Essential Elements of a valid offer or proposal

Indian Contracts act came into force on September 1st, 1872. This act was enacted with an intention to ensure reasonable fulfillment of agreements between parties entering into a contract.

To get a clear overview regarding an offer/proposal, it’s essential to look into 2 sections. i.e Section 2(a) and Section 2(b) of the Indian Contract Act.

-As per Section 2(a) – 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 person, to such an act or abstinence, he is said to make a proposal.

– As per 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.

– As per Section 2(c) – The person making the proposal is called the “promisor”, and the person accepting the proposal is called the “promise”.

To constitute a valid offer/proposal there are various essentials that must be fulfilled without which the offer/proposal becomes invalid.

Essentials of a valid proposal

The first essential to constitute a valid offer is that there must be two or more parties involved in the process. There must exist a promisor and a promisee. The promisee is the one making the offer/promise and the promisor is the acceptor of the offer/promise. For instance – ‘a’ offers to buy ‘b’s’ car and ‘b’ accepts the offer proposed by ‘a’ and hence an agreement is made. In this case, ‘a’ is the promiser and ‘b’ is the promisee.

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The second essential is that the offer must express his/her willingness to do or abstain from doing an act. Merely willingness isn’t enough. One must act on it. Simply a desire to do or not to do something does not constitute an offer. For instance- if ‘a’ wants to sell his car to ‘b’ but does not do anything about it, there is no offer made.

The third essential is that an offer can be either positive or negative. It can be to act or refrain from an act/s. It can stop someone from doing something or can be for someone to do something. For instance, if ‘a’ contracts with ‘b’ asking ‘b’ to stop mining in ‘a’s’ land, it is a valid offer.

The fourth essential to constitute a valid offer is that the offer must create legal relations between the parties. The parties must have an intention to create a legal relationship. For instance- if ‘a’ invites ‘b’ for dinner, it does not constitute a valid offer, or if a father promises his son to pay him some money for mowing the lawn, it is not a valid offer.

The fifth essential is that the terms and conditions of the offer/proposal must be clear and definite. The terminologies used in the offer/ proposal must not be vague. Vague terminology can lead to various loopholes and discrepancies and hence the usage of such terms will lead to the invalidity of the offer.

The sixth essential is that the offer must be communicated to the offeree and no acceptance can be made without the offeree being aware of it. In the case of Lalman Shukla V. Gauri Dutt, the Plaintiff was a worker of the respondent who was shipped off Hardwar for finding the nephew of the respondent, who had run away from his home. The worker located the missing nephew and he was compensated with two sovereigns and Rs. 20. Later on, following a half year when he was sent off from his job, he brought a suit against his master asserting Rs. 499 for the prize offered by the plaintiff under the handbills which were given and issued by him. The court rejected the claim. In this landmark case, the Allahabad High court was of the opinion that to constitute a valid contract and an offer, the knowledge, and acceptance of the proposal are necessary.

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The seventh essential is that an offer may be conditional and can be negotiated and can subject the offer to any terms necessary. Flexibility is encouraged.

The eighth essential is that an offer cannot contain any negative clauses or conditions. Inserting the clause of no-compliance of any terms of the offer cannot lead to automatic acceptance of the offer is an example of a negative clause. The idea of coercion or forcing someone to agree/accept is negative and invalid.

The ninth essential is that an offer can be expressed or implied. – An offer can be either expressed or implied. An expressed offer is an offer that is written or communicated directly and an implied offer is an offer that is based on the conduct or behavior or conduct of the person. For example, an expressed contract is when ‘a’ enters into a contract with ‘b’ by making an agreement and an implied offer can be a contract between a patient and his doctor, a passenger, and a conductor, etc. The offers in these scenarios are through the conduct or behavior of the persons. In the case of Carbolic Smoke Ball co. V. Carlill, A company issued a newspaper ad stating that they would pay 100 euros to anyone who suffers from influenza after the consumption of their smoke balls. As a guarantee for the same, the company deposited 1000 euros in Alliance Bank. Ms. Carlisle purchased these smoke balls and consumed them three times in two weeks. Even though she used the product she contracted influenza. She was aware of the claims made by the company and their guarantee. She claimed the money from the company, but the company claimed that it wasn’t a valid offer because it was merely a sale strategy and it did not have an intent to constitute to be an offer. The court was of the opinion that the deposition of 1000 euros displayed sincerity and stated that an offer can be made to the general public. Her acceptance was implied through her actions as she consumed the smoke balls and therefore is entitled to the money.

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Author: Anil George,
Christ University, 2nd year

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