Welcome to

Offer and Acceptance

(Contract Act, 1872)
Contracts play an important role in our everyday life
ranging from insurance policies to employment
contracts.
In fact, we enter into contracts even without thinking
for example while buying a movie ticket or
downloading an app.
Contracts are oral or written agreements between
two or more parties. Parties entering into a contract
might include individual people, companies, non-
profits or government agencies.
The whole process of entering into a contract starts
with an offer by one party, an acceptance by another
party, and an exchange of consideration (something of
value).
Let us take a look at the definition of an offer and the
essentials of a valid offer.
Definition of an Offer
As per Sec 2(a) of the Contract Act –
“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 who makes an offer is called “Offerer” or “
Promiser” and the person to whom the offer is made is
called the “Offeree” or “Promisee”.
Illustration-

Mr. A says to Mr. B, “Will you purchase my car for

Tk.10,00,000?” In this case, Mr. A is making an offer to
Mr. B.
Here A is the offeror and B is the offeree.
Observing the above definition we find, a proposal
involves the following essential elements:
It must be made by one person to another person. In
other words, there cannot be a proposal by a person
to himself.
It must be an expression of readiness or willingness to
do (i.e. a positive act) or to abstain from doing
something (i.e. a negative act)
It must be made with a view to obtain the consent of
that other person to proposed act or abstinence.
How An Offer Is Made

An offer may be either express or implied.

