Offer/Proposal [Section 2 (a)]
An offer is the starting point in the making of an agreement. An offer is also called 'proposal'.
According to Section 2(a) of The Contract Act, 1872, ‘When one person signifies to another, his willingness to do or abstain from doing anything with a view to obtaining the assent of the other, to such an act or abstinence, he is said to make a proposal’.
Offer is a crucial element that forms the basis of any contract. It is a proposal made by one party to another, indicating a willingness to enter into an agreement on certain terms and conditions. The terms of the offer must be definite and certain, leaving no room for ambiguity or confusion. This ensures that the parties involved understand the nature of the agreement they are entering into.
For an offer to be valid, it must indicate the intention of the offeror to be bound by the terms of the offer in case of acceptance by the offeree. This means that the offeror must be willing to enter into a legally binding agreement, and the offeree must be able to accept the offer on the terms presented.
An offer can be made in several ways, including in writing, orally, or by conduct. The mode of communication of the offer is not material as long as it is clear and unambiguous. The offer can be addressed to a particular person, a group of persons, or the public at large.
However, it's essential to note that an invitation to offer or a mere expression of willingness to negotiate or discuss the terms of an agreement is not an offer under the Contract Act. For instance, a price list displayed in a shop window is not an offer but an invitation to offer. The customer makes the offer to buy, and the shopkeeper accepts the offer by providing the goods or services on the terms stated in the price list.
Essential Elements of an Offer
1. There must be two parties:
It must be made by one person to another person. For a valid offer, there must be two parties. In other words, there can be no proposal by a person to himself.
Example: X says to Y that he wants to sell his car to himself for 1 lakh. There is no proposal because there can be no proposal by a person to himself.
2. Willingness:
It must be an expression of willingness to do (i.e. a positive act) or to abstain from doing something (i.e. a negative act).
Example: X offers to sell his car to Y for 1 lakh. It is a positive act on the part of X.
Example: X offers not to file a suit against Y if Y pays X the outstanding amount of Rs. 1,00,000. It is a negative act on the part of X.
3. Communication of offer:
The offer must be communicated to the offeree, either directly or indirectly, through conduct or other means.
4. Intention to create legal relations:
The offer must indicate the intention of the offeror to enter into a legally binding agreement with the offeree.
5. Definite and certain terms:
The terms of the offer must be clear, specific, and unambiguous, leaving no room for confusion or misunderstandings.
6. Capacity to contract:
The parties involved in the offer must have the legal capacity to enter into a contract, which means they must be of sound mind, of legal age, and not disqualified by law.
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