Unit Three :Offer and Acceptance
COURSE TO BE COVERED
Meaning of offer
Rules regarding offer
Meaning of acceptance
Rules Regarding Acceptance
Communication of Offer and Acceptance
Termination or Revocation of Offer and Acceptance
Meaning of offer:
• Offer+ Acceptance=Agreement=Contract(When enforceable by law)
• An offer is an expression of willingness to enter into a legally binding
contract.
• When a person signifies his willingness to do or not to do something
with a view to obtain the assent of offeree, such willingness is known
as offer.
Characteristics of Offer
• Offer is an expression of offeror’s intention to be bound by it.
• It relates to do something or abstain from doing something.
• It is made with a view to obtain the assent of the offeree to such act .
• It can be made by express words, written or spoken or by the
conducts of the parties or the circumstances of the case.
• It becomes a promise when it is accepted by the offeree.
• It is communicated to the offeree.
Rules Regarding Offer
• Offer must be capable of creating legal relationship
• Terms of offer must be definite and certain
• An invitation to make an offer is not an offer
• Offer may be general or specific
• Every offer must be communicated
• Offer must be made with a view to obtaining the assent
Meaning of Acceptance
• Acceptance of an offer is the expression by words or conducts of
assent to the terms of the offer in the manner prescribed or indicated
by the offeror.
• According to Indian contract act,1872, when the person to whom the
proposal is made signifies the assent there to, the proposal is said to
be accepted. A proposal when accepted becomes a promise. For eg: If
A offers to B, if you pay me Rs 1000, I will sell my book to you. Then if
B agrees to purchase and says I agree and pays Rs 1000 to A, it
becomes an acceptance.
Characteristics of Acceptance
• Acceptance is an expression of willingness to be bound by the terms
of offer.
• It shows the consent of the offeree to do or abstain from doing
something
• It is given with an intention to enter into a contract.
• It may be express or implied
• It concludes the contract between the parties.
• It is made by the offeree to whom the offer is made and it is given in
the manner as prescribed or indicated by the offeror.
Rules regarding Acceptance
• Acceptance must be absolute and must correspond with the terms of the
offer.
• Acceptance must be communicated to the offeror in general.
• Acceptance must be according to the mode prescribed or usual mode or
reasonable mode.
• Offeree must have knowledge of offer
• Acceptance must be given within a reasonable time.
• Acceptance can not be implied from silence.
• Acceptance must be given by the offeree only.
• Acceptance must be given before the offer lapses or terminates.
Termination or Lapse of Offer
• When acceptance is given to the terms of offer at that moment
contract concludes. The parties of the contract are bound to perform
their respective obligation. Acceptance also must be given before the
offer lapses or terminates.
The major cause due to which offer terminates are,
(1) By revocation of offer
(2) By lapse of time for acceptance
(3) By death or insanity of the offeror
(4) By death or insanity of the offeree
Termination or Lapse of Offer contd…..
• (5) BY making counter offer
• (6)By non fulfillment by the offeree of a condition precedent to
acceptance
• (7)By not being accepted in the mode prescribed
• (8) By operation of law
Termination or lapse of Acceptance
Termination or lapse of acceptance may happen due to following
reasons
(a) By notice of revocation
(b) By lapse of time
(c) By non communication
(d) By death or insanity of the acceptor
(e) By subsequent impossibility
(f) By non fulfillment of terms
Communication of offer and acceptance
• Communication of offer and acceptance plays a vital role in converting
a proposal into promise. It not only creates the obligation to the parties
but also ends the possibilities of revocation of offer and acceptance.
When contracting parties are face to face there is no problem of
communication . If parties send their offer and acceptance through the
mail or any other means to communicate offer and acceptance the
process is guided by the legal principles and provisions. An offer can be
communicated either by verbal, written or by conduct or behavior.
• Communication of offer is complete when it comes to the knowledge of
offeree. Communication of acceptance is complete if offeror receives a
notice of consent by the offeree .