2

Offer

formation of contract. Section 2(a) of the Act

Offer or proposal is considered as starting point of
another his willingness to do or to abstain
defines 'Proposal'. It provides that 'when one person signifies to
other to such act or abstínence, he is said
from doing anything, with a view to obtaining the assent of that
promisor (offeror) and person who
tomake a proposal.' The person who makes the proposal is called
accept the proposal is called 'promisee' (offeree).
Expression of willingness
According to the definition when an offer is made one person signifies his willingness to do or to
abstain from doing certain things. It means that the proposal can be for positive or negative act. For
a particular
example, a person may signify his willingness to sell certain thing at acertain price or to render
service for acertain duration etc. The phrase with a view to obtain the assent of other' suggests that the
offer must be made to obtain the assent of another person. It should not be a mere casual inquiry. If
another person is seeking asuggestion or generally making an inquiry for knowing the opinion of another
person then in that case he is not said to make a proposal.
Communication of offer

The word 'signifies' in Section 2(a) means that the proposal must be communicated to other party. To
'signify' means to indicate or declare. Section 3provides for the mode of communication, acceptance and
revocation of a proposal and an acceptance. According to Section 3the communication of proposals, the
acceptance and the revocation of proposals are deemed to be made by any act or omission of the party
proposing, accepting or revoking. By such act or omission the party must intendto communicate such
proposal, acceptance or revocation.Thus, communication can be made by words of mouth, by writing or
by conduct.
Communication of offer when complete
A:cording to Section 4the communictonafthe propasal is complete when it comes to the knowledge
of theperson to whom it is made. Court in alman Shukla v. Gauri Dut, (1913)11 AlI LJ 489 interpreted
 IndanContract Ad
the term'thereto' in Section 2(b) and held that a person cannot claimto have accepted a proposal without
having the knowledge of it. Inthis case defendant's nenhew absconded. The plaintiff, who was servant of
jefendant, was sent to search for the boy. After that the defendant issued handbills announcing reward or
Rs 501 to anyone who finds the boy. Plaintiff came to know about the offer after he searched the boy and
informedthe defendant. Plaintiff claimed the award. It was heldthat since the plaintiff was ignorant of the
ofter, his act of finding the boy did not amount to acceptance The court held that in order to constitute an

contract there must be acceptance of the offer and there cannot be any acceptance unless there is knowledge
of the offer.

Express and Implied promises

Section 9 further lays down that proposal can be express or implied. If it is made in words it is said to
be express and if it is made by conduct i.e. otherwise than by words, it is said to be implied.
Express - In words

Proposal
Implied - Other than words See
He
In Upton-on-Severn RDC v. Powell, (1942) All ER 220 a fire broke out in the defendant's farm.
believed that he was entitled to free service of the Upton Fire Brigade and therefore, he summoned it.
defendant
Later, it turned out that the defendant was not within the free service zone. The court held that the
implied
asked for the services and the services were provided. Here, the service was rendered on the
promise to pay for them. The court held that the test of communication is the objectivity ie. what reasonable
man thinks of the statement of communication. Objectivity requires that the words or conduct by
one
reasonable man.
party must be judged as they appear to a

In HaiiMohd. Ishaqv. Mohd lqbal and Mohd. Ali, (1978) 2SCC493 certain goods were supplied
by the plaintiff on his own account to the detendant. Detendant accepted the goods and partly paidfor
them. The liability topay the balance arose. Supreme Court held that the defendants by their clear conduct
of accepting the goods and paying the part price accepted the ofter and thereby liability to pay the balance
arose. In Ramii Dayawala and Sons (P) Ltd. v. Invest Impor, (1981) 1SCC80acontract was signed
between Indian andYugoslavian party. One of the terms of contract provided forarbitratioH. Soon after
the contract Indian party made an objection to the arbitration clause and wrote to the other party regarding
removal of arbitration clause. The other party made no rCPiy to it but continued with thecontract. It was
held that the arbitration clause stood deleted trom contract by an implied agreement.
 4Compndaas Cade ao wkiel ServnMains Eu°minations : Valxme l
General Offer

