Types of Offer – Indian Contract Act, 1872

Offer and It’s Types

• As per Section 2(a), Offer (Proposal) is when one person signifies to another his willingness to do or to abstain from doing anything, to obtain the assent of that other individual either to such act or restraint, he is said to propose.
• To frame an agreement, there must be at least two components – one offer and the other acceptance. Thus offer is the foundation of any agreement.

“When an individual signifies to another his willingness –

• to do or to restraint from doing anything,
• To get the consent of that other to such act or abstinence, he is said to propose.”

The individual who makes an offer is “Offeror” or “Promisor” and the individual to whom the offer is made is “Offeree” or “Promisee”.

Example

X says to Z, “Will you buy my laptop for Rs.1,00,000?” In this case, X is making an offer to Z. Here, X is the offeror and Z is the offeree.

Essentials elements of an offer :-

1. There must be two parties.
2. The offer must be conveyed to the offeree.
3. The offer must show the willingness of the offeror. Simple telling the plan is not an offer.
4. The offer must be made with the end goal of getting the consent of the offeree.
5. A assertion made jokingly does not add up to an offer.
6. An offer may include a positive demonstration or restraint by the offeree.
7. Mere articulation of willingness does not establish an offer.

Ex. – M tells N that he desires to marry by the end of 2008, it does not constitute an offer of marriage by M to N. M further adds “Will you marry me?”

Then it became an offer.

Kinds of Offer

There are basically 7 kinds of offers under the Law of Contract, which are the following –

1. GENERAL OFFER
2. SPECIFIC OFFER
3. COUNTER OFFER
4. CROSS OFFER
5. IMPLIED OFFER
6. EXPRESSED OFFER
7. STANDING OFFER

GENERAL OFFER –

When an offer is made to everyone or in public or in general, this offer is known as General Offer. It can be accepted by any individual or public at large whoever is interested in the offer offered. When an individual accepts the offer given, then the offeror and offeree enter into a contract. The reward will be given to that person who completed the task given or fulfilled the given condition.

Case Law: CARLILL v. CARBOLIC SMOKE BALLS CO. (1893)^[1]

In this case, Company advertised that a reward of Rs.100 would be given to any person who would suffer from influenza after using the medicine (Smoke balls) made by the company, according to the printed directions.

One lady, Mrs. Carlill bought and utilized the medicine as per the printed directions of the company, however suffered from influenza, she documented a suit to recuperate the reward of Rs.100. The court held that there was a contract as she had accepted a general proposal by utilizing the medicine in the recommended manner and as such as entitled to recover the Reward from the company.

SPECIFIC OFFER 

The offer which is made to an individual or a particular group of individuals is said to be a Specific offer. It can be accepted by that individual or group of individuals.

Example: A offer to buy a car from B for Rs. 10 lakh. Thus, a specific offer is made to a particular person, and only B can accept the offer.

COUNTER OFFER –

When an offeror makes an offer to offeree and offeree with some modification in it makes a converse offer which makes the initial offer void and the other comes in existence, which reverses the party from the offeror to offeree and offeree to offeror. This kind of offer is known as Counter Offer.

Case Law: HYDE vs. WRENCH (1840)[2]

In this case, the Defendant (Offeror) proposed to sell his farm for £1000 but the Plaintiff (Offeree) offered him £950 and subsequently rejected the offer. So, the offeree documented the case as the contract restricted the offeror, but it was held that when the offeree put the condition, the first offer becomes void which implies that the contract does not restrict the offeror as the offeree quashed the original offer.

CROSS OFFER –

When the offeror and offeree make the same offer to one another having the same terms out of knowledge of each other is known as a cross offer. In this case, there will be no contract due to acceptance of the offer offered.

Example: K makes an offer to sell his car for 10 lakhs to C and C in ignorance of that, makes an offer to buy the same car for 10 Lakhs, they are said to make a cross offer, and there is no acceptance, in this case, hence it cannot be a mutual acceptance.

Case Law: TINN v. HOFFMAN (1873)[3]

In this case, Hoffman wrote a letter to Tinn with an offer to sell 800 tons of iron for the price of 69 rs. per ton. On the same day, with no information about the same, Tinn composed a letter to purchase the iron with the price and with the same condition as composed by Hoffman. It was held by the court that it was a cross offer and the contract restricts no parties.

IMPLIED OFFER –

When a proposal is given by body posture, gesture, or by action or by the conduct of the offeror is known as an implied offer. The offeree can accept the offer by understanding the acts of the offeror.

EXPRESSED OFFER –

When an offer is express in written or in verbal form then this offer is known as an Expressed offer. For Example – A writes a letter to D to buy his earphone for Rs.500. This is an expressed offer.

STANDING OFFER –

When the tender is presented to supply certain goods or any quantity as and when required, it is known as Standing Offer. In such a situation, a contract does not come into existence merely when the tender is accepted, but a contract comes into existence when the order is placed. Each order in such a case is accepted and when the offer is accepted, the contract comes into existence.

Case Law: Perclval Ltd. vs. London County Council Asylums and Mental deficiency Committee

In this case, Plaintiff advertised for tenders for the supply of goods. The defendant took the tender in which he had to supply to the company various special articles for a period of 12 months. Meanwhile, the Defendant didn’t supply for a specific consignment. The Court held that the Tender was a standing offer that was to be changed over into a series of contracts by the resulting acts of the company and that an order forestalled pro tanto the chance of revocation, hence the company succeeded in an action for breach of contract.

Conclusion

As an offer is the first step of a contract, it is essential to distinguish what type of offer has been made by the offeror, as different kinds of offers have different kinds of legal rules being concerned with them.

[1]. (1893) 1 QB 256

[2]. (1840) 49 ER 132

[3]. (1873) 29 LT 271

Author: Ayush Patria,
Sangam University, Bhilwara (Rajasthan); 3rd Year; Law Student