Posted February 1, 2014 by advocateguru in Learning Centre
 
 

Essential requirement of valid offer

An offer must have certain essentials in order to constitute it a valid offer. These are:

The offer must be made with a view to obtain acceptance [Section 2(a)].

The offer must be made with the intention of creating legal relations.

The terms of offer must be definite, unambiguous and certain or capable of being made certain (Section 29). The terms of the offer must not be loose, vague or ambiguous.

It must be distinguished from mere declaration of intention or an invitation to offer.

It must be communicated to the offeree.

The offer must not contain a term the non-compliance of which may be assumed to amount to acceptance.

A tender is an offer as it is in response to an invitation to offer.

The Special terms, forming part of the offer, must be duly brought to the notice of the offeree at the time the offer is made.

Two identical cross-offers do not make a contract.

 

Example- A offers to sell to B “a hundred quintals of oil”. There is nothing whatever to show what kind of oil was intended. The offer is not capable of being accepted for want of certainty.

 

An offer must be distinguished from

F a mere declaration of intention or

F An invitation to offer or to treat.

 

Offer vis-a-vis declaration of intention to offer

A person may make a statement without any intention of creating a binding obligation. It may amount to a mere declaration of intention and not to a proposal.

For Example; when an auctioneer, N advertised that a sale of office furniture would take place at a particular place. H travelled down about 100 Km to attend the sale but found the furniture was withdrawn from the sale. H sued the auctioneer for his loss of time and expenses.

Held: N was not liable as It was just a declaration of intention and nothing more.

 

 

Offer vis-a-vis invitation to offer

An offer must be distinguished from invitation to offer. A prospectus issued by a college for admission to various courses is not an offer. It is only an invitation to offer. A prospective student by filling up an application form attached to the prospectus is making the offer. An auctioneer, at the time of auction, invites offers from the would-be-bidders. He is not making a proposal. A display of goods with a price on them in a shop window is construed an invitation to offer and not an offer to sell.

Example- In a departmental store, there is a self-service. The customers picking up articles and take them to the cashier’s desk to pay. The customer’s action in picking up particular goods is an offer to buy. As soon as the cashier accepts the payment a contract is entered into.

 

Likewise, prospectus issued by a company for subscription of its shares by the members of the public, the price lists, catalogues and quotations are mere invitations to offer.

 

On the basis of the above, we may say that an offer is the final expression of willingness by the offeror to be bound by his offer should the other party choose to accept it. Where a party, without expressing his final willingness, proposes certain terms on which he is willing to negotiate, he does not make an offer; he only invites the other party to make an offer on those terms. This is perhaps the basic distinction between an offer and an invitation to offer.

 

In Harvey v. Facie, the plaintiffs (Harvey) telegraphed to the defendants (Facie), writing: “Will you sell us Bumper Hall Pen?* Telegraph lowest cash price.” The defendants replied also by a telegram, “Lowest price for Bumper Hall Pen £900”. The plaintiffs immediately sent their last telegram stating: “We agree to buy Bumper Hall Pen for £900 asked by you”. The defendants refused to sell the plot of land (Bumper Hall Pen) at that price. The plaintiff’s contention that by quoting their minimum price in response to the inquiry, the defendants had made an offer to sell at that price was turned down by the Judicial Committee. Their Lordship pointed out that in their first telegram, the plaintiffs had asked two questions, first as to the willingness to sell and second, as to the lowest price. They reserved their answer as to the willingness to sell. Thus, they had made no offer. The last telegram of the plaintiffs was an offer to buy, but that was never accepted by the defendants.

 

The offer must be communicated to the offeree. An offer must be communicated to the offeree before it can be accepted. This is true of specific as well as general offer.

Example:-

When G sent S, his servant, to trace his missing nephew and Subsequently, G announced a reward for information relating to the boy. S traced the boy in ignorance of the announcement regarding reward and informed G. Later, when S came to know of the reward, he claimed it. Held, he was not entitled to the reward on the ground that he could not accept the offer unless he had knowledge of it.

 

The offer must not contain a term the non-compliance of which may be assumed to amount to acceptance. Thus, the offeror cannot say that if the offeree does not accept the offer within two days, the offer would be deemed to have been accepted.

Example- A tells B ‘I offer to sell my dog to you for Rs. 45. If you do not send in your reply, I shall assume that you have accepted my offer’. The offer is not a valid one.

 

A tender is an offer as it is in response to an invitation to offer. Tenders commonly arise where, for example, a hospital invites offers to supply eatables or medicines. The persons filling up the tenders are giving offers. However, a tender may be either:

(a) Specific or definite; where the offer is to supply a definite quantity of goods, or

(b) Standing; where the offer is to supply goods periodically or in accordance with the requirements of the offeree.

 

In the case of a definite tender, the suppliers submit their offers for the supply of specified goods and services. The offeree may accept any tender (generally the lowest one). This will result in a contract.

Example- A invites tenders for the supply of 10 quintals of sugar. B, C, and D submit their tenders. B’s tender is accepted. The contract is formed immediately the tender is accepted.

 

In the case of standing offers, the offeror gives an open offer whereby he offers to supply goods or services as required by the offeree. A separate acceptance is made each time an order is placed. Thus, there are as many contracts as are the acts of acceptance.

Example- The G.N. Railway Co. invited tenders for the supply of stores. W made a tender and the terms of the tender were as follows: “To supply the company for 12 months with such quantities of specified articles as the company may order from time to time. The company accepted the tender and placed the orders. W executed the orders as placed from time to time but later refused to execute a particular order.

Held: W was bound to supply goods within the terms of the tender.

 

It is to be noted that if the offeree gives no order or fails to order the full quantity of goods set out in a tender there is no breach of contract.


advocateguru