Govt Islamia Graduate College Cooper Road Lahore

Department Of Commerce

Submitted by
Maira Rafiq
Roll number
24211061044
Submitted to
Miss Shumaila
Assignment
Business law
OFFER & ACCEPTANCE
INTRODUCTION

Offer and acceptance analysis is a traditional approach in contract law used to determine
whether an agreement exists between two parties. Agreement consists of an offer by an
indication of one person (the "offeror") to another (the "offeree") of the offeror's willingness
to enter into a contract on certain terms without further negotiations. A contract is said to
come into existence when acceptance of an offer (agreement to the terms in it) has been
communicated to the offeror by the offeree and there has been consideration bargained-for
induced by promises or a promise and performance.

The offer and acceptance formula, developed in the 19th century, identifies a moment of
formation when the parties are of one mind. This classical approach to contract formation has
been weakened by developments in the law of estoppels, misleading conduct,
misrepresentation and unjust enrichment.

Section 2(a) of Indian contract act defines offer as when one person signifies to another his
willingness to do or to abstain from doing something with a view to obtaining the assent of
other, such act or abstinence is said as proposal.

Legal rules regarding valid offer

• An offer may be express or implied

• It should give rise to legal consequences and be capable of creating legal relations

• The term of the offer must be certain

• An offer can be made subject to any terms and conditions.

• It should be made with a intent to obtain the assent of the other party

• An offer should not contain a term the non compliance of which would amount to
acceptance

• Two identical cross offers do not make a contract.

• An invitation of offer is not an offer

Invitation to offer
 Display of goods by a shopkeeper in his window, with prices marked on them, is not an
offer but merely an invitation to the public to make an offer to buy the goods at the
marked the prices.
PHARMACEUTICAL SOCIETY OF GREAT BRITAIN vs BOOTS CASH
CHEMISTS

A sees an article marked „price rupees twenty‟ in B‟s shop. He offers B Rs20 for the article.
B refuses to sell saying the article is not for sale.

Held A cannot force B to sell him the article at Rs20. Marking of price of an article amounts
to an invitation to offer and not an offer

Essential of offer
• It must be an expression of the willingness to do or to abstain from doing something

• It must be made to another person

• It should be done with a objective to obtain the assent of the other person  The
objective of offer should be legal one

Lapses and revocation of offer

• An offer lapses after stipulated or reasonable time

• An offer lapses by not being accepted in the mode prescribed

• An offer lapses by rejection

• An offer lapses by the death or the insanity of the offeror or the offeree before
acceptance

• An offer lapses by revocation before acceptance

• An offer lapses by subsequent illegality or destruction of subject matter.

When communication is complete

• Communication of offer (sec 4 Para 1)- the communication of offer is complete
when ii comes to the knowledge of the person to whom is made.

• Communication of acceptance( sec 4 para2)-

As against the proposer-when it is put into course of transmission to him so as to be
out of the power of the acceptor

As against the acceptor- when it comes to the knowledge of the proposer

Time of revocation of offer and acceptance(sec5)
• Revocation of offer(sec5 para1)- A proposal may be revoked at any time before the
communication of its acceptance is complete as against the proposer but not
afterwards.

• (Revocation of acceptance sec5 para2)- An acceptance may be revoked at any time

before the communication of the acceptance is complete as against the acceptor, but
not afterwards.

Example
• A proposes by a letter sent by post to sell his to B. the letter is posted on the 1 st of the
month. B accept the proposal by a letter sent by post on the 4 th. The letter reaches A
on 6th

A
• may revoke his offer at any time before B post his letter of acceptance i.e 4 th but not
afterwards.

• B may revoke his acceptance at any time before the letter of acceptance reaches an i.e
6th but not afterwards.

Revocation of the offer by the offeror

The offeror can revoke his offer before it is accepted “the bidder at an auction sale may
withdraw (revoke) his bid (offer) before it is accepted by the auctioneer by using any of the
customary method

e.g. fall of hammer.

Decided case on revocation of offer by the offeror CASE

1
In cooke .v. Oxley(1790)3 T R 653 ,A offered to sell 266 hogshed at a certain price and
promised to keep it open for acceptance by B till 4 PM of that day .Before that time A sold
them to C ,B accepted before 4PM but after the revocation by A .it was held that the offer
was already revoked.

