ECO-5
2013-2014
Q.1
ANS: for making a
valid contract there must be a lawful offer and a lawful acceptance of that
offer. An offer is also called 4"roposal'. The words 'proposal' and
'offer' are synonymous and are used interchangeably.
i) It must be an expression of readiness or willingness to
do or to abstain from doing something. Thus, it may involve a 'positive' or a
'negative' act. For example, A offers to sell his book to B for Rs. 30. A is
making a proposal to do something i.e., to sell his book. It is a positive act
on the part of the proposer A. On the other hand, when A offers not to file a
suit against B if the latter pays A the outstanding amount of Rs. 1,000, the
act of A is a negative one i.e., he is offering to abstain from filing a suit.
ii) It must be made to another person. There can be no
'proposal' by a person to himself,
iii) It must be made with a view to obtain the assent of
that other person to such act or abstinence. Thus a mere statement of
intention- "I may sell my furniture if I get a good price" is not a
proposal. The person making the offer is called the 'offerer' or the 'promisor'
and the person to whom it is made is called the 'offeree'. When the offeree
accepts the offer, he is called the 'acceptor' or the 'promisee'. For example,
Ram offers to sell his scooter to Prem for Rs. 10,000 This is an offer by Ram.
He is the offerer or the promisor. Prem to whom the offer has been made is the
offeree and if he agrees to buy the scooter for Rs. 10,000 he becomes the
acceptor or the promisee.
How is an Offer Made?
An offer can be made by any act which has the effect of
communicating it to the other. An offer may either be an 'express offer' or an
'implied offer' Express Offer: When .an offer is made by words, spoken or
written, it is termed as an express offer. When A says to B that he wants to
sell his book to B for Rs. 20, it is an express offer. Similarly, when A writes
a letter to B offering to sell his car to him for Rs. 40,000, it is also an
express offer by A. The oral offer may be made either in person or over
telephone.
Implied Offer: It is an offer which is not made by words
spoken or written. An implied offer is one which is inferred from the conduct
of a person or the circumstances of the particular case. For example, public
transport like DTC in Delhi or BEST in Bombay runs buses on different routes to
carry passengers who are prepared to pay the specified fare. This is an implied
offer. Similarly, when a coolie picks up your luggage to carry it from railway
platform to the taxi, it means that the coolie is offering his service for some
payment. This is an implied offer by the coolie. A bid at an auction is an
implied offer to buy.
To Whom an Offer is Made?
According to law, an offer cam be accepted only by the
person to whom it is made. Hence, we must know how to identify the person to
whom the offer has been made. From this point of view, an offer may be
'specific' or 'general'. When an offer is made to a definite person or
particular group of persons, it is known as specific offer and it can be
accepted only by that definite person or that particular group of persons to
whom it has been made. For example, A offered to buy certain goods from B at a
certain price. This offer is made to a definite person B. Therefore, if goods
are supplied by P, it will not give rise to a valid contract (Boultan v.
Jones).
Legal Rules for a Valid Offer
I An offer or
proposal made by a person cannot legally be regarded as an offer unless it
satisfies the following conditions.
II Offer must intend to create legal relations: An offer
will not become a promise even after it has been accepted unless it is made
with a view to create legal obligations. It is so because the very purpose of
entering into an agreement is to make it enforceable in a court of law. A mere
social invitation cannot be regarded as an offer because if such an invitation
is accepted it will not give rise to any legal relationship.
3) The offer must be distinguished from a mere declaration
of intention:
Sometimes a person may.make a statement without any
intention of creating a binding obligation. Such statement or declaration only
indicate that he is VilliIg to negotiate and an offer will be made or invited
in future. For example an auctioner advertised in a newspaper that a sale of
office furniture will be held on a certain date. A person with the intention to
buy furniture came. from a distant place for the auction, but the auction was
cancelled. He cannot file a suit against the auctioneer for his loss of time
and expenses because the advertisement was merely a declaration of intention to
hold auction, (Harris v. W Nieversion).Similarly, a notice that goods will be
sold by tender does not amount to an offer. When a person calls for tenders, it
is only an attempt to ascertain whether an offer can be obtained within such a
margin as the seller is willing to adopt (Spencer v. Harding). The tenderers by
submitting their tenders make offers and it is for the person inviting tenders
to accept them or not. In case of Farina v. Fickus, a father wrote to his would
be son-in-law that his daughter would have a share of what he left. It was held
that the letter was a mere statement of intention and not an offer.
4) Offer must be distinguished from an invitation to offer:
An offer must be distinguished from an invitation to receive an offer or to
make on offer or to negotiate. In the case of invitation to offer there is no
intention on the part of the person sending out the invitation to obtain the
assent of the other party to such invitation. On the other hand, offer is a
final expression of willingness by the offerer to be bound by his promise,
should the other party choose to accept it. In case of an invitation to offer,
his aim is to merely circulate information of his readiness to negotiate
business with anybody who on such information comes to him, An invitation to
offer is not an offer in the eyes of law and does not become a promise on
acceptance.
Q.2
Ans
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