Essential condition of valid offer
Q.2.(a) Discuss the essential conditions of a valid offer.
Ans. The essentials
of a valid offer are as follows
1. An offer must be one to give rise to legal consequences - To constitute an offer, offerer must intend create a legal obligation. Where such intention is lacking the agreement is not a contract.
Further, where an agreement clearly provides that it shall not be subject to legal jurisdiction, there is no contract between the parties.
Social invitations are examples of offers made without the intention of creating legal obligations. For example if A invites B to dinner and then forgets all about it and goes out of town on the stipulated date B cannot claim compensation for expense and inconvenience as there was no intention to create a legal obligation.
In Balfour v. Balfour, (1919) 2KB 571, the husband promised to pay £30 to his wife every months, on his failure to pay, the wife sued him for the recovery of the amount. Court held that she could not recover as the agreement did not create any legal relationship. Warrington L.J. observed:
“There is no contract here. These people never intended to make a bargain which could be enforced in law. The husband expressed his intention to make this payment and he promised to make it and was bound in honour to continue it so long as he was in a position to do so. The wile on the hand, made no bargain at all”.
Offers made in jest or excitement cannot be construed as offers as they lack contractual intention, and are made without any thought or intention of creating a binding obligation.
In Weeks v Tybold, (1604) 74 ER 982, the defendant in the course of a casual conversation said that he would give £ 100 to anyone marrying his daughter with his consent. He was sued for the amount. It was held that such general words spoken to excite suitors could not be taken as seriously intended.
In Nuteki Sesharatman v Sub-Collector, Land Acquisition, Vijayawada. AIR 1992 SC 131, it was observed that the statement of the appellant amounts, in law to no more than an offer. Till the offer is accepted there is no contract between the parties and the appellant is entitled to withdraw his offer, as the appellant in no way bound to keep the offer open indefinitely.
2. The terms of the offer must be definite or capable of being made definite-An offer must be certain and definite and not uncertain, vague or loose. If the offer is uncertain, an essential element is lacking and it cannot be accepted.
In Taylor v Portington, 1855, A promised B to take a lease of a house for three years at £ 85 per annum, if the house were put into thorough repair and the drawing rooms decorated according to present style Held that the terms were too uncertain and that the promise could not be enforced.
3. An offer must be distinguished from an invitation to offer-An offer is to be distinguished from an invitation to offer exemplified by advertisements, marked price of goods displayed in shop windows or catalogues mentioning prices of goods. In all such cases the trader or advertiser is simply inviting an offer i.e. indicating that he is willing to consider an offer to pay the goods on the terms set out in the advertisement or catalogue. He is not making an offer.
In Harvey v. Facey. (1893) AC 552 X telegraphed to A “will you sell Bumper Hall pen? Telegraph lowest cash price answer paid."
A replied by telegram "lowest price Bumper Hall Pen $ 900 X telegraphed we agree to buy $ 900 asked by you”
In a suit by X against A it was held that the mere statements of the lowest price at which the vendor would sell his estate Bumper Hall Pen contained no implied offer to sell at that price and that the reply was no reply to the question whether agreed to sell the property. It was therefore held that there was no concluded contract between the parties.
In Machpherson v. Appana, (1951) ASC 184, P wrote offering to buy, D’s property for Rs. 6,000 to which D replied "Won't accept less than Rs. 10,000” P informed his acceptance of the price of Rs. 10,000 but D sold it for a higher price to another Held that the mere statement of the lowest price by D contained no implied offer to sell at that price, that it was no counter offer which could result in a concluded contract by its acceptance by P
4. Every offer must be communicated to the offeree-Every offer must be made known to the offeree, otherwise he will not be in a position to accept inasmuch as he will have no knowledge of the offer. The mere desire to enter into an agreement will not constitute an offer As observed by Lord Lindlay "A state of mind not communicated cannot be regarded in dealings between man and man".
(b) The figure
correction company issues the following advertisement in a newspaper:
“Any person who uses
our latest invention-'Fat loss', in accordance with the prescribed directions
shall lose weight upto 20 kg in one month. The company shall pay an amount of
Rs. 10, alpha /- to anyone who does not lose weight, as stated above, after
using the 'Fat loss' for one month as required above."
The 'Fat loss' is
purchased and used by ten persons, according to the prescribed directions, and
all of them find that it is absolutely ineffective. Discuss whether these
persons can claim the promised reward from the company.
Ans. The question in the present problem is whether there is a valid contract between ten persons (who used the company's product) and the company. For a valid contract, the following requirements are necessary
(1 )intention to enter into legal relations,
Intention to contract The advertisement states that the company shall pay an amount of Rs. 10, 000 to anyone who does not lose weight. Test of contractual intention is objective, not subjective. What matters is not what the parties had in mind, but what a reasonable man would think, in the circumstances, their intention to be. It can be presumed form the advertisement that the company intended to enter into legal relations (i.e. pay the said amount).
(2) existence of a valid offer,
An offer can be made to the public at large which ripen into a contract with anybody who comes forward and performs the condition. Such offers are called 'general offers' and are valid offers.
(3) existence of a valid acceptance,
- It is a general proposition that when an offer is made, one must have it not only accepted but notified acceptance. But in cases of general offers, the communication of acceptance is not necessary and the performance of condition is a sufficient acceptance without notification (Sec. 8). Thus, there is a valid acceptance in the present case as ten person performed the conditions offer by using the product according to prescribed directions.
(4) a consideration for the promise.
Consideration for the promise-In this case, as the transaction was advantageous to the company (for increasing sale), this is enough to constitute consideration.
