DEFINE OFFER. EXPLAIN THE RULES REGARDING TO VALID OFFER WITH THE HELP OF EXAMPLES.

INTRODUCTION:
Every day we directly or indirectly enter into agreements for the purpose of carrying out various
activities. Agreements can be for social/family or for legal relationships. An agreement entered for
legal purposes which intends to have a legal relationship can be termed a Contract. It is the Contract
which is considered to be legally enforceable in the eyes of the Law as per section 2(h) of the Indian
Contract Act, 1872. Every Contract to be valid has to satisfy certain essential elements as laid down
under the Contract Act, 1872.
MEANING: An Offer is an intimation by words or by the conduct of a willingness to enter into a
legally binding Contract.
DEFINITION: Section 2(a) of the Indian Contract Act, 1872 defines the term "Proposal" as follows:
“When one person signifies to another his willingness to do or to abstain from doing something with
a view to obtaining the assent of the other to such an act or abstinence, he is said to make a
proposal”. The person making the 'proposal' or 'offer' is called the 'promisor' or 'offeror' and the
person to whom the offer is made is called the 'offeree'.
The party (can also be called a company) which makes the offer is referred to as “The Offeror” and
the party to whom such offer is made is known as “The Offeree”.

ESSENTIALS OF VALID OFFER:

1. It may be express or implied:
An offer may be made either by words or by conduct. An offer, which is made by words spoken or
written, is called an express offer. The offer, which is made by the conduct of a person, is called an
implied offer.
Example:
a. A says to B that he will sell his motorcycle to him for RS. 40,000. It is an express offer.
b. A railway coolie carries the luggage of B without being asked to do so B allows him to do
so. It is an implied offer.

2. It must create legal relations / Intention of the parties:

The offer must be made in order to create legal relations otherwise, there will be no agreement. If an
offer does give rise to legal obligations between the parties it is not a valid offer in the eye of law.
Example:
a. A invites B to dinner, and B accepts the invitation. It does not create any legal relations, so
there is no agreement.
 b. A offers to sell his watch to B for Rs.200 and B agrees. There is an agreement because here
the parties intend to create legal relations.
Balfour v. Balfour – The husband (respondent) was a government employee and had to leave the
country for a vacation along with his wife but due to health issues she was unable to accompany her
and the husband had to leave alone. The husband however promised to send 30 pounds per month to
his wife for her expenditure. The husband, having failed to deliver his promise, was sued by his wife
for the same. The court held that there existed no intention to create a legal contract on the husband’s
side when he made that offer, it was a mere social promise, therefore the husband cannot be held
liable.
Jones v. Padavatton - The suit began when Mrs Ruby Padavatton filed a suit against her mother
alleging that she had failed to dispose of her legal obligation which was to provide Mrs Ruby with a
house to live in if she completes her Law study in England. Mrs Violet Jones (the mother/
respondent) took the defence of ‘no legal intention’ and cited Balfour v Balfour to further her
argument. She argues that there existed no intention from her side to create a legal contract with her
daughter but was rather an arrangement between the family members, a mere domestic promise.
However, Mrs ruby was adamant to declare it a legal obligation and therefore demanded the
possession of a house. The court upheld Mrs. Jones’s contention and emancipated her from any
liability. Court further added that neither the daughter nor the mother had anticipated the legal issues
or legal relations before also.

3. It must be definite & clear:

An offer must be definite and clear, if the terms of an offer are not definite and clear, it cannot be
called a valid offer. If such offer is accepted it cannot create a binding contract.
Example: A has two motorcycles. He offers B to sell one motorcycle for Rs.27,000. It is not a valid
offer because it is not clear that which motor cycle A wanted to sell.

4. It is different from invitation to offer:

An offer is different from an invitation to offer. It is also called invitation to treat or invitation to
receive offer. An invitation to offer looks like offer but legally it is not offer.
In the case of an invitation to offer, the person sending out the invitation does not make an offer but
only invites the other party to make an offer. His object is to inform that he is willing to deal with
anybody who after getting such information is willing to open negotiations with him. Such invitations
for offers are not offers according to law and so cannot become agreement by acceptance.
Example:
a. Quotations, Catalogues of prices, display of goods with prices issue of prospectus by
companies are examples of invitation to offer.
b. Display of goods in an auction sale is not an offer rather it is an invitation to offer. The offer
will come from the buyer in the form of bids.
 5. It may be specific or general:
When an offer is made to a specified person or group of persons, it is called specific offer. Such an
offer can be accepted only by the person or persons to whom it is made. A general offer, on the other
hand, is one, which is made to public in general and it may be accepted by any person who fulfils the
conditions mentioned in it. Both specified and general offers are valid.
Example:
a. M makes an offer to N to sell his bicycle for Rs.800, it is a specific offer. In this case, only N
can accept it.
b. A announces in a newspaper a reward of Rs.1,000 for anyone who will return his lost radio. It
is general offer.

