Offer and Acceptance, Slides of Business

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OFFER AND

ACCEPTANCE

DEFINITION OF OFFER

• (^) Section 2(a) - Proposal: "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.“

• (^) Terminology:

 Offeror/Promisor: Person making the offer.

 Offeree: Person to whom the offer is made.

 Acceptor/Promisee: Person accepting the offer.

4. Different from Invitation to Offer

 (^) An invitation to offer only invites the other party to make an offer.  Examples: Auction displays, advertisements for sale.

5. Specific or General

 (^) Specific Offer: Made to a specific person (only they can accept).  (^) General Offer: Made to the public at large (can be accepted by anyone fulfilling conditions).

• Famous Case: Carlill vs. Carbolic Smoke Ball Co.

6. Communication with Offeree

 (^) An offer is valid only when it is communicated to the offeree.  Famous Case: Lalman vs. Gauri Datt

7. Negative Condition

 (^) An offer cannot impose a negative condition (e.g., "If no reply, acceptance is assumed"). Silence does not imply acceptance.

8. Conditions in Offer

 (^) The offeror may prescribe a specific mode of acceptance. If not followed, the offeror may reject the acceptance.

9. Cross Offers

 (^) When two parties make identical offers to each other without knowledge of the other's offer.  (^) Cross offers do not result in a contract.

5. Rejection by Offeree: When the offeree rejects the offer.

6. Counter Offer: When the offeree accepts with changes in terms.

This rejects the original offer.

Famous Case: Hyde vs. Wrench

7. Death or Insanity of Offeree: Before acceptance, the offer

terminates.

8. Subsequent Illegality: If the act becomes illegal before

acceptance.

9. Destruction of Subject Matter: If the subject matter is destroyed

before acceptance.

10. Non-compliance with Prescribed Manner: If acceptance is not

made in the prescribed manner.

ESSENTIALS OF VALID

ACCEPTANCE

1. By the Offeree

 (^) Acceptance must be by the person to whom the offer was made. Famous Case: Boulton vs. Jones

2. Absolute & Unconditional

 (^) Acceptance must be without any conditions. A conditional acceptance is a counter offer. Famous Case: Neale vs. Merret

3. Prescribed Manner

 (^) Must follow the mode prescribed by the offeror. If no mode is prescribed, a reasonable manner should be used.

• (^) 4. Communication with Offeror  (^) Acceptance must be communicated to the offeror. Mere intention to accept is not enough. Famous Case: Brodgen vs. Metropolitan Railway Co.
• (^) 5. Express or Implied  (^) Express: By words.  (^) Implied: By conduct or action.
• (^) 6. Acceptance After Offer  (^) Acceptance must follow the offer. It cannot precede it.
• (^) 7. Reasonable Time  (^) Must be given within the time specified, or within a reasonable time if none specified. Famous Case: Ramsgate Victoria Hotel Co. vs. Montefiore

COMMUNICATION OF REVOCATION

• (^) Communication of Revocation:  (^) As against the person who makes it: Complete when the letter is posted.  (^) As against the person it is made to: Complete when it comes to his knowledge.
• (^) Time of Revocation (Sec. 5):  (^) Offer can be revoked any time before acceptance is complete against the offeror.  (^) Acceptance can be revoked any time before acceptance is complete against the acceptor.

LOSS/DELAY OF LETTER OF

ACCEPTANCE

1. Position of Offeror:

 (^) Once the letter is properly posted , the offeror is bound, even if it is delayed or lost.

2. Position of Acceptor:

 (^) Not bound until the letter reaches the offeror. They may revoke it at any time before it reaches.

3. Accidental Formation:

 (^) If a letter of acceptance and a letter of revocation arrive at the same time, contract formation depends on which is read first.