Contract law - Proposal/Offer

Proposal

Section 2(a) – 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.

For example – A’s willingness to sell his radio set to B for Rs 500 if B accepts to purchase the same, amounts to proposal by A for the sale of the radio set.

Offer must be communicated to the other person, i.e., the offeree. An offer cannot be accepted unless and until it has been brought to the knowledge of the person to whom it is made.

Offer and Invitation to offer

Sometimes a person may not offer to sell his goods, but makes some statement or gives some information with a view to inviting others to make offers on that basis. This is an invitation to offer.

For example – inviting persons to an auction or the advertisement calling for tenders. The contract will arise only when the highest bid is accepted by the competent authority and the said acceptance is communicated to the tenderer.

Case law

Pharmaceutical Society of Great Britain v. Boot Cash Chemists Ltd. 1952

It was held that display of articles, even on a self service basis was not an offer but was merely an invitation to offer. In fact, the offer is an offer to buy, and there is no offer to sell. The customer brings the goods to the shopkeeper to see whether he will sell or not.

?Intention to create legal relationship

It is necessary that the offer should be made with an intention to create legal relationship. The test to know the intention of the parties is objective and not subjective.

Case law

Balfour v. Balfour 1919

The husband and wife went to England for a vacation. The wife had to stay back due to health issues, so husband promised to pay her maintenance when they live apart. Issues developed between them and the husband stopped paying. Wife sued for the same. It was held that there being no intention to create legal relationship, the husband was not liable.

?Express and Implied Offers (Section 9)

An offer would be an express offer when it is made by words of mouth or by writing.

An offer made otherwise than in words is said to be an implied offer. It is an offer inferred from the conduct of the party. For example – boarding a bus or a train, hiring a taxi, etc.

Specific and General Offers

When the offer is made to a specific person or an ascertained person, it is known as a specific offer.

When the offer is not made to any particular person but to the public at large, it is known as a general offer. In such cases, the contract is concluded only with the person who acts upon the terms of the contract i.e., who accepts the offer.

Case law

Carlill v. Carbolic Smoke Ball Co. ?1893

A company advertised their product claiming to give reward to anyone contacting influenza after using it. the advertisement also mention certain amount being deposited in a bank. The plaintiff used the product according to the directions and contacted influenza. Her husband demanded the reward but the company refused. The court held that it was a general offer and performance of the conditions of the offer amounts to the acceptance of the offer. Therefore, she was entitles to claim the reward.?