Q. Discuss essential elements of a valid proposal.

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The offer/proposal is defined under section 2(a) of Indian contract act, here and after refers as ICA, 1872 as:

When one person signifies to another person, his willingness to do or not to do something, with the view to obtain his assent, he is set to make an offer.

The person who makes an offer is called “Offeror” or “Promisor” and the person to whom the offer is made is called the Offeree” or “Promisee”.


Essential elements of an offer: -

I.                    There must be two parties

An offer can’t be concluded without the 2 parties: Offeror and offeree. The person who makes an offer is called, “offeror” whereas the person who accepts that offer is called “Offeree”.


II.                 The offer must be communicated to the offeree

The offer is completed only when it has been communicated to the offeree. Until the offer is communicated, it cannot be accepted. Thus, an offer accepted without its knowledge does not confer any legal rights on the acceptor.

Case: Lalman Shukla v. Gauri Datt: A's nephew had absconded from his home. He sent his servant to trace his missing nephew. When the servant had left, A then announced that anybody who discovered the missing boy would be given the reward of Rs. 500. The servant discovered the missing boy without knowing the reward. When the servant came to know about the reward, he brought an action against A to recover the same.

It was held that the servant was not entitled to the reward because he did not know about the offer when he discovered the missing boy.


III.               The offer must be made with a view to obtaining the assent of the offeree

When a person is making an offer, it means that he is making it with a view to obtain the consent of the offeree. As soon as the offeree accepts it, the offeror is bound by it.


IV.               The offer must have its terms definite and clear

The terms of an offer must be definite, clear and certain. If the terms of the offer are vague and uncertain, no contract will come into existence.

Example: A offered to sell hundred tons of oil to B. The offer is uncertain as there is nothing to show what kind of oil is intended to be sold.


V.                  The offer must be capable of creating legal relationship

An offer must be such that when accepted it will result in a valid contract. 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.

In case of Balfour v. Balfour: There were married couple. Husband promised to his wife to send £30 per month. But husband failed to do so. Then wife filed the case against him and it was held that there was no intention to create legal relation. Thus, the agreement was not valid.


VI.               Offer must be distinguished from invitation to offer

The terms of the offer should be such that they contain final willingness of the offeror. Sometimes, a party does not express his final willingness but proposes certain terms on which he is willing to negotiate, the same is called invitation to offer. In such cases, he is not making an offer because he is not expressing his final willingness to enter into a contract.

Example: Menu card of restaurant is an invitation to put an offer.



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