Communication of Offer and Acceptance

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Communication of Offer and Acceptance

COMMUNICATION OF OFFER AND ACCEPTANCE

FOR MAKING VALID CONTRACTS IT IS ESSENTIAL TO FULFIL THE NECESSARY TERMS AND CONDITIONS LAID IN SECTION 10 OF THE INDIAN CONTRACT ACT 1872

1. Offer and acceptance
2. Lawful consideration
3. Parties must be sufficient to contract.
4. Free consent
5. Lawful object
6. Possibility of performance
7. Certainty of terms
8. No void agreements

Indian Contract Act 1872 has laid down the whole structure of performing the terms and conditions and for the first term, there is a whole section-wise elaborated framework.

To make or form a valid contract the first time is OFFER AND ACCEPTANCE.

So the communications of these are done in the following ways:

Offer

For the formation of a valid contract,
Step1: making a lawful offer by either party
According to Section 2(a) as “when one person will signify to another person his willingness to do or not do something (abstain) with a view to obtain the assent of such person to such an act or abstinence, he is said to make a proposal or an offer.”

Essentials of a valid offer:

  1. Must be communicated to the offeree

    • Land mark judgment: Lalman Shukla vs. Gauri Dutt
    • In this case, Lalman Shukla was the servant of Gauri Dutt and he filed a suit against Gauri Dutt to claim the reward on finding the lost nephew.
    • The case was dismissed by Allahabad High court as the plaintiff was unaware of such offer (Rs 501 on finding the missing) before finding the boy and hence could not claim it afterwards.

  2. Creation of legal relationship is must.

    • Land mark judgment: Balfour vs. Balfour
    • In this case, husband and wife went to England on a vacation.
    • Mrs. Balfour became ill and on mutual understanding of both husband and wife, she stayed in England
    • They decided that Mr. Balfour will pay her 30 pounds monthly.
    • Howsoever, Mr. Balfour stopped paying her after coming to know that Mrs. Balfour is having an affair.
    • Hence, the court allowed Mr. Balfour’s appeal and decided that he is not bound to pay as law of contracts does not apply to family relationships where there is no intention to come into legal relationship.
    • Promises in spousal roles are not legally binding.

  3. Must be certain

  4. Different and distinguished from invitation to offer

  5. Nature may be general or specific.

  6. Must be free to consent

    (free from section 15 coercion, section 16 undue influence, section 17 fraud, section18 misrepresentation and section19,20,21of mistake.)

COMMUNICATION OF OFFER

  • Offer or proposal is made by either party to the other.
  • Offer can be made or communication via word of mouth, by conduct or even writing. But for written offers, it may be carried in a letter or telegram.
  • Communication of offer is said to be complete when it comes to the knowledge of the person to whom it is made (offeree/s).

Illustration:

Consider first party as ABHAY and second party as BHAVIK.
Abhay wanted to sell his car and sent Bhavik a letter stating the same for Rs.4, 00,000 on 15 April. The letter reached Bhavik on 17 April.
• So, communication is complete when the letter is received by Bhavik on 17th April. (It has come to the knowledge of the person to whom it was made.)

Acceptance

The Indian Contract Act 1872 defines acceptance in: Section 2 (b) as “When the person to whom the proposal has been made signifies his assent thereto, the offer is said to be accepted. Thus the proposal when accepted becomes a promise.”

Acceptance is communicated keeping 2 factors in notice:

  1. Mode of expressing acceptance

    • Acceptance by ACT:

      • In this way it is generally communicated in the terms of words; it can be written as well as oral.
        Communications over and via telephone, letters, telegram and even e-mails will be considered as ACT.
      • ILLUSTRATION: Abhay wanted to sell his car and sent Bhavik a letter stating the same for Rs.4, 00,000 on 15 April. The letter reached Bhavik on 17 April. Bhavik posted a letter to Abhay stating his acceptance of offer

    • Acceptance by CONDUCT:

      • In this way it is communicated by conduct or action.
        The acceptor or offeree doesn’t communicate its acceptance in words but it is implied in his behavior.
      • ILLUSTRATION: Abhay wanted to sell his car and sent Bhavik a letter stating the same for Rs.4, 00,000 on 15 April. The letter reached Bhavik on 17 April. Bhavik directly paid Rs.4, 00,000 to Abhay via money transfer using the details in offer letter.

  2. Against the respective contracting parties i.e. proposer or acceptor

    • Timing of communication of acceptance complete stands different according to the respective end (contracting party i.e. proposer or acceptor) it is done.

    • AS AGAINST THE OFFEROR (proposer)

      • When the person or party who had an offer for another party i.e. that offers a proposal, for it the communication of acceptance is complete when it has been put in the course of transmission by the acceptor.
      • ILLUSTRATION: Abhay wanted to sell his car and sent Bhavik a letter stating the same for Rs.4, 00,000 on 15 April. The letter reached Bhavik on 17 April. Bhavik posted a letter to Abhay stating his acceptance of offer on 19 April. The letter was received by Abhay on 21 April.
      • So , against the offeror or proposer Abhay, communication of acceptance is complete when Bhavik has posted the letter of acceptance i.e. 19 APRIL , it has been put in the course of transmission and out of the hands of Bhavik.

    • AS AGAINST THE ACCEPTOR

      • When the acceptance given by the acceptor comes to the knowledge of the proposer, the communication of acceptance against the acceptor stands complete.
      • ILLUSTRATION: Abhay wanted to sell his car and sent Bhavik a letter stating the same for Rs.4, 00,000 on 15 April. The letter reached Bhavik on 17 April. Bhavik posted a letter to Abhay stating his acceptance of offer on 19 April. The letter was received by Abhay on 21 April.
      • So, as against the acceptor Bhavik, communication of acceptance is complete when the letter of acceptance posted by Bhavik is received by Abhay, i.e. 21 APRIL.

SUMMARY

ILLUSTRATION:

Abhay wanted to sell his car and sent Bhavik a letter stating the same for Rs.4, 00,000 on 15 April. The letter reached Bhavik on 17 April. Bhavik posted a letter to Abhay stating his acceptance of offer on 19 April. The letter was received by Abhay on 21 April.

  • Communication of offer is complete when Bhavik received the letter-17 APRIL.
  • Communication of acceptance is complete :
    • Against Abhay(offeror/proposer) – 19 APRIL
      (Letter of acceptance posted by acceptor)
    • Against Bhavik(acceptor) – 21 APRIL
      (Letter of acceptance received by proposer)

Author: Anjana Gupta,
Chandigarh University-B.A llb 1st year

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