An express offer is one which is made by words either

spoken or written such as letter, telegram, telex, fax
messages, e-mail or through internet.
An implied offer, on the other hand, is one that may
be gathered from the conduct of the party or the
circumstances of the case.
 To Whom an Offer is Made?
According to law, an offer can be accepted only by the
person to whom it is made. Hence, we must know how to
identify the person to whom the offer has been made.
From this point of view, an offer may be 'specific' or
'general'.
When an offer is made to a definite person or particular
group of persons, it is known as specific offer and it can be
accepted only by that definite person or that particular
group of persons to whom it has been made.
For example, A offered to buy certain goods from B at a
certain price. This offer is made to a definite person B.
Therefore, if goods are supplied by P, it will not give rise
to a valid contract (Boultan v. Jones).
On the other hand, if an offer which is not made to a
definite person, but to the world at large or public in
general, it is called a general offer.
A general offer can be accepted by any person by
fulfilling the terms of the offer. Offers of reward made by
way of advertisement for finding lost articles is the most
appropriate example of a general offer.
For example, B issues a public advertisement to the effect that
he would pay Tk. 1,000 to anyone who brings back his missing
dog. This is a general offer and any member of the public can
accept the said offer by finding the lost dog.
Similarly, a company advertised that it would pay $ 100 to
anyone who contacts influenza after using the smoke balls of the
company for a certain period according to the printed directions.
Mrs. Carlill used the smoke balls according to the directions of
the company but subsequently she contacted influenza.
She filed a suit for the reward. It was held that she would
recover the reward as she had accepted the offer by complying
with the terms of the offer (Carlill v. Carbolic Smoke Ball
Company).
 Rules Relating to Valid Offers
1. Offer must be communicated to the offeree: The
offer is completed only when it has been
communicated to the offeree.
 Until the offer is communicated, it cannot be
accepted. Thus, an offer accepted without its
knowledge, does not confer any legal rights on the
acceptor.
 Offer must be made with a view to obtaining the
assent of the other party. An offer must be
distinguished from mere expression of intention.
[Harris v. Nickerson (1873)]
In Lalman Shukla v. Gauri Dutt (1913), A’s nephew has
absconded from his home. He sent his servants to trace
his missing nephew.
When the servant had left, A afterwards announced that
anybody who discovered the missing boy would be given
the reward of Rs.500. The servant discovered the missing
boy without knowing about the reward.
When the servant came to know about the reward, he
brought an action against A to recover the same. But his
action failed.
It was held that the servant was not entitled to the
reward because he did not know about the offer when he
discovered the missing boy.
2. Special terms of the offer must also be communicated: If
special terms of the offer are not communicated, the
offeree will not be bound by those terms. This question of
special terms generally arises in case of standard form of
contracts.
3. The offer must be certain, definite and unambiguous: No
contract can come into existence if the terms of the offer
are vague or loose and indefinite. Both the parties should
be clear about the contract, its terms and the legal
consequences that may follow in a particular contract.
Sec.29 of Contract Act provides “a contract the terms of
which is not certain and is not capable of being made
certain is void for uncertainty”.
Example: A offered to sell to B. ‘a hundred tons of oil’. The offer
is uncertain as there is nothing to show what kind of oil is
intended to be sold.
4.The offer must be capable of creating legal relation: The offeror
must intend the creation of legal relations. He must intend that
if his offer is accepted a legally binding agreement shall result.
• A social, moral or domestic agreement without any intention to
create legal relation is not a contract because the presumption
is that parties do not intend legal consequences to follow from
breach of contract.
• For example, A invited B to a dinner and B accepted the
invitation. It is a mere social invitation. And A will not be liable if
he fails to provide dinner to B.
5. Offer may be express and implied: The offer may be
express or implied.
An offer which is expressed by words, written or
spoken/oral, is called an express offer.
An offer which is expressed otherwise than in words
i.e. by conduct, is called an implied offer [Section 9].
6. An offer may be conditional: An offer can be made
subject to a condition. In that case, the offer can be
accepted only subject to that condition. A conditional
offer lapses when the condition is not accepted.
7. Communication of offer must be complete and
acceptance of such original offer can only make a
contract i.e. a counter offer if made in place of
acceptance will result in the lapse of the original offer:
Example: A offered to sell his pen to B for Tk. 100. B replied, “I
am ready to pay Tk. 90. On A’s refusal to sell at this price, B
agreed to pay Tk. 100. Here, there was not any contract as
the acceptance to buy it for Tk. 90 was a counter offer, i.e.
rejection of the original offer of A. Subsequent acceptance
to pay Tk. 100 is a fresh offer from B to which A was not
bound to give his acceptance. This is called a counter offer
and a counter offer amounts to rejection or lapse of the
original offer after which original offer cannot be accepted.
8. Cross offer do not conclude a contract: Where two
parties make identical offers to each other, in ignorance
of each others offer, the offers are known as cross-offers
and neither of the two can be called an acceptance of
the other and, therefore, there is no contract.
9. An offer must not thrust or put the burden of
acceptance on the offeree: Offer should not contain a
term the non-compliance of which would amount to
acceptance. One cannot say while making the offer that
if the offer is not accepted before a certain date, it will
be presumed to have been accepted. Moreover,
acceptance cannot be presumed from silence.
Acceptance is valid only if it is communicated to the
offeror.
10. An invitation to offer is not an offer: An offer must be
distinguished from an invitation to offer. In the case of
an “invitation to offer” the aim is merely to circulate
information of readiness to negotiate business with
anybody who on such information comes to the person
sending it. Such invitations are not offer in the eyes of
law and do not become promises on acceptance.
