Proposal (Offer) – Section 2(a)

The starting point of any contract is a Proposal, commonly known as an Offer. Without a valid offer, there can be no acceptance, and consequently, no contract.

1. Meaning of Proposal

The term “Proposal” is defined under Section 2(a) of the Indian Contract Act, 1872:

“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.”

Breakdown of the Definition:

1. Signifies: The willingness must be communicated (spoken, written, or by conduct). It cannot remain in the mind.
2. Willingness to do or abstain: The offer can be positive (to do something) or negative (not to do something).
3. Objective: The purpose must be to get the “Yes” (assent) of the other party.

The Parties:

• Promisor/Offeror: The person making the proposal.
• Promisee/Offeree: The person to whom the proposal is made.

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2. Types of Offer

Offers can be classified based on how they are made and to whom they are made.

A. Express Offer

When an offer is made by words, either spoken or written.

• Example: A writes an email to B: “I will sell my car to you for ₹2 Lakhs.” This is an express offer.

B. Implied Offer

When an offer is inferred from the conduct of the parties or the circumstances of the case, rather than words.

• Example: A transport bus running on a specific route is an implied offer to carry passengers at the scheduled fare. When a passenger boards the bus, they accept this implied offer.
• Example: Using an ATM is an implied contract with the bank.

C. Specific Offer

An offer made to a definite person or a specific group of persons. Only that specific person can accept it.

• Example: X offers to sell his watch to Y for ₹500. Only Y can accept this offer. Z cannot accept it.

D. General Offer

An offer made to the public at large. Anyone who fulfills the terms of the offer can accept it.

• Landmark Case:Carlill v. Carbolic Smoke Ball Co. (1893)
  • Facts: A company claimed their medicine (Smoke Ball) would cure influenza and offered £100 reward to anyone who contracted the flu after using it. Mrs. Carlill used it, got the flu, and claimed the reward.
  • Held: It was a general offer made to the world. By using the product as directed, she had accepted the offer.

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3. Legal Rules Regarding a Valid Offer

For an offer to be valid and capable of forming a contract, it must satisfy specific legal rules:

1. Intention to Create Legal Relations The offeror must intend to create a legal obligation. If the offer is made as a joke or a social invitation, it is not valid.

• Reference: Balfour v. Balfour (Social agreements are not offers in the eyes of the law).

2. Terms Must Be Certain and Definite The terms of the offer must not be vague.

• Example: “I will sell you 100 tons of oil.” (Invalid, because it does not specify what kind of oil).
• Example: “I will sell you my car for a reasonable price.” (Invalid, price is uncertain).

3. The Offer Must Be Communicated An offer is effective only when it reaches the knowledge of the person to whom it is made. You cannot accept an offer you don’t know about.

• Landmark Case:Lalman Shukla v. Gauri Datt
  • Facts: A servant found a missing boy without knowing that his master had announced a reward. Later, he claimed the reward.
  • Held: He could not claim the reward because the offer (reward) was not communicated to him before he performed the act.

4. It Must Be distinguished from an “Invitation to Offer” An offer is final; an invitation to offer is just a negotiation.

• Offer: “I will sell this book for ₹500.”
• Invitation to Offer: A price tag on a shirt in a showroom, a menu card in a restaurant, or an auction notice. These are invitations for you to make an offer to buy.

5. It May Be Conditional An offer can contain conditions (e.g., “Offer valid only if you pay in cash”). However, the conditions must be clearly communicated.

6. It Should Not Contain a Term of Non-Compliance The offeror cannot say, “If you do not reply by Friday, I will assume you have accepted.” Silence cannot be prescribed as a mode of acceptance.