Carlill v. Carbolic Smoke Ball Co Case:

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definite offer as the company has stated that while using their product if they are infected with any
disease, then they can claim 100 pounds.

6. It must be communicated to the offeree:

An offer is effective only when it is communicated to the offeree. If an offer is not communicated to
the offeree it cannot be accepted. Thus an offer, which is not communicated, is not a valid offer. It
applies to both specific and general offers.
Section 4 [dealing with the completion of a proposal, acceptance and revocation] – enumerates that
the communication of the offer is completed when it has come to the knowledge of the person to
whom it was supposed to have been made to. When the offeree (specific offer) or any member of the
public (general offer) becomes aware/knows of the offer, the communication of the offer is said to be
complete. When two people are talking, face-to-face or via telephone, etc., the communication will
be complete as soon as the offer is made.
Example: A without knowing that a reward has been offered for the arrest of a particular criminal,
catches the criminal and informs the police. A cannot recover the reward as he was not aware of it.
Lalman Shukla v. Gauri Dutt - The defendant’s nephew had run away from his house. Defendant
sent out a search party to look for the child. Defendant’s house servant also went to the lookout.
Meanwhile, the defendant announced a reward to anyone who brings back his nephew. This
announcement was made after the departure of the servant therefore, the servant had absolutely no
knowledge about this offer. However, the servant was able to track the nephew and bring him back. It
was only after coming back that he got aware of this reward. When he demanded his compensation,
the defendant refused.
The court held - because the plaintiff did not know of the reward offer, his act of finding the boy who
was lost did not mean he accepted the offer as he only came to know after finding the boy. Thus, he
was not entitled to claim the reward. An offer can be accepted only after the same has come to the
knowledge of the offeree, as per contract law. It means that the offer has to be proposed by the offeror
so that there is acceptance by the other party, the offeree. This case law shows how communication of
offer is essential.

7. It should not contain negative condition:

An offer should not contain a condition the non-compliance of which may be assumed as acceptance.
An offeror cannot say that if acceptance is not communicated up to a certain date, the offer would be
presumed to have been accepted. If the offeree does not reply, there is no contract, because no
obligation to reply can be imposed on him, on the ground of justice no agreement because such
condition cannot be imposed on the offeree. It is only a one sided offer.
Example: A wrote to B offering to sell his book for Rs.500 adding that if he didn’t reply within 5
days, the offeree would be presumed to have been accepted. There is no agreement b/c such condition
can’t be imposed on the offeree. It is only a one sided offer.

8. It may be subject to any terms & conditions / Manner prescribed to be followed:

An offeror may attach any terms and conditions to the offer he makes. He may even prescribe the
mode of acceptance. There is no contract, unless all the terms of the offer are accepted in the mode
prescribed by the offeror. It must be noted that if the offeror asks for sending the acceptance by
telegram and the offeree sends the acceptance by letter, and the offeror may reject such acceptance.
Example: A asks B to send the reply of his offer by telegram but B sends reply by letter, A may reject
such acceptance because it is opposed to the prescribed mode of communication.

9. It must not contain cross offers:

When two parties make similar offers to each other, in ignorance of each other’s such offers are
cross-offers. The acceptance of cross-offers does not result in complete agreement.
Example: On 23rd December 2007, A wrote B to sell him 100 ton of iron at Rs.10,000 per ton. On
the same day, B wrote to A to buy 100 tons of iron at Rs.10,000 per ton. There is no contract between
A & B because the offers were similar and made in ignorance of the other and so there is no
acceptance of each other’s offer.

CONCLUSION:
Therefore, Offer is very important element for starting a Contract. Offer should be clearly
differentiated between Invitation to offer. Offer is legal binding one whereas invitation to offer is
merely an invitation. Quotations, catalogues of prices or display of goods with prices marked thereon
do not constitute an offer. They are instead an invitation for offer and hence if a customer asks for
goods or makes an offer, the shopkeeper is free to accept the offer or not.