What is an Offer in Law?
What is an Offer in Law?
What is an Offer in Law? The first and most important essential element of the contract is an offer and acceptance. In this blog post, we will discuss what is an offer letter? and its rules for making a valid offer.
An agreement arises when one party makes an offer to another and the other party to whom the offer is made, accepts it.
In every case of a valid agreement, there is an offer and acceptance. Without an offer and acceptance, no agreement can be framed.
In the Indian Contract Act, the word proposal is used but the proposal and offer are synonyms.
So let’s discuss an offer in detail.
Definition of a Proposal/Offer
What is the offer in contract law? The definition of an offer is given under section 2 (a) of the Indian Contract Act, the proposal means ‘When one person signifies to another person his willingness to do or to abstain from doing anything, to obtain the assent of that other person to such act or abstinence, he is said to make a proposal.’
Here, in the above definition, we can divide it into two parts to understand the meaning of the definition.
1. One party i.e. offeror expresses his willingness to another person i.e. offeree to do something or not to do something.
2. The expression of the will should be made to obtain the assent of the person to whom an offer is made.
Offeror: The person who is making an offer is called an offeror/promisor.
Offeree: The person to who the offer is made is called the offeree.
Promisee: When the offer is accepted by the person to whom the offer is made is called a promisee.
Example: A made an offer to sell his bike for Rs. 50,000/- to B. And, B accepts A’s offer and purchase the bike.
So, here A is making an offer so he is an offeror and B accepts A’s offer so he is an offeree.
Hence, we found three characteristics of a valid proposal
- Willingness of person
- To do or not to do anything
- To obtain the assent of another person
Legal Rules of a Valid Offer
Here, we will discuss the essential rules which are required to be performed by the parties to the contract for making a valid offer.
- There must be two parties
- Offer must be communicated with the offeree
- Offer must be clear and not indefinite or ambiguous
- There must an intention of the parties to create a legal relationship
- Offer can be made subject to any Terms and Conditions
Let’s discuss them one by one;
1. There must be two parties
For making a valid agreement there must be at least two parties. One who makes an offer i.e. offeror and who accepts the offer i.e. offeree.
Here, the parties can be legal persons (individual persons) or artificial persons (legal entities like companies, corporations etc).
2. Offer must be communicated with the offeree
For the formation of an agreement, there must be an offer and acceptance. However, if one person makes the offer but there should be another person to whom the offer is to be communicated with him for his acceptance of that offer.
Example: A wants to sell his house. But it is in his mind, he does communicate with any other. So, it is not an offer.
In section 4 it is provided that the communication of the offer is completed when it comes to the knowledge of the offeree.
In the case of Lalman Shukla v/s Gauri Dutta, 1913, (Popularly Known as Missing Boy’s Case). It was held that there is no acceptance of the offer made by the defendant, and there is no formation of a contract. Further, the court observed the rule and the court held that the communication of a proposal is mandatory for a valid contract.
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