CASE 2
IN Dickinson V. Dodds (1876) 2ch.D.463,A agreed to sell property to B by a written
document which stated “this offer to be left over until Friday 9AM”.on the Thursday A made
a contract to sell the property to C .B heard of this from X and on Friday at 7AM he delivered
to A an acceptance of his offer .Held B could not accept A‟s offer after he knew it had been
revoked by the sale of the property to C.
Case 2 - offer lapses after reasonable time
In Ramsgate Hotel Co. V.Montefiore (1866)1 Ex.109,M applied for shares in June ,but the
allotment was not made till November .Held that the offer to take shares had lapsed as the
reasonable time had passed since the making of the offer and M was not bound to take shares.

Offer lapses after stipulated time or reasonable time case

1
In Head V. Diggon, 3M and R.97 a seller on Thursday offered wool to a buyer and gave him
three days in which he had to accept .The buyer accepted the offer on Monday but the seller
after waiting for three days had sold the wool. It was held that the offer had lapsed by
Monday morning by its express terms and the seller was not bound.

ACCEPTANCE
Section 2(b) states that a proposal when the person to whom the proposal is made signifies
his assent thereto the proposal is said to be accepted

Legal rules regarding acceptance

• Acceptance must be given only by the person to whom the offer is made

• Acceptance must be absolute and unqualified

• It should be communicated by the acceptor

• It should be given within reasonable time or time stipulated

• Acceptance must succeed the offer. Types of offer

• General & specific offer

• Express & implied offer

• Positive &negative offer

• Cross offer

General and specific offer

General offer made to the whole world at Specific offer made to some specific
large person
General offer can be accepted by any Specific offer can be accepted only by
person having notice of the offer by doing person to whom it was made
what is required under the offer

Express and implied offer

• When an offer is expressed by words spoken or written it is termed as an express
offer.

• Implied offer means an offer made by conduct. when one person allows the other to
perform certain acts under such circumstances that nobody would accept them without
consideration it will amount to an offer by conduct and the permission of the
party ,who is benefited by such performance ,will amount to his acceptance .such an
acceptance will be asked to pay for it.

• A bus company runs buses between India gate to kahsmiri gate. there is implied offer
from the bus company to take any person on the route who is prepared to pay the
prescribed fare. the offer will be said to be accepted by a passenger as soon as he takes
seat in the bus.

• A bid at an auction is an implied offer to buy. Similarly consuming eatables at a self

service restaurant, both create implied promise to pay for the benefits enjoyed.

Positive and negative offer

A person may express his willingness to do something or to abstain from doing something e.g
it may be an offer to construct a wall to provide privacy or not to construct a wall so that free
passage of light and air may not be obstructed.

Cross offer
Two offer similar in all respects, made by one party to the other ,in ignorance of each other‟s
offer, are termed as cross offers. they shall not constitute acceptance of one‟s offer by the
other.

Example of cross offer

• Sham made an offer to ram to sell his car for Rs20000 through post. on the same time
ram made an offer to buy sham‟s car in Rs18000 through post ,without info of the
offer of sham.
 • Such an offer is known as cross offer. and offer of ram do not constitute acceptance.

• TINN vs. HOFFMANN

A offers by a letter to sell his car to B for Rs 15000. B at the same time offers by a letter to
buy A‟s car for Rs 15000. The two letters cross each other in the post. Is there a contract
between A and B?

No cross offer do not form any contract.

Communication of offer and acceptance

• Communication of offer(sec 4): The communication of the offer complete when it
comes to the knowledge of the person to whom it is made

• Example: A sends a proposal in the mail to B and if the mail lost, it can be held that
the communication of the proposal is not complete.

• Communication of acceptance (sec4): Communication of acceptance is complete

when it put in course of transmission to him as to be out of the power of the acceptor
to withdraw same and when it comes to the knowledge of the proposer. Legal rules
regarding acceptance
• Acceptance must be given only by the person to whom the offer is made.

• Acceptance must be absolute and unqualified

• Acceptance must be expressed in some usual and reasonable manner ,unless the
proposal prescribes the manner in which it is to accepted.

• Acceptance must be communicated by the acceptor.

• Acceptance must be given within a reasonable time and before the offer lapses and /or
revoked.

• Acceptance must succeed the offer.