Offer and Acceptance

(b) Offer and Acceptance

Offer (proposal) — Section 2(a) defines it as: "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." The person making the

proposal is the promisor/offeror; the person to whom it is made is the promisee/offeree;

and once the offeree accepts, the proposal becomes a promise (Section 2(b)) — the offeror

becomes the promisor and the offeree becomes the promisee.

Rules regarding a valid offer:

• It must be capable of creating legal relations, not a mere social invitation.
• Its terms must be definite, unambiguous, and certain — not vague.
• It must be communicated to the offeree; a person cannot accept an offer he does not know exists.
• It may be express (by words, spoken or written) or implied (by conduct).
• It may be specific (made to a particular person, acceptable only by that person) or general (made to the world at large, e.g. a reward notice for a lost dog — capable of acceptance by any person who performs the condition, as in the well-known "reward" cases taught under this unit).
• An offer is different from an invitation to offer (also called an "invitation to treat"). A shopkeeper displaying goods with price tags, a menu card in a restaurant, or an advertisement inviting tenders are all only invitations to the public to make an offer — the shopkeeper is free to refuse to sell even at the marked price. The actual "offer" in a shop is made by the CUSTOMER when they present the goods for payment; the shopkeeper then accepts (or refuses) it.
• A counter-offer is a rejection of the original offer, coupled with a new offer of its own — it does not create a contract by itself.
• Cross-offers — where two parties, without knowledge of each other's offer, make identical offers to each other — do NOT result in a contract, because neither is an "acceptance" of the other.

Acceptance — Section 2(b): "When the person to whom the proposal is made signifies his

assent thereto, the proposal is said to be accepted." Rules regarding valid acceptance:

• Must be absolute and unqualified — an acceptance with variations is only a counter-offer.
• Must be communicated to the offeror — a mere mental resolve to accept is not enough.
• Must be given in the mode prescribed by the offeror (or, if none is prescribed, in some usual and reasonable manner).
• Must be given within the time fixed by the offer, or within a reasonable time if none is fixed, and before the offer lapses or is revoked.
• Mere silence is not acceptance — an offeror cannot impose a contract on the offeree by stating "if I do not hear from you, I shall assume you accept."
• Acceptance of a counter-offer (i.e. accepting the modified terms) results in a fresh contract on the new terms.

Communication of offer and acceptance can be express (words) or implied (conduct).

Under Section 4, the communication of an offer is complete when it comes to the knowledge of

the person to whom it is made. The communication of an acceptance is complete in two stages:

(i) as against the proposer, when it is put in a course of transmission to him, so as to be

out of the power of the acceptor (e.g. the moment a letter of acceptance is posted); and (ii) as

against the acceptor, only when it comes to the knowledge of the proposer. …