1. Chapter 2
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2.  What is `Offer/Proposal`
A Proposal is defined as "when one person
signifies to another his willingness to do or to
abstain from doing anything, with a view to
obtaining the assent of that other to such act
or abstinence, he is said to make a proposal."
[Section 2(a)].
A PROPOSAL IS AN EXPRESSION OF WILL OR
INTENTION
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3. How offer is made
Express
Implied
To Whom offer is made
An offer may be made to
a) A particular person
b) A particular group or body of persons
c) The public at large i.e. whole world
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4. Express and implied offer
 When an offer is expressed by words spoken or
written it is termed as an express offer.
 Implied offer means an offer made by conduct.
when one person allows the other to perform
certain acts under such circumstances that
nobody would accept them without consideration
it will amount to an offer by conduct and the
permission of the party ,who is benefited by such
performance, will amount to his acceptance .such
an acceptance will be asked to pay for it.
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5. Example of implied offer
 A bus company runs buses between
India gate to kahsmiri gate. There is
implied offer from the bus company
to take any person on the route who
is prepared to pay the prescribed
fare. the offer will be said to be
accepted by a passenger as soon as
he takes seat in the bus.
 A bid at an auction is an implied offer Accepto
to buy. Similarly consuming eatables Of offe
at a self service restaurant, both
create implied promise to pay for the auction
benefits enjoyed. Bidder
Is an
offeror
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6. Positive and negative offer
 A person may express his willingness to do
something or to abstain from doing
something
 e.g it may be an offer to construct a wall to
provide privacy or not to construct a wall so
that free passage of light and air may not be
obstructed.
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7.  Specific Offer – An offer made to a definite
person or body of persons
 General Offer - When an offer is addressed
to the whole world , it is called general offer.
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8. Carlill vs. Carbolic Smoke Ball Co. 's case, the patent-
medicine company advertised that it would give a reward of
£100 to anyone who contracted influenza after using the
smoke balls of the company for a certain period according
to the printed directions. Mrs. Carlill purchased the
advertised smoke ball and contracted influenza in spite of
using the smoke ball according to the printed instructions.
She claimed the reward of £100. The claim was resisted by
the company on the ground that offer was not made to her
and that in any case she had not com-municated her
acceptance of the offer. She filed a suit for the recovery of
the reward.
Held: She could recover the reward as she had accepted the
offer by complying with the terms of the offer.)
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9. An offer must have certain essentials in order to
constitute it a valid offer. These are:
I. The offer must be made with a view to obtain
acceptance/ assent of the other party.
Case : Harris vs. Nickerson ( advt. In newspaper
for sale but later cancelled)
2. The offer must be made with the intention of
creating legal relations. [Balfour v. Balfour (1919)
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10. 3. The terms of offer must be definite,
unambiguous and certain or capable of
being made certain. The terms of the offer
must not be loose, vague or ambiguous.
Taylor vs. Portington ( Handsomely
decorated)
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11. 4. An offer must be distinguished from
(a) mere declaration of intention or
(b) an invitation to offer or to treat.
An auctioneer, at the time of auction, invites
offers from the would-be-bidders. He is not
making a proposal.
A display of goods with a price on them in a
shop window is construed an invitation to
offer and not an offer to sell.
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12. 5. Offer must be Communicated to the offeree
Case Lalman Shukla vs. Gauri Dutt ( servant
and missing nephew)
6. It may be conditional
7. Lapse of an offer
8. An invitation to offer is not an offer
9. Offer should not contain a term the non-
compliance of which would amount to
acceptance
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13.  An offer is made with a view to obtain assent
thereto. As soon as the offer is accepted it
becomes a con-tract. But before it is accepted, it
may lapse, or may be revoked. Also, the offeree
may reject the offer. In these cases, the offer
will come to an end.
 The offer lapses after stipulated or reasonable
time
 An offer lapses by the death or insanity of the
offeror or the offeree before acceptance.
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14.  An offer terminates when rejected by the
offeree.
 An offer terminates when revoked by the
offeror before acceptance.
