Offer and Acceptance, Communication of Offer

Offer and acceptance are the essential elements of a contract. An offer is a proposal made by one party to another party with the intention of creating a legal relationship. Acceptance is the assent given by the offeree to the offer made by the offeror.

For an offer to be valid, it must be communicated by the offeror to the offeree. An offer can be made either by words, conduct, or even silence, depending on the circumstances. However, silence is not an acceptance unless there is a duty to speak.

Acceptance must be communicated to the offeror by the offeree. In other words, acceptance must be in response to the offer. If the acceptance is not in response to the offer, it is not valid.

The acceptance must be unconditional and must comply with the terms of the offer. Any deviation from the terms of the offer is not acceptance but a counteroffer.

An offer can be revoked by the offeror at any time before acceptance. Revocation of the offer must be communicated to the offeree. Similarly, acceptance can be revoked by the offeree at any time before it is communicated to the offeror.

Offer and Acceptance Features

The following are the features of offer and acceptance:

  • Proposal: Offer and acceptance is based on a proposal made by one party to another. The proposal can be made in any form as long as it is clear and unambiguous.
  • Intention to create legal relations: Offer and acceptance must have an intention to create legal relations. If the parties do not intend to create legal relations, there can be no contract.
  • Communication of proposal: The proposal must be communicated to the offeree for it to be considered an offer. A proposal made to a third party cannot be considered an offer.
  • Acceptance: Acceptance is the assent of the offeree to the terms of the proposal. The acceptance must be communicated to the offeror for it to be valid.
  • Unconditional acceptance: Acceptance must be absolute and unqualified. Any conditional or qualified acceptance amounts to a counter-offer.
  • Manner of acceptance: Acceptance may be given in any manner and by any means which communicates the assent of the offeree to the offeror.
  • Time and place of acceptance: Acceptance must be made within a reasonable time and at a reasonable place. If no time and place are specified, acceptance must be made within a reasonable time and at the place where the offer was made.
  • Revocation: An offer may be revoked at any time before acceptance. Revocation must be communicated to the offeree to be effective.
  • Lapse of offer: An offer lapses if it is not accepted within a reasonable time, or if it is not accepted within the time specified in the offer.
  • Acceptance of offer: Acceptance of an offer creates a binding contract between the parties. Once the offer is accepted, the parties are bound by the terms of the contract.

Legal provisions

The Indian Contract Act, 1872 contains legal provisions relating to offer and acceptance.

Section 2(a) of the Act defines the term ‘proposal’ as an offer made by one person to another with a view to obtaining the assent of that other person to enter into a contract.

Section 2(b) defines the term ‘promise’ as a proposal when accepted, becomes a promise.

Section 2(c) defines the term ‘acceptance’ as the signification by the offeree of his assent to the proposal made by the offeror.

Section 2(e) defines ‘agreement’ as every promise and every set of promises, forming the consideration for each other.

Section 3 of the Act provides that for an agreement to be enforceable by law, it must be made by the free consent of parties competent to contract, for a lawful consideration, and with a lawful object, and not expressly declared to be void.

Section 7 of the Act provides that in order to convert a proposal into a promise, the acceptance must be absolute and unqualified. Any conditional acceptance or qualified acceptance is not valid and amounts to a counter-offer.

Section 8 of the Act provides that performance of the conditions of a proposal or the acceptance of any consideration for a reciprocal promise is an acceptance of the proposal.

Section 9 of the Act provides that an acceptance may be given in any manner and by any means, which communicates the assent of the offeree to the offeror.

Section 10 of the Act provides that an agreement is a contract if it is made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and is not expressly declared to be void.

Section 11 of the Act provides that a person who is of the age of majority, of sound mind, and not disqualified from contracting by any law to which he is subject, is competent to contract.

Section 14 of the Act provides that an agreement is void if the consent of the parties to the agreement is not free, or if the consideration or object of the agreement is unlawful or opposed to public policy.

Communication of Offer

Communication of offer is an essential element in the process of creating a valid contract. An offer must be communicated properly to the offeree for it to be considered as a valid offer. The following are the legal provisions related to communication of offer:

  • Offer must be communicated: An offer must be communicated to the person to whom it is made or to his authorized agent. An offer made to a third party cannot be considered as a valid offer.
  • Acceptance of offer: An offer must be accepted within a reasonable time and in the manner prescribed by the offeror. The acceptance must be communicated to the offeror to create a binding contract.
  • Communication of acceptance: Acceptance must be communicated in the same manner as the offer. If the offer is made by post, acceptance must be communicated by post. If the offer is made by email, acceptance must be communicated by email.
  • Communication of revocation: An offer may be revoked at any time before acceptance. The revocation must be communicated to the offeree to be effective. If the offer is made by post, revocation must be communicated by post. If the offer is made by email, revocation must be communicated by email.
  • Silence does not amount to acceptance: Silence on the part of the offeree does not amount to acceptance. The offeree must communicate his acceptance of the offer to create a binding contract.

Communication of Offer Legal provisions

The Indian Contract Act, 1872 lays down the following legal provisions related to communication of offer:

  • Offer must be communicated: As per Section 3 of the Indian Contract Act, an offer must be communicated to the person to whom it is made or to his authorized agent. The offer can be made in writing, orally or by conduct.
  • Communication of offer complete when put in course of transmission: As per Section 4 of the Indian Contract Act, the communication of an offer is complete when it comes to the knowledge of the person to whom it is made. The offer is deemed to be communicated when it is put in the course of transmission to the offeree.
  • Revocation of offer: As per Section 5 of the Indian Contract Act, an offer can be revoked at any time before acceptance. The revocation must be communicated to the offeree before he has communicated his acceptance.
  • Acceptance of offer: As per Section 7 of the Indian Contract Act, acceptance must be communicated in the same manner as the offer. If the offer is made by post, acceptance must be communicated by post. If the offer is made by email, acceptance must be communicated by email.
  • Acceptance must be absolute and unqualified: As per Section 7 of the Indian Contract Act, acceptance must be absolute and unqualified. Any condition or qualification in the acceptance amounts to a counter-offer and is not a valid acceptance.
  • Communication of acceptance: As per Section 4 of the Indian Contract Act, the communication of acceptance is complete as against the proposer when it is put in the course of transmission to him. It means that the acceptance is complete when it is sent by the offeree.

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