The Legal Lock


Law Notes Law of Contracts

Offer under Contract Law

By Tania Maria Joy

What is offer?

Offer is defined under Section 2 of the Indian Contract Act 1872. The definition is  “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”. In this, the person who makes the offer is called the offeror or promisor or proposer and the one who accepts is the offeree or promise.  For example, X offers Z a contract for producing music in this case X is the offeror and Z is the offeree. 

The act in which offer is the Indian Contract Act 1872. This act was enacted to ensure that there is reasonable enforcement of the obligation and the promises between the agreed parties. Third law commission of British India was formed in 1861 under the stewardship of chairman Sir John Romilly, with initial members as Sir Edward Ryan, R. Lowe, J.M. Macleod, Sir W. Erle ( Succeeded by Sir, W .M. James ) and justice Wills ( succeeded by J. Henderson ), had presented the report on contract law for India as Draft Contract law (1866). The Draft Law was enacted as The Act 9 of Indian Contract Act, 1872 on 25 April 1872 and the Indian Contract Act, 1872 came into force with effect from 1 September 1872.

Types of offers

There are six types of offers which are as follows:

  1. Express offer: It means an offer that is expressed by words, spoken or written. For example,  when D asks B whether he will buy his guitar for Rs10,000.
  2. Implied offer: It is an offer that is derived from the action or the circumstance of the parties. For example, a transport company to carry passengers at a specific rate on a specific route.
  3. General offer: This offer is not made to a specific party. It is made to the public and anyone in the public can accept this and they have the right to receive the reward or compensation. 
  4. Specific offer: It is an offer made to one person in specific or a group in specific and no one else than the other person can accept it.
  5. Cross offer: It is an offer that is made at a circumstance. In this, both parties have to make the same offer at the exact time. However, it will not amount to accepting the offer
  6. Counteroffer: It is an answer to the initial offer. This is an offer that is made to replace the initial offer. There are three choices in this offer which are accepted, refuse or make with another one. 

The offer can be lapsed and revocated under the following scenarios:

  1. The offer would lapse after a reasonable or defined time
  2. An offer may lapse by not being accepted by a specified mode.
  3. Offer may also lapse by rejection.
  4. The offer would also lapse when the offeree or the offerer dies or becomes insane before acceptance.
  5. It could also lapse by illegality or destruction of the substance.

The offer must be communicated between the two parties properly before they accept so there won’t be any issues. If the offeror says that silence means consent then the offer could be invalid. In an offer when the offeror fails to perform his contractual duties then the offeree can take legal actions against the offeror. 

If the offer is rejected by any parties it is considered that the offer is terminated. The term offer is from the 15th century which is offre which means the act of offering. An offer is a proposal that is presented for acceptance or rejection. In India, this came into the act through the Indian Contract Act 1872 which was introduced by the British during their colonial rule. 

It could also be said that this was brought by the British government to make their commercial transaction within the country go well. It could also be said that an offer is the beginning of a contract. Once an offer is accepted then it is led to a contract between the two parties. 

An offer is something that can be revoked or terminated before or after the acceptance. It can also be in different forms which are as follows:

Newspaper, fax, letter and email and so on. An offer can be revoked before the acceptance of the contract or there could be legal actions taken against it. But the offer can be terminated after acceptance and there won’t be legal actions if it is mutual. The offer could be terminated if any of the parties died or is insane or financially broke.  

In Carlill v. Carbolic Smoke Ball Co., the defendant made an offer where the respondent made an offer that by using their smoke ball, influenza can be prevented. The plaintiff used the smoke ball when she had flu but it did not serve the purpose, so she filed a case in court. The judgement was delivered in favour of the plaintiff and she received compensation of £ 10.  This case shows how an offer communicated which was inaccurately led to a loss in the goodwill of the company. 

Another case of the offer is Lalman Shukla v. Gauri Dutt. It was about an offer made to find a missing boy that would reward that person. But the plaintiff didn’t know about the reward and found the boy and later when he asked for the reward then filed a case against the defendant for not offering what was said in the offer. But the judgement delivered that the person did the offer without knowing the offer so the case was dismissed.

So it could be said that there should be proper communication and understanding of the offer before accepting it. It is also said that before accepting an offer it is necessary to understand the offer which is offered by the offeror. 

The person who accepts an offer should also know his rights and what are the problems that can come in an offer. It is very important to know that he or she is not being involved illegally or their right being violated. In today’s world, a lot of people are being conned so they must make sure the offer is not illegal or any issues being involved in it. 

Especially in the medical field where people are used for medical testing the offer sometimes made are not correct. Some people fall under medical con where they suffer health issues. Even in business people are also given illegal offers and sometimes suffer huge debts.  The offer was introduced when the Indian Contract Act was introduced so it could be said as it was there for a long time. 

With this, it could be understood that an offer is a proposal that is either accepted or rejected or made some corrections. In offer, there are two parties and one of the parties puts an offer it could be any type of offer. The other person has the right to accept or reject or change his requirement. Offer is also used in Latin. Because most legal documents are in Latin so it is also used in Latin. Since its French originated it is also in different parts of the European countries.