 An offer terminates by not being accepted
in the mode prescribed, or if no mode is
prescribed, in some usual and reasonable
manner.
 A conditional offer terminates when the
condition is not accepted by the offeree.
 Counter Offer
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15. 1. An offer lapses after stipulated or reasonable
time.
2. An offer lapses by the death or insanity of the
offeror or the offeree before acceptance.
3. An offer lapses on rejection.
4. An offer terminates when revoked.
5. It terminates by counter-offer.
6. It terminates by not being accepted in the
mode prescribed or in usual and reasonable
manner.
7. A conditional offer terminates when condition
is not accepted.
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16.  Counter Offer -
 rejection of the original offer and making a new
offer. This new offer is counter offer.
 Case Hyde vs. Wrench ( sell farm for 1000
pounds, counter offer for 950 pounds)
Cross Offers
Where two parties make identical offers to each
other, in ignorance of each other's offer, the
offers are known as cross-offers and neither of
the two can be called an acceptance of the other
and, therefore, there is no contract.
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17. Offer vis-a-vis Invitation to offer
An offer must be distinguished from invitation to
offer.
A prospectus issued by a company for
subscription of its shares by the members of the
public, is an invitation to offer. The Letter of
Offer issued by a company to its existing
shareholders is an offer.
5. The offer must be communicated to the
offeree. An offer must be communicated to the
offeree before it can be accepted. This is true of
specific as sell as general offer.
6. The offer must not contain a term the non-
compliance of which may be assumed to amount
to acceptance.
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18.  Section 2(b) states that
A proposal when the person
to whom the proposal is
made signifies his assent thereto the proposal
is said to be accepted.
An accepted proposal is called a promise or an
agreement.
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19. Acceptance may be express or
implied
 Express- words spoken or written
 Implied- accepted by conduct
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20. A lady invited her niece to stay with her in the
same house and promised to settle on her
immovable property.
The niece stayed with her residence till the
time of her death. Niece was held to be
entitled to property because she has accepted
the offer of the aunt by conduct i.e., by going
to her house and staying with her as desired.
(V. Rao v/s A. Rao)
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21.  An offer may be accepted by the person to
whom it is made. Case Boulton vs. Jones
 General offer- only the persons with the
knowledge /notice of the offer can come
forward and accept the offer. Case Carlill vs.
Carbolic Smoke Ball Co.
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22.  Boulton v. Jones 1857
 A foreman bought the business from the owner.
Then a certain amount of piping was ordered.
The order was accepted and sent by the new
owner.
The offeror refused to pay because the old
owner owed him money and there was a set-off
agreement that the dept would be paid in the
form of leather piping.
 It was an offer to a specific person which could
be accepted only by him.
 Jones only made the offer because he thought
to receive piping for free.
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23. I want reward
Carbolic smoke ball
Company advertisement
Carlill vs Carbolic smoke ball company,(1983)IQB256
Shweta Verma, Research Scholar 23
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24. 1. Acceptance must be absolute and unqualified/ unconditional
Case : A made an offer to B to purchase a house with possession
from 25th July, the offer was followed by an acceptance
suggesting possession from 1st August. Held there was no
concluded contract (Routledge v/s Grant)
2. Acceptance must be communicated to the offeror. Case
Brodgen vs. Metroploitan Railway co.
Case : a draft agreement relating to supply of coal was sent to the
manager of a railway company for his acceptance. The
manager wrote the word “Approve” and put the draft in the
drawer of his table intending it to send it to the company’s
solicitor for a formal contract to be drawn up. By some
oversight the document remained in the drawer. Held, there
is no contract. (Brogden v/s Metropolitan Rail Co.,)
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25. 3. Acceptance may be made within reasonable
time
Case Ramsgate Victoria Hotel Co. Vs. Montefiore
( a for person applied for shares in June can’t
be bound by an allotment made in late
November.
Case: on 08th June, Mr. M offered to take shares in
R Company. He received a letter of acceptance
on November 23. He refuses to take the shares.
