OFFER

Offer is defined as, Sec 2 (a):

-A person is said to have made a proposal when he signifies to another his willingness to do or abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence

OFFEROR: The person making the offer is the offeror. OFFEREE: the person to whom it is made is offeree. When the offeree accepts the offer, he is called the acceptor or promisee.

Essentials Of Offers
1. Offer must be intended to create a legal relation. 2. The terms of offer must be definite, unambiguous & certain and not loose and vague. 3. Offer must be communicated. 4. Offer must be made with the view to obtaining the assent of the offeree. 5. A mere statement of price is not an offer. 6. Offer should not contain a term the noncompliance of which may be assumed to amount to acceptance. 7. An offer must be distinguished from

1. Express offer 2. Implied offer 3. Specific offer 4. General offer 5. Cross offer 6. Standing offer 7. Counter offer

 An express offer is made by words-written or oral. Insofar as the proposal or acceptance of any promise is made in words, the promise is said to be express. says to B that he wants to sell his old computer for Rs.5000. This is an express offer A writes to B that he offers to sell his Computer for Rs.10,000. This is also an express offer.

Ex-A

 Implied offer is one that the law infers from the conduct of the parties or the circumstances of the particular case. Insofar as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.
Ex:- X steps into a restaurant and consumes some food. This act creates an implied promise to pay. As soon as a shoe shiner starts cleaning someones shoes, without being asked to do so, he is considered to have made an implied offer

 An offer is said to be specific or particular when it is made to a specific person or a group of persons. Such an offer can be accepted only by that person or a member of the group, and by no one else. Ex:-A offers to sell his dog to B for Rs 5,000.this is a specific offer as B alone can accept or reject it.

 A general or a public offer is one that is made to the world at large. Any person(i.e. competent to contract) with the notice of the offer may validly accepted such an offer by complying with the terms of the offer. An advertisement addressed to the public at large is a common example. Ex:- In Harbhajan Lal vs. Harcharan Lal, a young boy ran away from his home. The father of the missing boy, by issuing a handbill, offered a reward of Rs.500 to any one who would bring the boy home. The plaintiff spotted the boy at Dharamsala railways station and took him to the police station. He then informed the boys father through a telegram. It was held that the handbill was an offer open to the world at large and the plaintiff, by tracing the missing boy, had substantially performed the conditions of the offer and was thus entitled to the reward.

 Refers to identical offers made by two person or parties to each other, neither side knowing of the others offer when they make their own. Cross offers do not constitute acceptance of each other because they tend to promote uncertainty and as such no contract is concluded.

Ex:-A writes to B offering to sell his bike for Rs 5000 and

B simultaneously writes to a offering to buy his bike for the same price. The two mails cross each other. If no further communication takes place in such a case, no contract can be concluded between A and B, as both sides have made offers without knowing about the offer made by the other. Also this does not amount to acceptance of each others offer.

 An offer is kept open for the acceptance over a period of time is termed as standing , open or continuing offer.

 It is refers to an offer to contract on terms materially different from the terms of the offer. This is, thus an alternative proposal made by the offeree in substitution for the original offer.

 When an offer is made it will not remain open indefinitely but will lapse or terminate, i.e. come to an end . Once an offer lapsed or terminated, it cannot be accepted. An offer may be terminated in the following ways.

 Revocation of offer implies taking back, withdrawing, or cancelling an offer. As a general rule, an offer can be withdrawn at any time before the offeree has accepted it.

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

An offer stands lapsed in any of the following circumstances:1.Communication of notice of revocation 2.Failure to fulfill a condition precedent to acceptance 3.Lapse of time 4.Death or insanity of either party 5.Refusal or counter offer 6.Acceptance differs from prescribed one 7.Subsequent illegality or destruction of subject matter.

 Once the presence of a valid offer has been acknowledged, the next stage in the formation of an agreement is to find an acceptance of that offer. The acceptance must be made while the offer is in force, i.e., still open. when a person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted becomes promise. Ex:-A offers to sell some goods to B for Rs 500. B agrees to the price demanded by A and conveys the same to A . This is an acceptance of As offer by B. Now A is bound to sell the goods to B for the agreed price

1. 2. 3. 4. 5. 6.

It should be made by the offeree. It should be unconditional. It should be communicated to the offeror. It may be in any form, oral or written. It should be in the mode prescribed by the offeror. It should be given in a reasonable time, if no time limit is set. 7. It should given while the offer is in force.

