FOR EVERY AGREEMENT THERE NEEDS AN OFFER AND ACCEPTANCE, A CRITICAL NOTE

Author: Jayana Mishra, I year of B.A.,LL.B. from Damodaram Sanjivayya National law University.

Co-author: Rashie Sharma, I year of B.A.,LL.B. from Damodaram Sanjivayya National law University.

Abstract

The entire process of formation of a contract begins with offer and acceptance. For the formation of an agreement there must be offer by one party to enter into contract and acceptance by the other party. Here it is also essential to note that this proposal must also be communicated, must create legal relations and must be certain. Also we would denote types of offer like general or specific, express or implied etc. communication in itself represents a specific case and we would see what are essentials of communication,like , it must be communicated to the person who made the offer etc. When this offer becomes accepted it becomes promise and every legal binding promise is a contract . We would also see in respect of acceptance some common law proposals and doctrines.

Introduction

The first requisite of a contract is that the parties should have reached agreement. By and large an agreement is created when one party accepts an offer made by the other. The whole operation of entering into a contract begins with an offer by one party andits acceptance by another party. The rules of ‘offer’ and ‘acceptance’, and their use as the basis for deciding whether there has been an agreement between contracting parties, derives , as with much of the classical law of contract , from late 18th century and early 19th century case law of Adam v Lindsell.[1]

Proposal or offer

The whole affair of formation of a contract commences with the proposal or an offer made by one party to another. According to the Indian Contract Act 1872, proposal is defined in Section 2(a) as “promisor signifies to promisee his willingness to do or not do something in consideration to obtain the assent of such person to such an act or abstinence, he is said to make a proposal or an offer.” So basically offer may be defined as indication by one person that he is ready to contract with the other person.

The person making the offer/proposal is referred to as the “promiser” or the “offeror”. And the person who accepts an offer is referred to as “promisee” or the “acceptor”.

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Offer and acceptance ccontemplation is a traditional approach in contract law. The offer and acceptance construction, developed in the 19th century, and its significance identifies a moment of formation when the parties are of one mind. This classical approach to contract creation has been redisgned by developments in the law of estoppel, misleading conduct, misrepresentation and unjust enrichment. An offer, according to Treitel, is "an expression of willingness to contract on certain terms, made with the intention that it becomes binding as soon as the person to whom it is directed accepts it," the "offeree."

An offer is a declaration of the terms under which the offeror is ready to be bound. It is the current contractual intent to be bound by a contract with specific and certain terms communicated to the offeree.

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The expression of an offer may take various forms, such as a letter, newspaper advertisement, fax, email and even conduct, only condition being it communicates the basis on which the offeror is prepared to contract.”

The essential requisite for acceptance is that the parties each engaged in conduct manifesting their assent from a subjective standpoint. Under this meeting of the minds theory of contract, a party could deny a claim of breach by proving that he had not be intended to be bound by the agreement, only if it appeared otherwise that he had so intended. This is discriminatory as one party can only act upon what the other party reveals objectively to be his intent[2]. Perhaps, it has been argued that the "meeting of the minds" idea is a recent error: 19th century judges spoke of "consensus ad idem" which modern teachers have wrongly translated as "meeting of minds" but actually means “agreement to the same thing.”

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Making of An Offer

An offer can be made by any act or omission of the party which proposes by which he aspires to communicate such proposal or which has the result of communicating it to the other (Section 3).[3] It can be by way of words (written offer and oral offer) or conduct (affirmative acts or signs).

An offer which is implied from the conduct of parties or the circumstances of the case is known as implied offer.[4]”.”Now an offer made to whole world is general offer and the one made to particular person or group is specific offer.

Validity of offer One of the principle of offer is that it must be communicated to the offeree only then it is complete. And unless the offer is communicated or known, it cannot be accepted[5],this was observed in the case of Lalman Shukla (Vs) Gauri Datt. (1913)[6]. Another essential of an offer is that it must be certain and definite and not vague and ambiguous and it must be capable to create legal relations. Now legal relation means that "the parties did not in [the agreement] should be attended by legal consequences”.[7]

After that there is an essential that for communication that the offer is communicated when it comes to the knowledge of the person to whom it is made. It may be by way of words spoken or written or it may be inferred from the conduct of the parties.

Acceptance When the person to whom the proposal is made, signifies his assent there to, the proposal is said to be accepted. On the acceptance of the proposal, the proposer is called the promisor/offeror and the acceptor is called promise or offeree.[8] In the case of a specific offer, it can be accepted only by that person to whom it is made.The rule of law here is that if X wants to enter into a contract with Y, then Z cannot substitutehimself in place of Y, this was observed in the case of Boulton v. Jones.[9]

Validity of acceptance

For an acceptance to be valid it must be absolute and unqualified and in congruence with the accurate terms of the offer and for this reason an acceptance with a modest variation is no acceptance and amounts to mere counter offer.

