Offer and revocation of offer

In my previous blog I had explained how offer is an essential element of contract. Now I am going to explain offer separately in this blog. Students can expect questions on offer and requisites of a valid offer and how offer is revoked. It is a repeated question in Kslu as well as other universities.

Offer- When one person signifies his willingness to do or to abstain from doing something in order to obtain the assent of the other to such act or abstinence is said to make an offer. Offer can also be called as a proposal. It is the first part of an agreement. ( Agreement = offer + acceptance)

Below are the requisites of a valid offer:

1) Communication - An offer must be communicated to the offeree( the person to whom the offer is communicated is the offeree). Unless it is communicated it would not come to the persons knowledge which is very important. Communication of an offer is complete against the offeror when the offer comes to the knowledge of offeree. An offer if to be revoked must be done so before the offer comes to the knowledge of the offeree.

2) Definite - An offer must be definite in its terms and conditions. In other words an offer cannot be vague. It has to be 100 % sure as to what it contains. The terms conditions price place everything has to be mentioned. eg: A offers to sell to B a scooter for 5000 or 10000 . This is not a valid offer as the offer is not definite about its price.

3) Intention to create a legal relationship- Since a contract is an agreement enforceable by law , the intention of giving an offer or a proposal should be to create a legal relationship with the other person.

4) Obtain the assent of the other - An offer should be should be made with the intention of obtaining the assent of the other to offer in order to complete the agreement.

5)offer cannot contain a term , non compliance of which amounts to acceptance - There cannot be a term in the offer which says that if you do not agree to this or which says if you do not reply within such and such time i presume that you have accepted the offer. Acceptance is something that has to be given by the offeree , a term in the offer cannot make an acceptance by non compliance.

6) Offer should be something which is being capable of being performed : eg: A offers to pay b rs 1000 if B discovers treasure through magic. Here it is an impossible offer and hence it is void.

7) Offer should be distinguished from invitation to offer : Eg: Shopkeepers display of catalogue of prices , Bankers display of interest rates, tender,auction,railway timetable are all inviation to offer. If A goes to a shop and picks up a book priced at 500 and the shopkeeper refuses to sell , A does not have an right against the shopkeeper as the book displayed there is only a invitation to offer.

Revocation of offer :

An offer can be revoked through the following methods:

1) Notice of revocation : An offer can be revoked through notice of revocation. The notice of revocation must be given before the communication of offer is complete against the offeror.

2) lapse of time : An offer gets revoked when the offer is not accepted within the prescribed time period or if there is no prescribed time period then it has to be accepted within reasonable time.

3) Qualified acceptance : one of the essentials of an acceptance is that it should be absolute and it should be accepted in the prescribed form. If an offeree does not accept in the prescribed form and adds his own conditions this becomes a qualified acceptance and the original offer is revoked.

4) Death or Insanity of the offeror - If the offeror dies or becomes insane and this comes to the knowledge of the offeree before making the acceptance, the offer is revoked.

next blog would be about types of offers: general , invitation to offer, cross offer, counter offer

Contract and its essential elements under the Indian Contract act.

The following is intended to convey to the reader important points regarding law of contracts. This can be used by students pursuing any course where there is a subject on contracts.I intend to cover all the necessary points in a simple manner which would make it easier to understand for the student. These points are only illustrative and can be used for a quick reference , for thorough knowledge of this subject i advice you to read the text books in detail.

In this issue I am going to discuss the elements of contract.

Contract- A contract is an agreement enforceable by law. There are two parts in this defintion : part 1- an agreement, Part 2 - legal enforcement. we can say that any agreement that can be enforced in a court of law is a contract.

Agreement - every promise and set of promises forming the consideration for each other is an agreement.

Agreement = offer + acceptance.

offer and acceptance shall be discussed later in this issue.

Let us see as to what are the essential elements of a valid contract. Essential elements means the elements which are necessary to be present in order to make a contract legally enforceable.

1) Free consent - The consent of the parties to a contract must be free ie the consent should not be obtained through means of fraud,misrepresentation,undue influence,mistake, coercion. ( for beginners: consent means agreeing to the terms and conditions of the contract and entering into it. eg: A agrees to sell an apple to B at 10 rupees. here A's willingness to sell the apple is his consent.

2) Competency to contract- The parties to the contract must be competent. Here competency doesnt mean any ability or skill . It means the following:
a)Major.
b)of sound mind.
c)persons not disqualified by law.

we can also say that a minor, person of unsound mind and persons disqualified from law are not competent to contract.

3)Legality of object- The object of the contract should be legal and not illegal. illegal objects would make the contract void ab initio that is void since the beginning.eg: A B and C agree to share among themselves gains arising out of a illegal business. This is not a valid agreement as the object is unlawful.

4)Consideration - Every contract must have a lawful consideration.Consideration means something in return( need not be adequate). It is also called a recompense. The consideration to a contract must be lawful as well. It cannot be something prohibited by law. Eg: A agrees to pay B rs 1000 for no consideration this is not a valid agreement... A agrees to pay B rs 500 for a horse valued at 1000. This is a valid agreement as consideration is something in return and need not be adequate.

5)valid offer and acceptance - every contract is made by a valid offer and acceptance.
offer- a person is said to make an offer when he signifies his willingness to do or to abstain from doing something in order to obtain the assent of the other to such act or abstinence.
acceptance- Signifying ones willingness to such act or abstinence mentioned above is a acceptance.

6)Wherever it is necessary the agreement should be in writing. Wherever it is legally necessary that the agreement should be in writing it should be in writing and not in a oral mode.

In my next blog I shall discuss Offer , Acceptance , Conditions for making it valid and its revocation.

I shall discuss the various heads under free consent, competency,consideration and unlawful agreements separately in my future blogs.