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Proposal or Offer

The whole process of entering into a contract starts with a proposal or an offer made by one party to another. To agree such a proposal must be accepted. Let us take a look at the definition and classification of an offer and the essentials of a valid offer.

Proposal or Offer

According to the Indian Contract Act 1872, the proposal is defined in Section 2 (a) as “when one person will signify to another person his willingness to do or not do something to obtain the assent of such person to such an act or abstinence, he is said to make a proposal or an offer.”

Essentials of a Valid offer:

  • The person making the offer/proposal is known as the “promisor” or the “offeror”. And the person who may accept such an offer will be the “promisee” or the “acceptor”.
  • The offeror will have to express his willingness to do or abstain from doing an act. Only willingness is not enough. Or simply a desire to do/not do something will not constitute an offer.
  • An offer can be positive or negative. It can be a promise to do some act, and it can also be a promise to abstain (not do) some act/service. Both are valid offers.

Classification of Offer

There can be many types of offers based on their nature, timing, intention, etc. Let us take a look at the classifications of offers.

  • General Offer: A general offer is made to the public at large. It is not made by any specified parties. So any public member can accept the offer and be entitled to the rewards/consideration. Say for example you put out a reward for solving a puzzle. So if any public member can accept the offer and be entitled to the reward if he finishes the act.
  • Specific Offer: On the other hand, a specific offer is only made to specific parties, so only they can accept the said offer or proposal. They are also sometimes known as special offers. For example, A offers to sell his horse to B for Rs 5000/-. Then only B can accept such an offer because it is specific to him.
  • Cross Offer: In certain circumstances, two parties can make a cross offer. This means both make an identical offer to each other at the same time. However, such a cross offer will not amount to acceptance of the offer in either case. For example, both A and B send letters to each other offering to sell and buy A’s horse for Rs 5000/-. This is a cross offer, but it will be considered acceptable for either of them.
  • Counter Offer: There may be times when a promise will only accept parts of an offer, and change certain terms of the offer. This will be a qualified acceptance. He will want changes or modifications in the terms of the original offer. This is known as a counteroffer. A counteroffer amounts to a rejection of the original offer.

Essentials of a Valid Offer

Here are some of the few essentials that make the offer valid.

  1. Offer must create Legal Relations.
  2. The offer must be Clear, not Vague.
  3. The offer must be Communicated to the Offeree.
  4. The offer may be conditional.
  5. Offer cannot contain a Negative condition.
  6. It can be Specific or General.
  7. Offer may be Expressed or Implied.