1) Offer :
Section 2 (a) of The Indian Contract Act, 1872. (Hereinafter, ICA).
2) Definition of offer :
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.
To note, an offer is the first step in the formation of a contract, it marks the beginning of contractual obligation between the parties. As it is a known fact that acceptance can only be made to a prior offer, an offer is essential for the formation of a contract.
3) Types of offers :
- Express Offer
- Implied Offer
- General Offer
- Specific Offer
- Cross Offer
- Counter Offer (Partial acceptance)
- Standing / Continuous Offer
A) Express Offer:
In so far as the proposal or acceptance of any promise is made in words, the promise is said to be expressed. An offer made in words, written or spoken is called an express offer.
Example: Mr. A says to B, I am willing to purchase your phone for rupees 6000. Here Mr. A has clearly expressed his offer to B.
Ramji Dayawala & Sons (P) Ltd V Invest Import.
A case between an Indian and Yugoslavian party, the notice for revocation of an arbitration clause in the contract between the parties was made by the Indian party to which the other party gave no reply. It was held that this would amount to an implied acceptance (ie: the arbitration clause was deleted from the contract and a suit would lie in the court of law). Similarly entering into an omnibus also amounts to implied acceptance, same as consuming edibles at a self service restaurant. Therefore in simpler terms a contract that is entered into because of actions on the offerors part, may be referred to as an implied offer any contract entered into otherwise is an express offer.
B) Implied Offer:
In so far as such a proposal or acceptance is made otherwise than in words, the promise is said to be implied. An offer is implied from the conduct of the parties or from the circumstances of the case is known as implied offer.
Example: A bus plying on a definite route (ie: Pune to Mumbai) offers carrying passengers for a fare on a stated route this is an implied offer.
Upton-on-Severn RDC V Powell.
Wherein the defendant called a fire brigade assuming that those services would be free to him, however it was found that his farm did not come under that of Upton. The court held that the truth of the matter is that the defendant wanted the services of Upton, he asked for the services of Upton and in response to that they offered their services and they were rendered on an implied promise to pay for them.
C) General Offer:
A general offer is an offer that is made to the world at large. When a general offer is of continuing nature, like it was in a carbolic smoke ball case, it can be accepted by a number of people till it is retracted. However, when a similar offer requires information regarding a missing thing, it is closed as soon as the first information comes in.
Carlill V Carbolic Smoke Ball Co.
A Company by the name carbolic smoke ball offered through an advertisement to pay 100 pounds to anyone who would contract increasing epidemic influenza, cold or any disease caused by cold after taking its medicine according to the prescribed instructions it was also added that 1000 pounds have been deposited in Alliance bank showing our sincerity in the matter. One customer Mrs.Carlill used the medicine and still contracted influenza and hence sued the company for the reward. The defendants gave the argument that the offer was not made with an intention to enter into a legally binding agreement, rather was only to puff the sales of the company.
Moreover, they also contended that an offer needs to be made to a specific person and here the offer was not to any specific person and hence they are not obliged to the plaintiff. Setting aside the arguments of the defendant, the bench stated that in cases of such offers ie: general offers there is no need for communication of acceptance, anyone who performs the conditions of the contract is said to have communicated his/her acceptance and moreover the money deposited by the defendant in the Alliance bank clearly shows that they intended to create a legally binding relationship hence the plaintiff was awarded with the amount.
Lalman Shukla V Gauri Dutt.
Wherein a servant was sent by his master to trace his missing nephew. In the meanwhile, when the servant was gone the master also announced a reward of Rs.150 for anyone finding his nephew, this in itself is an example of an offer that is made to the world at large and hence a general offer.
D) Specific Offer:
A specific offer is an offer that is made or ascertained person, this type of offer can only be accepted by the person to whom it is made.
Example: A offers to sell his fridge to B for Rs.10,000. This is a specific offer made to B, no one else can accept this offer except B.
Boulton V Jones.
The plaintiff had taken the business of one brocklehurst, the defendant used to have Business with Brocklehurst and not knowing about the change in ownership of business, sent him an order for certain goods. The defendant came to know about the change only after receiving an invoice at which point he had already consumed the goods. The defendant refused to pay the price as he had a set off against the original owner for which the plaintiff sued him.