 Example: Menu card of restaurants, price-tags attached
with goods displayed in any showroom or supermarket is
an invitation to proposal/offer and not an offer in itself.
If the salesman or the cashier does not accept the price,
the interested buyer cannot compel him to sell, if he
wants to buy it, he must make a proposal.
Similarly, job or tender advertisement inviting
applications for a job or tenders is an invitation to an
offer. An advertisement for auction sale is merely an
invitation to make an offer and not an offer for sale.
Therefore, an advertisement of an auction can be
withdrawn without any notice. The persons going to
the auction cannot claim for loss of time and expenses
if the advertisement for auction is withdrawn.
 Kinds of Offer/Proposal
Express offer– When the offeror is expressly
communicated by the offeror by words, spoken or
written, the offer is said to be an express offer.
Implied offer– When the offer is not communicated
expressly rather an offer may be implied from the
conduct of the parties or the circumstances of the case,
it is said to be an implied offer.
Specific offer– It means an offer made to a particular
person or to a group of persons. A specific offer can be
accepted only by that person to whom it is made and
communication of acceptance is necessary in case of
specific offer.
General offer– It means on offer which is made to the
public in general. General offer can be accepted by
anyone. If offeree fulfills the term and condition which is
given in the offer then the offer is said to be accepted.
Communication of acceptance is not necessary is case of
general offer. Mere compliance with the terms of the
offer gives rise to a contract.
Cross offer– When two parties exchange identical offers
in ignorance at the time of each other’s offer, the offer’s
are called cross offer. A contract comes into existence
when any of the parties, accept the cross offer made by
the other party.
Counter offer– When the offeree gives a qualified or
conditional acceptance of the offer i.e. an acceptance
subject to modifications and variations in the terms of
original offer, he is said to make a counter offer.
In other words, an offer made by the offeree in return
of the original offer is called as a counter offer. A
counter offer amounts to rejection of the original offer.
Standing, open and continuous offer– An offer which
is allowed to remain open for acceptance over a
period of time is known as standing, open or
continuous offer.
Tender for supply of goods is a kind of standing offer.
For example, when we ask the newspaper vendor to
supply the newspaper daily, in such case, we do not
repeat our offer daily and the newspaper vendor
supplies the newspaper to us daily. The offers of such
types are called standing offers.
Standard form of contract– In commercial transactions,
usually parties do not intent to negotiate the terms of
contract at every occasion.
And therefore, the institutions such as banks, insurance
policy departments etc. design a standard document to
be signed with every person who intends to avail
services from such institutions.
Such documents are called Standard form of contracts.
 Revocation of Offer
An offer may come to an end in any of the following
ways stated in Section 6 of the Contract Act:
By communication of notice of revocation: An offer
may come to an end by communication of notice of
revocation by the offeror.
It may be noted that an offer can be revoked only
before its acceptance is complete for the offeror. In other
words, an offeror can revoke his offer at any time before
he becomes bound by it.
Thus, the communication of revocation of offer should
reach the offeree before the acceptance is
communicated.
By lapse of time: An offer lapses-
If either offeror or offeree dies before acceptance.
If it is not accepted within-
The specific time, or
A reasonable time, if not time is specified
Where time is fixed for acceptance of the offer, and it is
not accepted within the fixed time, the offer comes to
an end automatically on the expiry of the time.
Where no time for acceptance is prescribed, the offer
has to be accepted within reasonable time. The offer
lapses if it is not accepted within that time. The term
‘reasonable time’ will depend upon the facts and
circumstances of each case.
By failure to accept condition precedent: Where, the
offer requires that some condition must be fulfilled before
acceptance of the offer, the offer lapses, if it is accepted
without fulfilling the condition.
By the death or insanity of the offeror: Where, the
offeror dies or becomes insane, the offer comes to an end
if the fact of his death or insanity comes to the knowledge
of the acceptor before he makes his acceptance.
But if the offer is accepted in ignorance of the fact of
death or insanity of the offeror, the acceptance is valid.
This will result in a valid contract, and legal representatives
of the deceased offeror shall be bound by the contract. On
death of the offeree before acceptance, the offer also
comes to an end by operation of law.
By counter offer by the offeree: Where a counter
offer is made by the offeree, the original offer
automatically comes to an end, as the counter offer
amounts to rejection of the original offer.
By not accepting the offer, according to the
prescribed or usual mode: Where some manner of
acceptance is prescribed in the offer, the offeror can
revoke the offer if it is not accepted according to the
prescribed manner.
By rejection of offer by the offeree: Where the
offeree rejects the offer, the offer comes to an end.
Once the offeree rejects the offer, he cannot revive
the offer by subsequently attempting to accept it. The
rejection of offer may be express or implied.
By change in law: Sometimes, there is a change in law
which makes the offer illegal or incapable of
performance. In such cases also, the offer ends.
 Acceptance Under Contract Act
Acceptance is defined under Sec. 2(b) of the Contract
Act as:
“When the person to whom the proposal is made,
signifies his assent there to, the proposal is said to be
accepted.”
Alike a proposal, an acceptance may also be express or
implied. When acceptance is made by words, spoken or
written, it is an express acceptance.
If it is accepted by conduct, it is an implied acceptance.
Thus where a person boards a train or bus, he impliedly
accepts to pay the usual fare.
Who Can Accept?
An offer can be accepted only by the person to whom
the offer is made. It cannot be accepted by another
person without the consent of the person making it.
In case of specific offer– Can be accepted only by the
person to whom that offer was made.
In case of General offer– An offer made to the world at
large or public in general (called general offer) can be
accepted by any person having knowledge of the offer
by fulfilling the terms of the offer.
Form of Acceptance?

