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Unit 2: Offer and Acceptance

2.9 Summary Notes

z Offer is not only one of the essential elements of a contract but it is the basic building
block also. An offer is synonymous with proposal. The offeror or proposer expresses his
willingness “to do” or “not to do” (i.e., abstain from doing) something with a view to
obtain acceptance of the other party to such act or abstinence [s.2 (a)]. Thus, there may be
‘positive’ or ‘negative’ acts which the offeror is willing to do.
z If the terms of the offer are loose, vague, ambiguous or uncertain, it is not a valid offer.

z 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.
z The offer must be made with a view to obtain acceptance thereto.
z 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.
z The offer must be communicated to the offeree before it can be accepted. This is true of both
specific and general offers.

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

not remain open for an indefinite 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.
z Acceptance of an offer “subject to a contract” or “Subject to a formal contract”, or ‘Subject
to a contract to be approved by solicitors” – The significance of these words is that the

parties do not intend to be bound and are not bound until a formal contract is prepared
and signed by them. The acceptor may agree to all the terms of the offer and yet decline to
be bound until formal agreement is drawn up.
z The acceptance of an offer cannot be implied from the silence of the offeree or his failure to
reply.
z When one party abandons or refuses to perform the contract. Where there is a breach of
contract, the aggrieved party is entitled to claim reasonable compensation for what he has
done under the contract.
z When a contract is divisible and the party not in default, has enjoyed the benefit of the part

performance, the party in default may sue on quantum meruit.
z When an indivisible contract is completely but badly performed. When an indivisible
contract for a lumpsum is completely performed, but badly, the person who has performed
can claim the lump sum less deduction for bad work.

2.10 Keywords

Express offer: It means an offer made by words (whether written or oral). The written offer can be
made by letters, telegrams, telex messages, advertisements, etc. The oral offer can be made either
in person or over telephone.
Implied offer: It is an offer made by conduct. It is made by positive acts or signs so that the person
acting or making signs means to say or convey something. However, silence of a party can, in no
case, amounts to offer by conduct.

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