Offer and Acceptance

From insurance plans to work contracts, contracts play a significant role in our daily lives. In reality, we often enter into contracts without even realising it, such as when we buy a movie ticket or download an app. Agreements made in writing or orally by two or more parties constitute a contract. A contract's parties could be one person, a company, a non-profit, or a government agency. An offer is made by one party, accepted by another, and then there is an exchange of money or other consideration to begin the process of entering into a contract.

A Proposal or Offer

Section 2 of the Indian Contract Act of 1872 defines proposal 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."

Features of a Valid Offer

The person making the offer or proposal is referred to as the "promisor" or the "offeror". And the person who accepts an offer is referred to as the "promisee" or the "acceptor".

• The offeror must state whether he is willing to perform the act or refrain from performing it. Merely being willing is insufficient. A simple inclination to do something or not do anything won't qualify as an offer. An offer may be accepted or rejected.

• It can be a promise to carry out a specific act or a pledge to refrain from carrying out any act or providing any service. Both proposals are genuine.

Element of a Valid Offer

Here are some essentials that make the offer valid −

• It must create Legal Relations

• Every proposal must be communicated

• Every proposal must be communicated

• There must be two parties

• It may be specific or general

• It must be certain and definite

Classification of offer

The types of offers are listed below −

Express Offer

The express wording of a spoken or written offer is both acceptable. It is referred to as an express offer.

Example: When ‘A’ says to ‘B’, "will you purchase my car for Rs. 2,00,000"?

Implied Offer

The acts or circumstances of the parties may lead to the creation of an offer. It is referred to as an implied offer.

Example: When a transportation firm runs a bus on a specific route, there is an implicit offer by the corporation to convey people for a specific fare.

General Offer

No specified party makes a generic offer. It is a decision that the general public makes. So, anyone in the public has the option to accept the offer and the right to the benefits or consideration.

Specific Offer

It is an offer that has been made to a certain individual or group of individuals, and only they have the right to accept it.

Cross offer

Under specific conditions, a cross-offer is made by two parties. It indicates that both make the identical offer to the other at the same moment. The counter-offer will not, however, equal accepting the offer in any scenario.

Counter-offer

In response to an original offer, one makes a counteroffer. A counter-offer indicates that the first offer has been rejected and has been replaced by a different one. The counteroffer gives the initial offeror three options: accept, reject, or make another offer.

Acceptance

Acceptance is defined in Section 2(b) of the Indian Contract Act of 1872 as

"when the person to whom the proposition is presented signifies his assent thereto. As a result, when accepted, the proposition becomes a promise. An offer may be withdrawn prior to acceptance.”

As stated in the definition, acceptance of the offer will occur if the offeree to whom the request is made unconditionally accepts the offer. The guarantee is made once the offer has been accepted.

Example: B accepts "A's" offer to pay 40 lac rupees to purchase his home. It has now been made a promise.

When a promise is made and accepted, it also becomes irrevocable. An offer does not constitute a binding contract.

Types of Acceptance

Following are the major types of acceptance −

Expressed Acceptance

It becomes an "expressed acceptance" if it is expressed verbally or in writing.

Example: "A" emails "B" and offers to sell him his phone. B replied to the email and acknowledged receipt of the purchase offer.

Implied Acceptance

If the acceptance is demonstrated through behaviour, it then becomes an implied acceptance.

Example: A vintage book is sold at auction by the Arts Museum to raise money for a good cause. They promote the same thing in the media. A simple invitation to an offer, according to the Indian Contract Act of 1872, is stated here. The invitees extend the same request. The offer to purchase is given orally, making it an "instant offer, but the auctioneer makes the final determination by striking the hammer three times. It's known as implicit acceptance.

Conditional Acceptance

When a person to whom an offer has been made informs the offeror that he or she is willing to accept the offer provided that specific changes are made to the offer's condition, this is known as a conditional acceptance or an eligible acceptance. When used in this way, acceptance serves as a counter-offer. Before a contract is formed, the initial offeror must take into account a counteroffer.

Legal Requirements and Standards for Acceptance

The conditions to meet the criteria for accepting an offer are listed below −

• The offeror must be informed of the acceptance.

• Acceptance must be unconditional and unqualified.

• Acceptance must be unconditional and unqualified.

• Acceptance must be delivered within a reasonable amount of time.

Mere silence is not acceptance

An offeree's silence in response to an offer made to him should not be interpreted as acceptance. There is, however, one exception to this rule. According to the terms, the offeror must be informed of the non-acceptance three weeks after the offer date. Otherwise, the silence must be interpreted as consent.

Conclusion

One way to determine if a two-party agreement exists under contract law is to examine the offer and acceptance. An offer is a declaration by one party to another that they are ready to settle on specific terms. A contract will be created if there is either an express or implied agreement. When the offeree informs the offeror that their offer has been accepted, a contract is said to have been formed. When the person to whom the offer is made becomes aware of it, the communication of the offer is complete.

Likewise, the communication of the acceptance is complete when it is put in motion to be transmitted to the offeror. As a result, an offer and an acceptance are necessary components of a contract, and in both cases, they should be made of one's own free will with the goal of reaching a binding agreement.

Frequently Asked Questions

Q1. What are offer and acceptance in the law of contract?

Ans. According to Section 2(b) of the Indian Contract Act of 1872, acceptance occurs "when the person to whom the proposal has been made shows his approval thereto." As a result, when accepted, the proposition becomes a promise.

Q2. What is the relationship between offer and acceptance?

Ans. An offer is a declaration by one party to another that they are ready to settle on specific terms. A contract will be created if there is either an express or implied agreement. When the offeree informs the offeror that their offer has been accepted, a contract is said to have been formed.

Q3. What is the invitation to make an offer?

Ans. An invitation to offer is a statement made with the intention of eliciting feedback and facilitating negotiations but without indicating a firm intent to enter into a contract. When a request for an offer is made, an offer is created.

Q4. What would be the validity of acceptance if a letter of revocation and a letter of acceptance were reached together?

Ans. The Indian Contract Act, 1872, stipulates that, in the case that the offeror receives both the letter of acceptance and the telegram of cancellation, whichever is read first is deemed to have been given effect. Yet, for this reason, revocations are sent more quickly, and a telegram is more likely to be read before the acceptance letter.