Like an offer, an acceptance may also be either

‘express acceptance’ i.e. by words, oral or written or
‘implied acceptance’ i.e. otherwise than by words
which means by conduct.
 Requirements for a Valid Acceptance
Acceptance must be absolute and unconditional: As
per Sec. 7(1), an acceptance must be unconditional and
unqualified.
Accepting an offer with conditions, variations and
reservations amounts to a counter offer and rejection of
the original offer.
The acceptor must comply with the terms of the offer.
A variations or alteration, however, small of the offer, will
make the acceptance invalid.
Acceptance must be communicated to the offeror: If
the offeror remains silent and does nothing to show that
he has accepted the offer, no contract is formed. The
acceptor should do something to signify his intention to
accept. Thus, where a person accepts an offer but fails to
post the letter of acceptance, it is no acceptance.
Acceptance must be within a reasonable time:
Acceptance to be valid must be made within the time
allowed by the offeror and if no time is specified, it must
be made within a reasonable time.
It must be according to the mode prescribed or usual
or reasonable mode: As per Sec. 7(2), if the proposal
does not prescribe the manner in which it is to be
accepted, then the offer must be accepted in some
usual and reasonable manner.
And if the proposal prescribes the manner in which it is
to be accepted then the offer must be accepted in the
prescribed manner only, within a reasonable time.
Acceptance should be exactly made as is demanded by
the offeror. This is also called “mirror image rule.”
An offer should not contain a term the non-
compliance of which would amount to acceptance.
One cannot say while making the offer if offeree
remains silent then acceptance shall be presumed
from such silence.
Silence is not permitted as a mode of acceptance in
law. Acceptance is valid only if it is communicated to
the offeror.
 General Rules as to Communication of
Revocation, Offer And Acceptance
When parties are at a distance and the offer and
acceptance are exchanged through post, rules are
contained in Sections 3 and 4.
1.Communication of proposal – When it comes to the
knowledge of the person to whom it is made i.e. the
offeree.
In case an offer is made by post, its communication will
be complete when the letter containing the offer
reaches the offeree.
2. Communication of Acceptance –The communication of
acceptance is complete at different times for the proposer
and acceptor. The rules regarding the communication of
acceptance are as follows-
 As against the proposer: As soon as a duly addressed letter
of acceptance is put into the course of transmission i.e.
when the letter of acceptance is posted so as to be out of
reach of the acceptor, whether the same reaches the
proposer or not. Thus, mere posting of letter of acceptance
is sufficient to conclude a contract.
 However, the letter must be properly addressed and
stamped. Where the letter of acceptance is posted by the
acceptor but it never reaches the offeror, or it is delayed in
transit, it will not affect the validity of acceptance. The
offeror is bound by the acceptance.
As against the acceptor: As soon as the proposer
receives the letter of acceptance.
Acceptance by Telephones Telex or Fax: Such contracts
are treated on the same principle as an oral agreement
made between two parties when they are face to face
with each other.
In such cases, the communication of acceptance is
complete when the acceptance is received or is heard by
the offeror and not when it is transmitted by the offeree.
The contract is concluded as soon as the offeror
receives or hears the acceptance. Therefore, the
acceptor must ensure that his acceptance is properly
received by the proposer.
The Place of Contract: In case of acceptance by the
post, the place where the letter of acceptance is
posted is the place of contract.
Where the acceptance is given by instantaneous
means of communication (telephone, fax, telex etc.),
the contract is made at the place where the
acceptance is received or is heard.
Communication of Revocation of Offer and Acceptance
The term ‘revocation’ means ‘taking back’ or
‘withdrawal’. Rules regarding revocation have been
incorporated under Sec. 5 of the Contract Act.
The communication of a revocation is complete as
against the person who makes it when it is put into the
course of transmission.
As against the person to whom it is made, when it
comes to his knowledge.
 Time limit for Revocation of Offer
A proposal may be revoked at any time before the
communication of its acceptance is complete as against the
proposer, but not afterward.
We know that communication of acceptance is complete
when a properly addressed and stamped letter of
acceptance is duly posted by the acceptor.
Hence, an offer can be revoked at any time before the
letter of acceptance is duly posted by the acceptor.
Thus, the proposer may revoke his offer by a speedier
mode of communication which will reach before the letter of
acceptance is posted by the acceptor.
 Rules Regarding Revocation
Revocation must always be express and it must move
from the offerer/proposer himself or through a duly
authorised agent
Notice of revocation of a general offer must be given
through the same channel by which the original offer was
made.
Offer can be revoked even if the letter of acceptance is
lost or delayed in transit.
Time limit for revocation of acceptance: According to Sec.
5, “An acceptance may be revoked at any time before the
communication of the acceptance is complete as against the
acceptor, but not afterwards.”
Thank You