The term Offer is also called as Proposal. The first step in the formation of a contract is the making of a proposal. To constitute a contract there must be an offer and acceptance. The person who makes an offer is called "Offeror" and the person who accepts the offer is called "Acceptor".

Definition of Proposal (Offer) :

         Section 2(a) of the Indian Contract Act, 1872 defines Proposal - "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."

    Section 2(b) defines "promise" as, "when a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise;

          According to Section 2(c) of the Indian Contract Act, the person making the proposal is called the “promisor”, and the person accepting the proposal is called “promisee”,

Example : 

    A intends to sell his Car to B for ₹ 200000/- and makes proposal to B. Here  A is called Proposer or promissor or offeror. B is called promisee or offeree.



Essentials of a valid Offer :

             An offer to be valid and enforceable following conditions are to be satisfied

1) There must be Two parties :

2) Every proposal must be communicated

3) It must create Legal Relations

4) It must be Certain and definite

5) It may be specific or Public


1) There must be two parties:
 
            There must be at least two persons, A person to make proposal and the other person to accept it. Legal persons, artificial person all are included in person.


2) Every proposal must be communicated

             Communication of proposal is compulsory. An offer is valid if it is communicated to the offeree. The communication may be express or implied. It may be communicated by means of words of mouth, messenger, telegram etc. Section 4 of the Indian Contract Act says that the communication of proposal is complete when comes to the knowledge of the person to whom it is made.

    Example :

              A proposes , by letter, to sell a house to B at a Certain price. The communication of the proposal is complete when B receives the letter.




3) It must create Legal Relations:

              To create a contract intention of the party to enter into legal obligation is compulsory, means the intention of offer should be to perform a legal obligation if it is to perform a social obligation it is not a proper proposal.

Example :

      A invites to B for lunch and failed to arrange the same. B cannot sue A as it does not create a legal obligation.  (See... relevant Case : Balfour Vs Balfour (1919) 2 KB 571 )

 4) It must be Certain and definite : 

               To create a valid contract the terms of the offer must be certain and definite and must not be vague. It may be specific or public


5) It may be specific or Public : 
 
     Specific offer : Offer to specific person or group are known as specific offer.

           
     General Offer  : Offer to public are known as specific offer

      The specific offer can be accepted by the person or group to whom it is made. The general offer can be accepted by any person.


See also

1) Types of Agreement (The Indian Contract Act, 1872)

2)  Rights and Duties of Agent (Agency: Indian Contract Act,1872)

3) What is a sound mind for the purposes of contracting ?

4) Difference between Sub-Agent and Substituted-Agent

5)  Difference between Sub Agent and Co-Agent/ Substituted agent




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