Offer and Acceptance

Offer

An offer is a declaration of a party's willingness to act or refrain from acting in order to secure the other party's consent to perform the act or refrain from acting in order to engage into a legally enforceable agreement. It is an offer made by one party to another to enter into a contract that is enforceable.

• Contract Act, 2056, section 2(b): Offer means an Offer put by a person to another with a hope to get assent from him for doing or not doing any work.
• Indian Contract Act, 1872, 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 other to such act or abstinence, he is said to make a proposal.

Features of an Offer

• An offer is a demonstration of openness.
• To the offeree, it is made by the offeror.
• It has to do with whether or not to do something.
• It is made in an effort to win approval for the offer's terms.
• It has been expressed as an intention.

Rules Regarding a Valid Offer

The offer must be legitimate in order to constitute a contract, and the following guidelines establish if an offer is legitimate. They are as follows:

• The offer must be able to establish a legal relationship.
• It needs to be said.
• It must be made with the intention of getting the other party to agree to the terms of the offer.
• It must be unambiguous or certain.
• A simple proclamation of intent or an invitation to make an offer are not offers.
• It cannot include clauses that could be interpreted as acceptance if not followed.
• A claim of the lowest price does not constitute an offer.
• It could be explicit or implicit.
• It could be particular or broad.
• It has to be legal.
• It may be made with provisions restricting or excluding the offeror's liabilities.
• It must be approved before it expires, is terminated, or is revoked.

Acceptance

A contract is formed when an offer is accepted; a contract cannot be formed without it. A contract cannot be formed until the other party to whom the offer was made accepts it. In other words, it is the offeree's approbation of the act of offering or their acceptance to the terms of the offer. The offeree is said to have made an acceptance if he indicates his desire to be bound by the offer's conditions. Once the offer is accepted, a contract is formed, and the parties are unable to reverse course. As a result, the acceptance brings a contract to an end because the offer is likened to a pack of dry gunpowder and the acceptance to a matchstick.

• Contract Act, 2056, section 2(c): Acceptance is an assent given by the offeree in the same sense as the offeror has taken.
• Indian Contract Act, 1872, section 2(b): A proposal is said to be accepted when the person to whom the proposal is made signifies his assent thereto. A proposal, when accepted, becomes a promise.

Features of an Acceptance

• An manifestation of willingness is acceptance.
• It comes from the Offeree.
• The offer's terms are considered.
• It is created with the intention of signing a contract.
• It has been expressed as an intention.

Rules Regarding a Valid Acceptance

The acceptance must be valid in order to be a contract, and the following guidelines decide whether it is. They are as follows:

• It must be unqualified and absolute.
• It needs to be explained to the offeror.
• It must follow the recommended mode or a customary and appropriate mode.
• It must be delivered in a timely manner.
• It is not permitted to come first.
• It needs to come from the offeree.
• Silence does not imply consent.
• It could be explicit or implicit.
• Contract-restricted acceptance is not acceptance at all.
• It must be sent before the offer expires or is terminated.

Revocation of Offer

The offer has been canceled or terminated. In other terms, revocation, termination, or lapse of an offer refers to when an offer expires or ceases to be in effect. An offer may come to an end under the following modes:

• By sending the offeree a revocation notification.
• Through passing of a suitable period of time.
• By the offeror's or offeree's demise or insanity.
• By rejection or a lack of acceptance.
• By failing to meet the prerequisites.
• By counterproposal.
• By declining the offer in the customary or prescribed manner.
• By modifying the law.

Communication of Offer, Acceptance, and Revocation

• It is necessary to convey the offer, acceptance, and cancellation.
• A suitable manner of communication may be used, along with explicit or implicit communication.
• When the offeree receives the letter, communication of the offer is complete.
• When the offeree gets the letter of revocation, communication of the offer's cancellation is complete.

Communication of acceptance completes as against the offeror when the letter is posted in the post office.

• When the offeror gets the letter rescinding the acceptance, communication of acceptance is considered complete in favor of the offeree.
• Before the communication, revocation is possible at any time.
• Even if the letter of acceptance is lost in postal transit, the contract still stands.
• The exchange of information might be finished via telex or phone.

References:

Business Law, Ram Prasad Shrestha;M.K Books, Bhotahity, Kathmandu,2013

Merchantile law, ICAI, 2013

Yugaraj Pandey