Held, Mr. M, was entitled to refuse as his offer
has lapsed as the reasonable period during
which it could be accepted had elapsed
(Ramsgate Victoria Hotel Co., vs. Montefiore)
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26. 4. Acceptance must be according to the mode
prescribed.
Ex- A sends an offer to B through post in the
usual course. B should make the acceptance in
the "usual and reasonable manner" as no
mode of acceptance is prescribed. He may
ac-cept the offer by sending a letter, through
post, in the ordinary course, within a
reasonable time.
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27. 5. The acceptor must be aware of the proposal
at the time of offer Case Boulton vs. Jones
Case: Boulton brought a hose-pipe business from
Brocklehurst. Jones to whom Brocklehurst owed a
debt, place an order with Brocklehurst for the supply
of certain goods. Boulton supplied the goods even
though the order was not addressed to him. Jones
refused to pay Boulton for the goods because he, by
entering into contract with Brocklehurst, intended to
set off his debt against Brocklehurst. Held, the offer
was made to Brocklehurst and it was not in the power
of Boulton to step in and accept and therefore there
was no consent (Boulton vs. Jones)

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28. 6. Acceptance must be given before the offer
lapses or before the offer is revoked
7. Acceptance can’t be implied from silence
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29. Acceptance of a proposal may sometimes be
inferred from silence or inaction.
As a rule silence does not imply acceptance, but in
the following cases silence may be indicative of
assent to the proposal
1. Where the offeree having reasonable
opportunity to reject the offered goods or
services takes the benefit of them, it will amount
to acceptance.
Case Kashi Prasad vs. Sajjadi Begum- Enhancement
of rent not protested and tenants continued
living after notice was served by the landlord
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30. 2. Where because of previous dealings the
offeree has given the proposer reason to
understand that the silence was intended by
the offeree as a manifestation of assent and
the offeror does so understand.
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31. Subject to contract or subject to approval by
certain persons such as solicitors etc.
No contract will arise till a formal contract is
settled or consent of such person obtained.
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32.  When the contracting parties are face to face
and negotiate in person, a contract comes in
existence the movement the offeree gives his
absolute and unqualified acceptance to the
proposal made by the offeror. When the
parties are at the distance and the offer and
the acceptance and their revocation are made
through post, i.e., by letter or telegram.
 When parties are at a distance and the offer
and acceptance are exchanged through post,
rules contained in sec.4 & 5 apply
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33. The communication of offer is complete when
is comes to the knowledge of the person to
whom is made/ offeree.
E.g., A Proposes, by a letter, to sell a house to
B at a certain price. The letter is posted 10th
July. It reaches B on 12th July. The
communication of the offer is complete when
B receives the letter, i.e., on 12th July.
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34. As against the proposer-when it is put into course
of transmission to him so as to be out of the
power of the acceptor
As against the acceptor- when it comes to the
knowledge of the proposer
E.g., in the above case, when B accepts A’s
Proposal, by a letter sent by post on 13th instant.
The letter reaches on 15th instant. The
communication of acceptance is complete, as
against A, when the letter is posted, i.e., on 13th,
as against B, when the letter is received by A, i.e.,
on 15th. (Case of NT Rama Rao)
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35. As against the proposer
• Communication is complete as soon as a
duly addressed letter of acceptance is put
into the course of transmission.
• Whether the same reaches the proposer
or not.
As against the acceptor
• Communication is complete only when
the proposer has received the letter and
learnt the contents thereof.
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36. Communication of
Revocation
• Communication of revocation (of
offer or acceptance) is complete:
– As against the person who makes it
when it is put into the course of
transmission.
– As against the person to whom it is
made, when it comes to his
knowledge.
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37.  The communication of a revocation is complete -
as against the person who makes it, when it is
put into a course of transmission to the person
to whom it is made, so as to be out of the power
of the person who makes it; as against the
person to whom it is made, when it comes to his
knowledge.
 E.g., A Proposes, by a letter, to sell a house to
B at a certain price. The letter is posted 15th
May. It reaches B on 20th May. A revokes his
offer by a telegram on 19th May. The telegram
reaches B on 21st May. The revocation is
complete as against A when the telegram is
dispatched, i.e., on 19th May. It is complete as
against B when he receives it, i.e., on 21st May.