Only the Offeree Can Accept an Offer

Example1 A sold his business to B. C an old customer and against whom A had a set-off, sent an order for goods to A addressing the order explicitly to A. B supplied the goods thinking that the defendant would not care from whom he obtained them. C subsequently refused to pay for the goods and was sued by B for the price. The court, however, held that there was no contract between B and C because the latter had made a specific offer to A, which only A or his authorized agent could accept. Accordingly, the defendant, C in this case, was not liable to pay for the goods(Boulton vs Jones)

Example 2
P applied for the post of a headmaster in a school. The selection committee passed a resolution appointing him to the post, but the decision was not communicated to him. One of the members of the committee, however, in his individual capacity and without any authority, informed P about the decision. Subsequently, the managing committee canceled its resolution and appointed someone else instead of P. P field a petition against the decision. Rejecting the petition, the court held that because the plaintiff was not informed about his appointment by some authorized person, there was no contract between the two sides. Information provided by an unauthorized person is as insufficient as overhearing from behind the door(Powell vs Lee).

Example 1 A offers to sell his car to B for Rs.50,000. B replies, I can purchase the car for the stated price provided you purchase my house for Rs.40,000. This does not amount to acceptance, but is a counter-offer. Example 2 A offers to sell his pets to B for Rs.500. B says he would buy them for Rs.400. This too is a counter-offer and not an acceptance. Even if, B subsequently changes his mind and is prepared to pay Rs.500, he cannot compel A to sell the pets to him as Bs counter offer has led to the rejection of the original offer. It is up to A whether to accept the fresh offer or not(Union Bank of India vs Bahulal).

In Household Fire Insurance Co. vs Grant, 1879, the defendant applied for 100 shares in the plaintiff company. The company received his application form, and its secretary in consequently completed and posted a letter of allotment to the defendant and entered the name of the defendant in the register of shareholders. The letter, however, never arrived. Sometime later the company went into liquidation, and the liquidator claimed the payment outstanding on the shares from the defendant. It was held that the defendant was liable for this sum. This shares became his property as soon as the letter of allotment was posted, even though the never received it, and was thereby unaware that he had become a shareholder.

 When

at the desire of the promisor, the promisee or

any other person has done or abstained from doing or

dose or abstains from doing, or promises to do or to

abstain from doing something, such act or abstinence or promise is called a consideration for promise sec 2(d) of contract act.

Example:
A agrees to sell his motorcycle to B for Rs 20000. Here Bs promise to pay the sum of Rs 20000 is the consideration for As promise to deliver the motorcycle, and As promise to deliver the motorcycle is the consideration for Bs promise to pay Rs 20000

CASE
ABDUL AZIZ vs. MASUM ALI:

In this case , the secretary of a mosque committee filed

a suit to enforce a promise to subscribe Rs 500/- for the

re-building of the mosque.

 Solution: The court dismissed the suit on the ground that there was no consideration in sense of

benefit. It was held that the person who made the

promise gained nothing in the return for the promise made and the Secretary of the Committee to whom the promise was made suffered nothing in a getting promise from the subscriber.

Essentials of valid consideration

1. Consideration must move at the desire of promisor. 2. Consideration may move from the promisee or any other person. 3. Consideration may be past, present or future. 4. Consideration may be positive or negative. 5. Consideration need not be adequate to the promise but must be of some value in the eyes of law.

6. Consideration must be real and not illusory, impossible, uncertain or ambiguous. 7. Consideration must not be immoral or opposed to public policy or illegal. 8. Consideration must be something which the promisor not already bound to do.

 In order to constitute legal consideration, the act or

abstinence of the promisee or any person forming the

consideration for the promise must be done at the desire the promisor.

CASE
Durga Prasad Vs. Baldeo

D constructed a market at the request of the collector of the district. The shopkeepers in the market promised to pay D a commission on the article sold by them in the market. But as they failed to do so, D filed a suit against them. It was held that the promise to pay commission did not amount to a contract for want of consideration because D, the promisee, had constructed the market not at the desire of the shopkeepers but at the desire of the collector to please him.

 Solution: In this case, It is not necessary that the

promisor himself must be benefitted by consideration

of the promisee. It is enough if the act or forbearance constituting consideration was done at the promisors request and the benefit may accrue to the third party.

 It is not necessary that the consideration must move

from the promisee. It may also move from a third

person. If the promisee has no objection, this means that a stranger to the consideration can sue on a contract, provided he is a party to the contract (case:-Chhannayya Vs. Ramayya (1881 ) 4 mad 137).

