’
continued to use the magazine but denied to pay the bills sent to him. ’A’ would be liable to
pay as his continued use of the magazine was his acceptance of the offer.

Time:
time taken to accept an offer

Specified in offer Not specified in offer

Acceptance is Acceptance is Acceptance is Acceptance is not

made within not made given within given within
time within time reasonable time reasonable time

Offer accepted Offer will lapse Offer accepted Offer will lapse