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38. Time of revocation
of offer and acceptance(sec5)
• Revocation of offer(sec5 para1)- A
proposal may be revoked at any time
before the communication of its
acceptance is complete as against the
proposer but not afterwards.
• (Revocation of acceptance sec5 para2)-
An acceptance may be revoked at any
time before the communication of the
acceptance is complete as against the
acceptor, but not afterwards.
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39. Example
 A proposes by a letter sent by post to sell
his to B. the letter is posted on the 1st of
the month. B accept the proposal by a letter
sent by post on the 4th. The letter reaches A
on 6th
• A may revoke his offer at any time before B
post his letter of accpetance i.e 4th but not
afterwards.
 B may revoke his acceptance at any time
before the letter of acceptance reaches A i.e
6th but not afterwards.
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40. A proposal may be revoked at any time before
the communication of its acceptance is complete
as against the proposer, but not afterwards.
 Ex- A proposes, by a letter sent by post, to sell
his house to B. B accepts the proposal by a letter
sent by post. A may revoke his proposal at any
time before or at the moment when B posts his
letter of ac-ceptance, but not afterwards. B may
revoke his acceptance at any time before or at
the moment when the letter communi-cating it
reaches A, but not afterwards.
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41.  A proposal may be revoked at any time
before the communication of its acceptance is
complete as against the proposer, but not
afterwards.
 An acceptance may be revoked at any time
before the communication of the acceptance
is complete as against the acceptor, but no
afterwards.

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42.  Ex: Mr. A proposes by a letter sent by post to
sell his house to Mr. B. the letter is posted on
the 01st of the month. Mr. B accepts the
proposal by a letter sent by post on the 04th.
The letter reaches Mr. A on the 06th.
 Mr. A may revoke his offer at any time before
Mr. B posts his letter of acceptance, i.e., 04th
but not afterwards
 Mr. B may revoke his acceptance at any time
before the letter of acceptance reaches Mr. A,
i.e., 06th, but not afterwards
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43. Revocation of offer arises if there has been no
acceptance of the offer by the time of
revocation. Sec.6 Modes of revocation of offer
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44. Revocation of the offer by the
offeror
 The offeror can revoke his offer before it is
accepted “the bidder at an auction sale may
withdraw (revoke) his bid (offer) before it is
accepted by the auctioneer by using any of
the customary method e.g. fall of hammer.
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45. Decided case on revocation
of offer by the offeror
CASE 1
 In cooke .v. Oxley(1790)3 T R 653 ,A offered to
sell 266 hogshed at a certain price and
promised to keep it open for acceptance by B till
4 PM of that day .Before that time A sold them
to C ,B accepted before 4PM but after the
revocation by A .it was held that the offer was
already revoked.
A B
45
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46. CASE 2
 IN Dickinson V. Dodds (1876) 2ch.D.463,A
agreed to sell property to B by a written
document which stated “this offer to be left
over until Friday 9AM”.on the Thursday A
made a contract to sell the property to C .B
heard of this from X and on Friday at 7AM he
delivered to A an acceptance of his offer
.Held B could not accept A’s offer after he
knew it had been revoked by the sale of the
property to C.
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47.  Acceptance is complete as against the offeror
as soon as the letter of acceptance is posted.
The contract is complete even if the letter of
acceptance goes astray or is lost through an
accident in the post.
 But in order to bind the offeror, it is
important that the letter of acceptance is
correctly addressed, adequately stamped and
posted, otherwise the acceptance is not
complete as per section 04 of the Act.
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48. 1. By notice of revocation
2. By lapse of time
3. By non-fulfillment of condition precedent
4. By death or insanity
5. By counter offer
6. By the non-acceptance of offer acc. to the
prescribed or usual mode
7. By the subsequent illegality
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49.  Acceptance of a proposal may be revoked at
any time before the communication of
acceptance is complete as against the
acceptor but not afterwards.
 The acceptance is binding on the acceptor
when the letter of acceptance actually reaches
the proposer
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