The judges gave a unanimous judgement holding the defendant not liable. Pollock CB held that the rule of law is clear, if you intend to contract with A, B cannot substitute himself as A without your consent and to your disadvantages it was also held that whenever a person makes a contract with a specific personality, a specific party, so to say for writing a book for painting a picture or for any personal service or if there is any set off due from any party, no one has the authority to come in and maintain that he is the party contracted with.
E) Cross Offer:
When two parties make an identical offer to each other in ignorance to each other’s offer, they are said to make cross offers. Cross offers are not valid offers. Same offer to one another, when the offeror makes an offer to the offeree and the offeree without prior knowledge makes the same offer to the offeror, then both the object and the party remain the same. Offer must be made in ignorance of each other, the two parties must make their offer in ignorance of each other.
Two offers which are similar in all respects made by two parties to each other in ignorance of each other’s offer are known as cross offer.
Example: A by letter offers to sell his bike to B for Rs.40,000. B by letter offers A to buy the same bike for Rs.40,000 it is a cross offer.
Tinn V Hoffman.
An important case in this aspect is the English case of Tinn V Hoffman, the defendant wrote to the complainant an offer to sell him 800 tons of iron at 69s per ton at the same time the complainant also wrote to the defendant an offer to buy iron at similar terms. The issue in this case was that, was there any contract between the parties and would simultaneous offers be a valid acceptance. The court held that these were cross offers that were made simultaneously without knowledge of one another and would not bind the parties.
Here it is imperative to deduce that for a valid contract to be formed there needs to be an offer and acceptance of the same, where as in a cross offer there is no acceptance but only simultaneous offers being and therefore a cross offer will not lead to the formation of a contract.
F) Counter Offer:
When the offeree offers a qualified acceptance of the offer subject to modifications and variations in terms of the original offer, he is said to have made a counter offer. A counter offer is a rejection of the original offer.
Example: an example of this would be if A offers B a laptop for 50,000 thousand, B agrees to buy for 40,000 thousand this amounts to a counter offer and it would mean a rejection of the original offer. Later on, if B agrees to buy for 50,000 thousand then A may refuse. When the offeree offers a qualified acceptance of the offer subject to modifications and variations in terms of the original offer, he is said to have made a counter offer. A counter offer is a rejection of the original offer.
Haji Mohd Haji Jiva V Spinner.
Sir Jenkins CJ in Haji Mohd Haji Jiva V Spinner, held that any departure from original offer vitiates acceptance. In other words, an acceptance with a variation is not acceptance it is simply a counter proposal which must be accepted by the original offeror for it to formulate into a contract.
Counter offer also includes within its contours partial acceptance meaning that a party to the contract cannot agree to those conditions of the agreement that favour him and reject the rest, the acceptance should be of the complete agreement ie: all its parts.
Ramanbhai M Nilkanth V Ghashiram Ladliprasad.
The plaintiff made an application for certain shares in a company with the underlying condition that he would be made cashier in its new branch. The company did not comply with this and hence the suit, the court held that the petitioners application for shares was condition on him being made the cashier and that he would have never applied for the shares had there been no such condition.
G) Standing / Continuous Offer:
An offer which remains open for acceptance over a period of time is called a standing offer. Tenders that are invited for supply of goods is a kind of standing offer.
Perclval Ltd V London Country Council Asylums and Mental Deficiency Committee.
The plaintiff advertised for tenders for supply of goods, the defendant took the tender in which he had to supply to the company various special articles for a period of 12 months. In between this the defendant did not supply for a particular consignment, the court held that the tender was a standing offer that was to be converted into a series of contracts by the subsequent acts of the company and that an order prevented pro tanto the possibility of revocation, hence the company succeeded in an action for breach of contract.
4) Offer and Invitation to offer:
- Shows his readiness to do or not to do.
- Entering into a contract.
- Demanding goods from shop.
- Binding in auction.
- Example: Missing person.
B) Invitation to Offer:
- Person invites offers.
- Enter into an offer.
- Goods in display in a store.
- Example: Naukri.com.
Harris V Nickerson, 1973.
- Nickerson advertised about auction in the newspaper.
- Harris travelled to participate in the auction.
- Sale of office furniture.
- Auction got cancelled.
- Harris sued Nickerson for the cost he had incurred of travelling.
- It was only an invitation to offer and not offer as there was no acceptance.
- No contract.
- Thus Harris’s cost were not to be recovered.