BUSINESS LAWS

TOPIC
Offer and Acceptance

Elements of a Contract

Offer and Acceptance (Agreement)

Genuine Assent/consent
Legality
Consideration

Something of Value

Capacity of parties
Writing (Form)

Agreement

Offer A promise to do (or not do)

something provided the offeree does
(or does not do) something in return.
Acceptance Act or promise in
response to an offer
Offer + Acceptance =
Agreement

Proposal / Offer
The term proposal has been
defined in section 2(a) as follows:
When one person signifies
to another his willingness to
do or 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.

Proposal / Offer

Requirements of the offer:

1. Contractual

intent must be present in the

offer
2. Must be communicated to the offeree
3. Terms must be reasonably definite

The Offer Intention to create legal relationship

In order that an offer, after

acceptance, can result in a valid
contract it is necessary that the
offer should be made with an
intention to create legal
relationship.

The Offer - Intent

Hence the offer made in
1.
2.
3.
4.
5.

Jests
Statements made in anger or terror
Expressions of Opinion
Statements of intention
Preliminary Negotiations
1.

6.

Advertisements, Catalogs, etc

Social Agreements

Are not valid offer

The Offer Definite Terms

Terms promises, conditions, and

descriptions in a contract.
Important Terms

Subject Matter
Parties
Price
Time for Performance

The Offer Definite Terms

Terms and subject matter must be
specified in order to prove the
intention of an offeror

The Offer - Communication

Must be communicated to the offeree
According to section 4,
the communication of a
proposal is complete when it
comes to the knowledge of the
person to whom it is made.

Termination of the Offer

Termination by the Parties

Termination by Law

Termination by the Parties

Revocation

Must be made same way offer was

Rejection
Counteroffer
Condition stipdent if condition not
satisfied

Termination by Law

Time Stated

Reasonable length

Death or Insanity of the parties

Destruction of the Subject Matter
Illegality

ACCEPTANCE

According to Section 2 (b) : when

the person to whom the proposal is
made signifies his assent thereto, the
proposal is said to be accepted. A
proposal, when accepted, becomes
a promise

ACCEPTANCE
Acceptance is the assent to an offer
which results in a contract.
Usually the manner of acceptance is
irrelevant.
An offer may stipulate that
acceptance be written and received.
Persons can avoid problems by
including the manner of acceptance
in the contract.

Essentials of a valid acceptance

In order that acceptance of an offer can
result in a contract the acceptance must
satisfy the following requirements.
1. Acceptance should be communicated by the
offeree to the offeror.
2. Acceptance must be made in the prescribed
manner, and if no manner is prescribed, in
some usual and reasonable manner.
3. Acceptance should be absolute and
unqualified.
4. Acceptance should be made while the offer is
still subsisting/exists.

Communication of Acceptance

Silence

Tricky, tricky
Exception: prior practice, Old Legal Focus

Bilateral

Promise for a Promise

Words or conduct

Unilateral

Promise for an act

Modes of Communication

All forms of contractual

communication are effective once
received EXCEPT
Acceptance
Effective once sent
Same mode as offer or faster
Mailbox rule
Unless otherwise stipulated in the offer

Effect of Acceptance

A contract is created only after an offer is

accepted. Before the acceptance is made neither
party is bound thereby. At that stage the offeror
is free to revoke or withdraw his offer, and the
offeree is free not to accept the offer or reject the
same. After the offer has been accepted it
becomes a promise which, if other conditions of a
valid contract is satisfied, binds both the parties
to the promise. After acceptance each party
becomes legally bound by the promise made by
him through the medium of offer or acceptance of
it.

Revocation of acceptance
Section 5 expressly permits the
revocation of acceptance through the
following provision :
An acceptance may be revoked at
any time before the communication
of the acceptance is complete as
against the acceptor, but not
afterwards.