 Consideration may consist of a past, present or future act or abstinence . When something was done at the request of the promisor, before the date of the promise, it is called past consideration . Consideration which moves simultaneously with the promise is called present consideration. When the consideration on both sides is to move at a future date, it is called Future consideration

 Example: A promise to sell and deliver the goods to B after 15 days while B promises to pay the amount at the time of delivery. It consists of an exchange of promises and each promise is a consideration for the other. It is a case of future or executory consideration

In other words, consideration may be an act to do or not do. Case:- Amith Vs. Balaroa As promise of not filing a suit against B, his debtor on Bs promise of pay a higher rate of interest is a good example of Negative consideration

 Inadequacy of consideration does not invalidate the contract. The law only insists on the presence of consideration and not on the adequacy of it. Example: A agrees to sell his motor car worth Rs. 25000/- for only Rs. 5000/-. As consent to the agreement is freely given. Hence the agreement is a contract even though there is a inadequacy of consideration.

If consideration is physically or legally impossible,

uncertain, or ambiguous or illusory, it becomes unreal and has no value in the eyes of low. Example: A promises to run 100 miles per hour for 5 hours. As consideration is physically impossible.

In other words, consideration must be lawful.

Unlawful promise cannot be enforced. Following are

the cases where consideration is said to be unlawful.

When it is forbidden by law. When it is fraudulent. When it is such a nature that, if permitted, I would

defeat the provisions of law

 A promise to do what is required to be done under a general law or under an existing contract is not a good consideration for a new promise, because it

adds no nothing to the pre-existing legal or

contractual obligation.

Example:
A client promised to pay additional sum to his

pleader, if his suit was successful. It was held that the

clients promise was void for want of consideration, because the pleader was already under a pre-existing legal obligation to render his services so as to win the suit.

Consideration being one of the essential element of valid contract, the general rule is that an agreement made

without consideration is void. But there are

a few

exceptions to the rule, where an agreement without consideration will be perfectly valid and binding.

Love and Affection Compensation for voluntary services Promise to pay time bared debt Completed gift Agency Remission Bailment Guarantee

Love and Affection Sec 25

An agreement made in writing and registered and
is made on account of natural love and affection between parties standing in a near to each other. An agreement without consideration is valid under sec 25(1) only if the following requirements are,

Contd..
The agreement is made in a written document,

The document is registered according to the law relating to

registration in force at that time, The agreement is made on account of natural love and affection. The parties to the agreement stand in near relation to each other

CASE
Venkataswamy Vs. Rangaswamy
An elder bother on account of natural love and affection, promised through a registered document to pay the debts of his younger brother. It was held that the agreement was binding on the elder brother, and the younger brother could sue the elder brother in the event of his not carrying out the agreement.

Compensation for voluntary services Sec25(2)

An agreement made without consideration is also

valid and enforceable if it is a promise to compensate,

wholly or in part, a person who has already voluntarily done something for the promisor, or something which promisor was legally compelled to do.

Example:
A lost his purse containing Rs. 10000/-. The purse

was found by B who gave it to A. So A promises to

pay Rs.100/- as a gift. This is a valid contract. X supports Ys ailing mother. X promises to pay the expenses incurred by Y. This is a valid contract.

Promise to pay time bared debt Sec25(3)

A promise is writing signed person to be
charged therewith or by his agent , to pay debt by the law of limitation would constitute a valid contract, even through it is not supported by any consideration.

Contract of Agency Sec(185)

Besides the above exceptions mentioned in section 25 of the act, there are also other types of agreement which enforceable by law even without consideration.

For instance, Section 185 of the Act Contract

specifically says that, No consideration is necessary to

create an agency.

Completed Gift (Exp 1 to 25)

In the case of a gift actually made, not being an

agreement to make a gift, no consideration is necessary

although the donor and the donees may not be standing in near relation to each other, and even if they do, there may be any natural love and affection between them.

Remission by the promise Sec (63)

No consideration is necessary for an
agreement to receive less then what is due, known as remission in India and accord and satisfaction in England.

Bailment
A gratuitous bailment means giving an
article to a person for a certain purpose and it is to be returned after the purpose is fulfilled; but no remuneration is charged for the favor. Gratuitous bailment is, in essence, without consideration.

Guarantee
A contract of guarantee is made without

consideration (Sec 127 of the Contract Act 127).

Note:- There is no consideration in an accommodation

bill under the Negotiable Instruments Act 1881.

Contribution to charity:
A promise to contribute to charity, which is gratuitous, is enforceable at law, if the promisee, on the faith of such promised subscriptions, takes certain definite steps to fulfil the object and undertakes a liability. The promise is enforceable by the promisee to the extent of the liability, but not exceeding the amount promised by the promisor(Kedar Nath Vs. Gorie Mohammad).