General - made to world at large

Otters
Specific made to specific ascertained person
Otiers can be categorized into two categories ie. General and Specific. Specific offer is made to a
sPiâg asetainedperson while general offer is made to the public or world at large. Earlier, in(Wecks v)
Tyhald,)lo05 Noy 11: 74 ER 982 the court was of the view that offers must be made to adefinite person
and hot to the world at large. This was overruled in Carlillv. Carbolic Smoke Ball Company Ltd, (1893)
1QB 256 (CA). The current positionisthatthe ofters can be made tothe world at large but the contract is
made only wIth such person or persons who fulfill the conditions of the proposal and accept it. According
to .fman, ofter need not be made to the ascertained person, but no contract can arise until it has been
accepted by an ascertained person.
In Carlillv. Carbolic Smoke Ball Company Ltd, (1893) 1QB 256 (CA), the Carbolic Smoke Ball
company was manufacturer of a medicine to prevent influenza. Company offered to pay 100 pounds to
anyone who contractsinfluenza after consuming the medicine of the company in prescribed manner.
Company further stated that they had deposited 1000 pounds in the bank in order to show sincerity.
Plaintiff used the smoke ball according to directions but nevertheless contracted the disease. One of the
contentions of the company was that general offers cannot be agood offer and it does not constitute a
valid contract.The court then laid down the following law in case of general offer:
(a) Offer can be made to the world at large and contract is made with the person who comes
forward and accepts the offer.
(b) In such cases, communication of acceptance is not necessary. Performance of conditions is a
sufficient acceptance without communication.
(c) General offer is continuing in nature and it is open for acceptance to any number of persons until
it is retracted.

In Carlill's case it was held by the court that there is no need to communicate tbe acceptance in case
of general offer. If the person has performed the conditions specified in the general offer then it is enough
to constitute the aceptance. This principle has been incorporated in Section 8of lndian Contract Act also.
Section 2(a) of Indian Contract Act defines 'proposal'. The word 'another' in the definition indicates
that the person may be specific person or unascertained person. Further, Section 8provides that performance
of conditions of a proposal or acceptance of any consideration for a reciprocal promise is acceptance of
proposal. There fore, if the person performs the conditions specified in the general offer then it will amount
to acceptance of the offer. Under a general offer the communication or notice of acceptance is not necessary.
The fulfillment of conditions of proposal is deemed as acceptance.
 In Har Indian Contracdt Ad
be an offer Bhajan Lal v. har
boy and the world at Charan Lal, AIR 1925 All 539 Allahabad High Court held that there can
made to
and on
offered a reward of Rslarge.
500
In this case a
boy went missing and father issued handbills to find the
to
seeing the boy he took him anyone who finds the boy. The plaintiff got to
handbill was ageneral offer to police station and informed the know of the offer
forward and accepts the open to the world at large. It was boy's father. The court held that the
held that he was conditions
entitled to reward.
of the
offer.
capable of acceptance by anyone who
Since, the plaintiff has performed the comes
conditions
it
Classification of general offer: General offers can be was
further classified into
Acceptable by many following two categories:
(continuing in nature) Acceptable by only one
In the first case,
the general offer can be
Acceptance by one person does accepted by many persons and it is
not exhaust the offer.
can be
purchased by many persons and if all of themFor example, Carlill's case. In continuing
this case the
in nature.
then all of them will
accept the general offer. Such consume the medicine according to the directions
medicines
persons before being kind of
withdrawn. In the second case, the generaloffers can be accepted by any
offer can be accepted only by number of
Acceptance by one completes the transaction and the one person.
Bhajan Lal's case.In this case, as soon as the object of general offer is fulfilled. For example, Har
object of the offer was fulfilled. person found the boy, the general offer ended
because the
offer, if the information sought inRewnd
Theory of first information: In case of general
is supplied by many persons then the the general offer
theory of first information is applied. Court in
(1838) 4 M&W 16, held that according to this theory Lancaster v. Walsh.
the person who gave the information first will be
entitled to reward. When the correct information is given by the first
informant, the general offer is exhausted.
In Har Bhajan Lal's case theory of first information was applied in India.
Revocation of general offer: In England it is settled that general offers can be revoked and the same
principle is applied in India also. General offcIS Are revoked in the same manner in which they are made
Invitation to Offer
No willwgnes w)
When a party, without expressing his (inal willingnes. proposes certain terms on which he is willing to
negotiate. he is said to make an invitationOote. ninvitation to offer is not same thing as an offer Ofer
must be distinguishedfrom invitation to ofter. An ofter isa final expression of willingness by the oferor to
bebound by bis offer should the other party choose to acceptit. It can be inferred from Section 2(a) of the
expression of willingness
Act which emphasizes that there should be
 ACompendions Guide to Judicial Services Mains Examinations: Volume II

