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Legal Rules of a Valid Offer

The following are the legal rules that make up a valid offer.

Express or Implied

An Offer may be made either by words or by conduct. If the Offer is expressed by use of words, either spoke or written, it is called a 'Express Offer'. If the offer is inferred by the conduct of a person, it is an 'Implied Offer'.

Capable of creating Legal Relations

An Offer should be capable of creating legal consequences. Hence, social or moral agreements are not a valid offer in a contract.

Example Case Laws

Terms must be certain and not vague

An offer is not a valid offer if the terms mentioned in the offer are not definite and certain. The offer must not be vague or ambiguous.
Example: An agreement to agree in future is not a contract.

Example Case Laws

  • Taylor vs Portington, (1855)

Offer may be Specific or General

An offer may be specific or general. If the offer is made to an individual or a body of individuals it is called a specific offer. If the offer is made to an unascertained individual, it is a general offer. Jurist Salmond called specific offers as "offers to individuals" and general offers as "offers at large".

Example Case Laws

  • Carlill vs. Carbolic Smoke Ball Co. (1893)

Must be communicated to the Offeree

An Offer is effective only if it is communicated to the Oferee.

Example Case Laws

  • Lalman Shukla vs. Gouri Dutt (1913)

Should not contain the term non-compliance would amount to acceptance

The offer should not say that if acceptance is not communicated by a specified date the offer would be presumed to have been accepted. If the offeree does not reply, there is no contract.

Can be subject to any terms or conditions

An Offeror can prescribe the mode of acceptance to the offer. He can also make any number of terms or conditions in the offer. The offeree will have to accept all the terms of the offer in the mode prescribed in a contract.

Offer different from Quotation or Invitation

An Offer should be distinct from a invitation or a quotation.

Example Case Laws

  • Harvey vs. Facey (1893)

Two incidental cross offers does not make a contract

When two parties make offers to each other, the offers are known as cross offers. They do not constitute acceptance of one's offer by the other.

Revocation of an Offer

An Offer can be revoked any time before acceptance. If the offer is accepted, the offer can not me be made irrevocable. Section 5 of the Indian Contract Act, 1872 says a proposal may be revoked at any time before communication of its acceptance and is complete as against the proposer, but not afterwards.

According to section 4, if the communication of acceptance is sent by post, it is said to be complete as against the proposer when the letter of acceptance is posted.

An Offer lapses under the following circumstances.

  1. An Offer lapses after reasonable or stipulated time.
  2. An Offer lapses by not being accepted in the mode prescribed.
  3. An Offer lapses by revocation
  4. An Offer lapses by rejection
  5. An Offer lapses by death or insanity of the Offeror or Offeree.
  6. An Offer lapses by subsequent illegality or destruction of subject matter
  7. An Offer lapses by failure to fulfill conditions precedent to acceptance

Example Case Laws

  • Rams Gate Victoria Hotel Co. vs Montefiore (1866)
  • Dickinson vs. Dodds (1876)
  • Reynolds vs. Athertion (1921)

Communication of Offer

The communication of offer is complete when it comes to the knowledge of the person to whom it is made.

Acceptance through Post
The offeror is bound by acceptance from the moment when the letter of acceptance is posted, although the letter is delayed or wholly lost through an accident in the post. However the letter of acceptance must be correctly addressed, properly stamped and actually posted. The Acceptor can revoke the acceptance by sending a telegram.

Acceptance over phone

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