Define the term Proposal. Discuss the essentials of a Valid Offer.
An offer is also called proposal. According to Section 2(a) of the Indian Contract Act, 1872, When one person signifies to another his willingness to do or to abstain from doing something, with a view to obtaining the assent ox mat other to such act or abstinence, he is said to make a proposal.
According to Section 2(b) of the Indian Contract Act, 1872, A proposal when accepted becomes a promise. The offer involves the following elements:
- It must be an expression of readiness or willingness to do or to abstain from doing something.
- It must be made to another person.
- It must be made with a view to obtain the assent of that other person to such act or abstinence.
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Essentials of a Valid Offer.
An offer or proposal made by a person is not treated as legal unless the following conditions are satisfied, namely:
Offer must intend to create legal relations:
The offer does not turn into a promise if it has been accepted unless it is made to create legal obligations. As the underlying feature for the creation of an agreement is its enforce-ability at the law.
Therefore, a mere social invitation cannot be regarded as an offer because if such an invitation is accepted it does not give rise to any legal relationship.
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Terms of offer must be certain, definite and not vague:
The terms of the offer must be certain and unambiguous and not vague.
As a vague offer does not convey what is exactly means and also that the parties would not exactly know what they intend to do.
The offer must be distinguished from a mere declaration of intention:
When the statement is without any intention of creating a binding obligation, it only indicates that he is willing to negotiate and an offer will be made or invited in future.
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Offer must be distinguished from an invitation to offer:
In case of invitation to offer there is no intention on the part of the person sending out the invitation to obtain the assent of the other party to such invitation, which makes it important for an offer to be distinguished from an invitation to receive an offer or to make an offer or to negotiate.
The offer must be communicated:
It is very important that the offer is communicated to the person to whom it is made. As an offer is only complete when it is communicated to the offeree, based on the fact that the offer can only be accepted only when one knows about it.
Therefore, an offer accepted without its knowledge does not confer any legal rights on the acceptor.
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Offer should not contain a term the non-compliance of which would amount to acceptance:
The offeree must not be under an obligation to reply under the offer. While making the offer the offeree cannot say that if the offer is not accepted before a certain date it will be presumed to have been accepted.
Special terms or conditions in an offer must also be communicated:
If the special terms of the offer are not communicated then the offeree will not be bound by those terms. In other words, the offerer is free to lay down any terms and conditions in his offer and the other party accepts the offer then he will be bound by those terms and conditions.