An invitation to offer is merely adeclaration of willingness to enter into the negotiations. Interested
party may make an offer based on the invitation to offer. Sometimes, party makes alluring statement to the
other party in order to attract him towards the commodity. It is astatement made to the other party with a
view to bargain. The purpose is to let other party come forward and make an offer. It is also called
'invitation to treat' under English law.
In Harvey v.Facey, 1893 AC 552 plaintiff telegraphedthe defendants writing 'will you sell us Bumper
Hall pen'Telegraph the lowest cash price'. Defendants replied, also by telegram, lowest price for Bumper
HallPen is 900pounds'. Plaintiff immediately sent the telegram stating 'we agree to buy Bumper Hall Pen
for 900 pounds asked by you'. Defendant refused to sell the Bumper Hall Pen. The court held that mere
quotation of lowest pricedoes not amount to offer. It is at best an invitation to offer.
In McPherson v. Appana, AIR 1951 SC184, the plaintiff offeredto purchase a lodge owned by the
defendant for Rs 6000. Plaintiff wrote asking whether his offer has been accepted and he was prepared to
accept any higher price. Defendant replied 'won't accept less than Rupees Ten Thousand'. Plaintiff accepted
this and brought a suit for specific performance. The court held that mere statement of the lowest price at
which the offeror would sell does not amount to contract. Court relied on Harvey v. Facey and held that
defendant did not make any offer. It was merely an invitation to offer.
Display of goods in self service shop
On the same line of reasoning, the display of goods in a self service shop does not amount to offer.
It only amounts to invitation to offer. In Pharmaceutical Society of Great Britain v. Boots Cash
Chemists Ltd, (1953) 1QB 401 it was held that display of goods in ashop witha price attached is not an
offer even if it is a self service shop.
Auction notice

Auction notice also constitute invitation to offer. Indication of reserve price is not aproposal to sell at
that price. In auction, when the bidder makes the bid then it is called offer. The acceptance of bid by fall of
hammer or by any other means amounts to acceptance. Court in Union of India v. Gangadharan
Mohandas, (1997) 2Cal LJ 221held that(auctioneer is not boundto accept the highest bjd Highest bid is
nothing more than an offer to buy and it requires to be accepted.

Tender( 2
Similarly tender notice also constitutes invitation to offer. When the contractor submits the tenders, it is
called proposal. When the tender is approved it converts into standing offer. Contract arises when an order
is placed on he basis of tender. Aparty inviting tenders is not bound to accept lowest tender. However, if
the party is a Government then it must be guided by some rules which ought to be reasonable. Government
cannot arbitrarily pick and choose the tender which is to be accepted.
432 Samarth Agrawal Books
 Indian Contract Ad

Cross offers
Cross offers arise when
offer. Suchh offers do not two parties make
identical offerstto each other in ignorance to each othe's
271]. For
exanmple, constitute
"^ writes a letteracceptance
of one's offer (Tinn v. Hoffman and Co. (1873) 29 LT
to 'B'
to buy A's car foroffering to sell his car for Rs 2 lacs. At the same time 'B' also
writes aletter to "A'
The requirements of ofering Rs 2
cross offers are (1) parties lac. Letters crossed in post. This constitute across offer.
terms of offer should also be should be same, (2) subject matter should be same and(3)
same.
Revocation of offer
Section 5 provides that a proposal may be
acceptance is complete as against the proposer butrevoked at any time before the
not afterwards. For example, 'Acommunication
of its
sent by post, to sell his house to 'B'. ' proposes, by a letter
'B accepts the proposal by a letter
proposal any time beforeor at the moment when 'B posts
at sent by post. "A' may revoke his
his letter of acceptance, but not
Section 4 provides that communication of afterwards.
Circumstances: revocation proposal is complete in the following
of

As against the person who mnakes it:

When it is put into a course of transmission to the
person to whom it is made, so as to be out of the power of the
proposer.
As against the person to whom it is made: When it comes to his
knowledge.
Mode of Revocation of Proposal: Section 6 provides that a proposal may be
revoked in the
following manner:
Modes of Revocation of Proposal

k
By communication By lapse of time By failure to fulfill By death or -Â
or reasonable time conditions precedent
nohce insanity of proposer

() By thdcommunication of notice)of revocation by the proposer to other party. If the proposal

is renewed before acceptance in some parts and not in its entirety and the letter purports to
supercede the earlie communication then the acceptance can only be of renewed nart
is prescribed by
(2) By lapse of the time prescribed in such proposal tor Its acceptance or if no time
before the
Lante offreasonable time. k is enough it the acceptor has posted the acceptancetheeffective
stinulated time, even if it reaches the ofteror atter stipulated time. In other words
exercised| by a party is to be ascertained from the date
of acceptanceis
date onwhich the option transmission
putin the course of
when the acceptance is
fulfill conditions precedent to acceptance.
of the acceptor to
Bythe failure
(3)
death or insanity of the proposer (ifthe fact of his death or insanity comes to the
(4) By the before acceptance),
acceptor
knowledge of the Samarth Agrawal Books 433