Page 13 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes 1.3 Essential of a Valid Contract

It is important to have valid offer. Following are the essentials of a valid offer:

1. The terms of the offer must be definite, unambiguous and certain or capable of being made

certain. If the terms of the offer are loose, vague, ambiguous or uncertain, it is not a valid
offer.
2. An offeree must have knowledge of the offer before he can accept it. The offer must be
communicated to the other party. The communication of offer is complete only when it
comes to the knowledge of the offeree. If the offer is lost on the way in transit it is no offer.

This is true of specific as well as general offers.
3. An offer cannot contain a term the non-compliance of which may be assumed to amount
to acceptance. An offeror cannot say that if the offeree does not accept the offer within
two days the offer would be deemed to have been accepted. Such a burden cannot be
imposed on the offeree. It is for the offeree to accept the offer or not; and therefore, he may
communicate his acceptance accordingly.
4. If a person makes a statement without any intention of creating a binding obligation this
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 traveled 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but found the furniture was withdrawn from the sale.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. An offer must be distinguished from a mere invitation to offer.

What is a Standard Form Contract?

A standard form contract is a document which is generally printed, containing terms and

conditions, with certain blanks to be filled in. It is prepared by the business people. The customer
has only to sign it. Therefore, from his standpoint, the freedom to contract is restricted. Many of
the contracts now being entered into by consumers are not the result of individual negotiations;
rather they are one-sided contracts. The consumer has to accept them or leave them. Rather than
permit the form to be varied, the firm or industry imposing it simply refuses to deal with anyone

who will not accept its terms. A contract thus is imposed by a party having a strong bargaining
power on a party having a weak bargaining power. Hence, such a contract is known as a contract
of adhesion. Most contracts for photocopier machines, insurance, automobiles, telephone, water
and power connection and a host of other goods and services are contracts of adhesion. In fact,
the process of dilution of the freedom of the parties to contract has started in a big way and a time
might come when it shall only be a myth.

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