” Here it must be noted that mere mental acceptance is no acceptance for a valid acceptance, acceptance must be made by the offeree and also be communicated by the offeree to the offeror, but there is no requirement of communication of acceptance of general offer.The General rule of acceptance say that it must be in accordance with the the manner prescribed by offeror. In case the offereor does not prescribe any mode then it can beaccepted in some usual and reasonable manner .It is also to be noted that the acceptance of offer must be made by the offereor and that acceptance of an offer for a contract, the offeree must make the promise requested by the offeror and an offeror must communicate the terms of his proposal to the offeree before an offer results. This is due to the reason that communication is a necessary component of the present intent to contract required for the creation of an offer and that to accept an offer for a unilateral contract the offeree must perform the requested act. On this issue, the conventional contract law norm expects that the offeror will hear of the offeree's performance and argues that no more notification from the offeree is required to create a contract unless the offeror expressly demands notice.Now this communication of acceptance can be when the parties are dealing face-to-face, by telephone, or by other means of communication that are virtually instantaneous.

Common Law: Traditional “Mirror Image” Rule

According to conventional contract law, an acceptance must be a mirror copy of the offer. Attempts by offerees to amend the terms of the offer or add additional stipulations to it are considered counteroffers because they impliedly showed an intent by the offeree to reject the offer instead of being bound by its terms. However, recent years have witnessed a judicial tendency to apply the mirror image rule in more liberal style by holding only significant (essential) differences between an offer and a supposed acceptance result in an implicit rejection of the offer. Even under the mirror image rule, no rejection is inferred if an offeree just inquires about the conditions of the offer without signalling rejection (an inquiry regarding terms) or accepts the terms of the offer while complaining about them (a grumbling acceptance). It might be difficult to distinguish between a counteroffer, a request for terms, and a grumbled acceptance. However, the essential issue remains the same: Did the offeree objectively demonstrate resentment at being bound by the conditions of the offer?

Should offer and acceptance be replaced?

Eventhough in American jurisdiction once it was said that the question of contract formation that was once answered by offer and acceptance should be replaced with more simpler and clear doctrine like that of subjective and reasonable objective wherein it was to be looked into that if both parties believe there is a contract, there should be a contract; if one of the parties believes there is a contract, and that belief is more reasonable than the other party's belief that there is no contract, there should be a contract. Placing this and disregarding the fundamental doctrine was built on the stance that there exist needless compilation when trying to fulfill a contract.For example, a common way to conclude a contract is for two parties to sign a document together. If the signatures are literally simultaneous (or their processes overlap temporally), there is no sequence of final communications; there is simply a joint act creating a contract and the other being that it may yield potentially poor results as for instance if I write an email to sell some stuff and at the same time you write an email to buy it for a certain price then it does not have a sequence of traditional offer and acceptance and the question arises before the court that whether it should enforce it or not.

Conclusion From the article we could conclude that there is an offer when one person signifies to another his willingness to do or to abstain from doing anything, to obtain the assent of the other person either to such act or abstinence, and the acceptance takes place when the person to whom the proposal is made, signifies his assent there to the proposal.We learnt what are the types of offer that is general and specific. Also an offer can be made by the words or actions and similarly the acceptance can be given by the words or actions also. We then learnt that when after the offer the other party accepted the offer what are the essentials that must be taken note of by that party like acceptance should be conveyed in the mode prescribed and if not then in the reasonable manner. We also talked about the mirror rule and the alternative doctrine.To be precise that the offer and acceptance are the two basic elements of a contract and one should have perfect knowledge about them before entering into a contract.”

[1]https://www.taylorfrancis.com/books/mono/10.4324/9781003143277/modern-law-contract-richard-stone-james-devenney [2]https://www.lexisnexis.com/community/casebrief/p/casebrief-lucy-v-zehmer [3]https://www.latestlaws.com/bare-acts/central-acts-rules/section-2-interpretation- [4]https://www.mgkvp.ac.in/Uploads/Lectures/47/2845 [5]https://www.scconline.com/blog/post/2018/03/13/is-section-4-of-contract-act-1872-in-pace-with-21st-century/ [6]https://www.juscorpus.com/lalman-shukla-v-gauri-dutt/ [7]https://www.australiancontractlaw.info/cases/database/balfour-v-balfour [8]https://www.indiacode.nic.in/bitstream/123456789/2187/2/A187209. [9]https://thelegallock.com/boulton-vs-jones-1857-