OFFER - Indian Contract Act 1872

Offer  - Sec.2(a) – a proposal by one party to another to enter into a legally binding agreement with him – willingness to do or to abstain from doing something – intention of obtaining the assent of other.  

Types of Offer

1. Express Offer – spoken words or written

2. Implied Offer– by conduct of the parties or circumstances of the case.

E.g. Wilkie Vs. London Passenger Transport Board – transport company runs bus service – fare charged – implied offer by the transport company - acceptance complete when passenger boards the bus.

3. Cross offer:  When two parties when identical offers, in ignorance of each other’s offers – one cannot be construed as offer or the other as acceptance – no valid contract.

4. Counter Offer – when acceptance with variation of terms offered by offeror – not valid acceptance – no contract  - earlier offer cannot be revived.

Hyde Vs. Wrench  - W offered to sell farm at £1000 – H rejected it – instead offered to buy it for £950 – turned down by W – subsequently H agreed to pay £1000 – Held, H gave counter offer, rejecting the previous offer – earlier offer cannot be revived by giving acceptance  to it -  no contract.

Offer may be made to –

(i) Definite person or class of persons – specific offer – may be accepted by only the person(s) to whom the offer is made.

(ii) The world at large – general offer – may be accepted by anyone having notice of the offer.

Essentials of offer :

1.      Must be capable of being accepted and constitute legal relationship – must be such as would constitute a valid contract when it is accepted - a social invitation is not offer, as no intention of legal relationship.

2.      Terms must be definite, unambiguous and certain: must not be vague and indefinite.  Gould Vs. Gould -  husband promises to pay maintenance to wife on separation ‘so long as I can manage it’ – on separation husband and wife could enter into legal relationship – However terms of agreement were vague and discretionary – Held, no offer and hence no contract.

But where provision available for ascertaining the meaning of the vague term, offer is valid.   Foley Vs. Classique Coaches Ltd. – F sold land to C – agreement that C should buy petrol from F at agreed price – disputes to be referred to arbitration – No price agreed upon – C refused to buy – Held, Clear Avenue for determining reasonable price by arbitration – valid contract. 

3.      Different from declaration of intention or invitation to offer:  Mere declaration of intention or announcement or advertisement does not constitute offer – E.g. advertisement of auction sale is not an offer.

Display of goods in showcase, quotations, catalogues, advertisements are invitation to offer and not offer itself – the potential customers to make the offer which will then be accepted - the seller may or may not accept the offer.

Pharmaceutical Society of Great Britain Vs. Boots Cash Chemists -  goods sold under ‘self service’ system – customer chooses the desired goods – makes payment to cashier – display of goods only an invitation to offer – actual offer made by the customer when he offers to make the payment – acceptance by cashier constitutes a contract.

Newspaper advertisement is not offers – an exception is a general offer of reward to public – anyone can accept the general offer by fulfilling the condition - constitutes a contract.  E.g. an advertisement to pay a reward for finding missing son – general offer to any one performs the required act - acceptor must have knowledge of the offer - constitutes valid contract.

4.      Offer must be communicated: Unless communicated, no acceptance – mere act of acceptance without knowledge of the offer does not constitute acceptance. 

Lalman Vs. Gauri Dutt  - G sends servant L to trace lost nephew – later announces reward to finder – L finds the nephew – Held, ignorant of offer – hence, no acceptance - L not entitled to reward.

5.      Intention to obtain the assent: Offer must be made with intention to obtain assent of other party - must not be declaration of intention to make an offer.

6.      Non-compliance of condition not deemed to be acceptance  : Must not contain a term the non-compliance of which may be assumed to be acceptance –

E.g. A writes to B offering his horse for Rs.500, adding “if you do not reply I shall assume you have accepted the offer” – in case of B’s silence, no specific acceptance – no contract.

7.      Declaration of price not an offer:  mere statement of price is not an offer to sell.

 Harvey Vs. Facey - H sends telegram to F asking “Will you sell us Bumper Hall Pen? Telegraph lowest cash price.” – F replies “Lowest price for Bumper Hall Pen £ 900.”  -  H telegraphs to F “We agree to buy Bumper Hall Pen for the sum of £ 900 asked by you.” Held, F only quoted the price and did not answer to first question of H’s first telegram – hence no offer by F to sell. 

8.      Special terms to contract must be communicated in offer: must be communicated at the time of proposal – cannot be inserted in contract later on unilaterally – must be decipherable (understandable) in reasonable manner.

Rajpur Transport Company Vs. Ghanshyam  - R accepted goods for transportation without any condition – later issued circular limiting its liability for damage or loss in transit – Held, special condition communicated after the contract has been entered into – client not bound by them. 

When the words “For conditions see back” printed on a receipt – valid – immaterial whether person reads them or not or is even unable to read.

Parker Vs. S.E. Railway Co. -  P deposited baggage in cloak room – ticket issued – printed on face “See back” – Condition printed on back limited the liability in case of loss – baggage lost and P filed claim – Held, P bound by condition on the back of the ticket even if not read by him.

If no words on front of a receipt to draw attention regarding conditions printed on its reverse – not binding.   Even conditions printed on voucher or receipt for payment (which do not normally contain the conditions of contract) are not binding. 

Chapleton Vs. Barry Urban District Council – C hired deck chair from Municipal Council – issued ticket containing condition “The Council will not be liable for any accident or damage arising from hire of chair” – C did not read it – chair broke and C injured – Held, Council liable for damages as the ticket issued is a mere receipt and different from a railway ticket which contains the terms upon which a railway co. agrees to carry passengers.

Exemptions in Offer

Ordinarily, acceptance of an offer implies unconditional and absolute acceptance of all the terms and conditions contained in the offer.  However, this is subject to following exceptions –

1.There is misrepresentation or fraud.

2.When the notice of terms is insufficient.

3.Where there is nothing to indicate that there are additional terms to the offer.