Page 26 - DCOM103_COMMERCIAL_LAW

Unit 2: Offer and Acceptance

4. If a person makes a statement without any intention of creating a binding obligation this Notes
does not amount to an offer. It is only a mere declaration of intention to offer.

Example: An auctioneer, L, advertised that a sale of office furniture would take

place at a particular place on a stated day. H travelled down about 100 km. to attend the
sale but found the furniture was withdrawn from the sale. He claimed compensation from
the auctioneer. Held, that auctioneer was not liable.
5. Where two parties make identical offers to each other in ignorance of each other’s offer
this does not result in a contract. Such offers are known as cross offers and neither of the
two can be called an acceptance of the other.
6. The offer must be made with a view to obtain acceptance thereto.
7. The offer must be made with the intention of creating legal relationship. An offer of a
purely social or domestic nature is not a valid offer.
8. The offer must be communicated to the offeree before it can be accepted. This is true of both
specific and general offers.

9. If no time is fixed by the offeror within which the offer is to be accepted, the offer does

not remain open for an indefi nite period. Where no time is specified, then the offer is to be
accepted within a reasonable time. Thus, if no time is specified then the offer lapses after

a reasonable time. What is a reasonable time is a question of fact and would depend upon
the circumstances of each case.
10. An offer must be distinguished from a mere invitation to offer.

2.5 Revocation of Offer

There are many reasons due to which the offer lapses or is revoked such as: (i) An offer is revoked
by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge
of the acceptor before acceptance. Therefore, if the acceptance is made in ignorance of the death,
or insanity of the offeror, there would be a valid contract, (ii) An offer lapses by the death or
insanity of the offeree before acceptance, (iii) An offer terminates when rejected by the offeror,
(iv) An offer terminates when revoked by the offeror before acceptance by the offeree, (v) An offer
terminates by not being accepted in the mode prescribed, or if no mode is prescribed, in some
usual and reasonable mode (or manner), (vi) A conditional offer terminates when the condition
is not accepted by the offeree, (vii) An offer terminates by counter-offer by the offeree.
Meaning of a Counter-offer

When in place of accepting the terms of an offer as they are, the offeree accepts the same subject
to certain conditions or qualifications, he is said to make a counter offer.

Example: An offer to sell rice was accepted by the offeree with an endorsement on the Sold
and Bought Notes that yellow and wet grain will not be accepted [Ali Shain vs. Moothia Chetti,
2 Bom L R 556]. Held, there was no contract.
Irrevocable offers. Generally, a proposer specifies a period within which the offeree must accept.

Thus, if A makes an offer to B on 1 June, valid upto 6 June, but revokes it on 5 June, before its
acceptance by B the revocation is effective, and the offeree has no remedy. However, the courts
will bind an offeror to his promise to hold an offer open in exchange for a consideration given
by the offeree. For instance, in the above case, if B had given some consideration to A to keep the
offer open, then A could not revoke the same before the specified time. Sometimes such contracts

are called “option contracts”.

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