Thus, in the present case, there is a valid contract between the figure Correction Company and ten persons who have bought and used their product 'Fatloss. These ten person, thus can claim the promised ward of Rs. 10,000 from the company (Carlill v carbolic Smoke Ball Co,).
(C). Write a short note on 'offer and invitation to offer'.
There are certain expressions of statements which invite the person to make offer in terms of the statement. An invitation to make an offer is distinguishable from an offer primarily on the ground that it is not made with the intention that it shall become binding as soon the addressee communicates his assent to its terms. The following are held to be invitation to make an offer:
(a) An advertisement in newspaper inviting application for situation on a post.
(b) Goods exhibited with price on a label stuck to them in show-case.
(c) Catalogue or price list circulated.
(d) A personal quotation of the price of goods.
(e) Goods put for sale by auction. Auctioneer's request for birds is mere invitation to treat.
(f) Prospectus of a company inviting public to subscribe their shares and debentures.
(g) Menu card in hotel and restaurant.
An offer' is the final expression of willingness by the offeror to be bound by his offer should the other party chooses to accept it. Where a party, without expressing his final willingness, proposes certain terms on which he is willing to negotiate, he does not make an offer, but merely invites the other party to make an offer on those terms. This is the basic difference between an "offer" and "invitation" to receive offers.
McPherson v Appana (AIR 1951 SC 184) P wrote offering to buy, D’s property for Rs. 6,000 to which D replied "Won't accept less than Rs. 10,000” P informed his acceptance of the price of Rs. 10,000 but D sold it for a higher price to another Held that the mere statement of the lowest price by D contained no implied offer to sell at that price, that it was no counter offer which could result in a concluded contract by its acceptance by P
Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd. (1953) 1 All ER 482
In this case it was held that the display of goods in a shop with price chits attached is not an offer even if there is a “ self-service” system in the shop. The plaintiff picked up a bottle of medicine from the shelves of the defendant's shop with the intention of buying it, but the defendant refused to sell it. The plaintiff contended that the display of goods in a shop with price chits attached is an offer to sell, so picking of goods amounts to an acceptance of this offer.
The Court observed: A shopkeeper's catalogue of prices is not an offer, it is only an invitation to the intending customers to offer to buy at the indicated prices. Similarly the display of goods in a shop with price chits attached is not an offer. It would be wrong to say that the shopkeeper is making an offer to sell every article in the shop to any person who might come in and that person can insist on buying any article by saying 'I accept your offer'... There might be various reasons for the refusal by the shopkeeper, for example, limited stock of particular goods
(D). Write a short note on General Offer and
Specific offer.
(E). An offer need
not to be made to an ascertained person, but no contract can arise until it has
been accepted by an ascertained person". Discuss the above statement, with
reference to Carlill v Carbolic Smoke Ball Co. case.
An offer need not always be made to an ascertained person but it is necessary that an ascertained person should accept it. For example, if a person offers a reward to anyone who finds his lost diamond ring, the finder can successfully claim the reward. The position will, however, be different if the finder has no knowledge of the reward. For example, in Lalman Shukul v. Gauri Datt, (1913) 11 All U 489) it was held that the servant was not entitled to claim the reward because it came to his knowledge after he had discovered the boy which he was obliged to do as a servant.
Where an offer is made to the whole world, acceptance of the
offer and performance of the condition will be sufficient for making it an
enforceable contract. A well known illustrative English case on the point is Carlill v. Carbolic Smoke Ball Co.,
(1893) 1 QB 256.
In this case, the defendants were proprietors and vendors of 'Carbolic Smoke Ball'. They advertised a reward of £100 to any person who contracted influenza after using the Smoke Ball for a certain period according to the printed directions. In order to show their sincerity, they also deposited £ 1000 in a Bank for the same purpose. The plaintiff, a lady, used the Smoke Ball according to the printed directions yet she contracted influenza. She brought an action to claim the reward. It was held that she was entitled to claim the reward. The court pointed out that in advertisement cases, an offer may be made to the whole world but it becomes a promise only when it is accepted by an ascertained person.
(F). Distinction
between Offer and Counter-offer
To make a contract, there must be an offer and unqualified acceptance of the offer. But when an offer has been accepted with some modification of the terms of offer or with condition precedent, such an acceptance is called counter-offer. In such a case it kills the original offer. It cannot, therefore, be subsequently accepted.
Illustration
(a) A offers B to sell his car for Rs. 10,000. B says to A that he will buy the car for Rs. 8000 B’ s expression is not an acceptance but a counter-offer.
(b) The defendant offered to sell the plaintiff a firm for £ 1,000. The plaintiff said to buy at £ 950 which the defendant refused. The plaintiff then signified his assent to buy at £ 1,000 and sued for specific performance. It was held that there was no contract.
(G). Cross Offers
When two persons make identical cross offers neither knowing the other offer, there is no contract. A writes to B offering to sell his car for Rs. 30,000 and B simultaneously writes to A to buy the car for Rs. 30,000. But the letter cross in the way. In such a case it is necessary for one of the parties to contact the other to make sure that there is indeed an agreement between them. Tinn v. Hoffman & Co, (1873)29 LT 271, it was held that "cross-offers are not an acceptance each other".
References
Avtar Singh – Law of Contract and Specific relief .
Mulla --- Law of Contract and Specific relief.
Dr. H.K. Saharay- Law of Contract.
Dr R.K. Bangia—Law of Contract.
https://www.slideshare.net/shrinivas1648/law-of-contract-business-law
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