contract law essay on offer and acceptance

contract law essay on offer and acceptance

Contract Law: Offer and Acceptance

1. Introduction

The work is carried on the extensive insight into the formation of contract in the core English Law, as it is the stepping stone of any contractual agreement. All over the world parties enter into contracts on a daily basis and contracts can be defined as written or spoken agreements between two or more parties that the law will enforce. There are numerous elements in a contract and each element has its own significance. But the most important element is the agreement between the parties: the offer and acceptance. It is the point where a contract begins, and in order for a contract to be considered valid there should be a well-defined offer and a corresponding acceptance. The offer is an expression of willingness to contract on a particular item under specific conditions, made by the offeror with the intention that it shall become binding on him when it is accepted by the offeree. In other words, the essential factor is the legal obligation that the offeror intends to create. An offer can be differentiated from an invitation to treat, as an invitation to treat is merely a declaration of willingness to enter into negotiations and it doesn’t carry any legal obligation. An invitation to treat is not an offer, as the party making the invitation is merely inviting the other party to make an offer, being an indication that he is willing to negotiate the terms of the contract. The offer can be made expressly or by the conduct of the offeror. The offer is the vital beginning of a contract and it opens the way to the acceptance. It has been said that an offer is an incomplete contract and it’s a promise to make a contract provided the other party does exactly what the offerer wants him to do. It’s also important to note that an offer can be revoked at any time before acceptance, until a particular period of time (if such is specified in the offer) or if the offeror dies or becomes incapacitated, as in these cases the revocation will be considered effective but the offeree should have knowledge of the death or insanity of the offeror.

2. Elements of a Valid Offer

The plaintiff purchased one of the smoke balls and used it according to the instructions, but she still caught the influenza. She then sued for the £100, and the defendants were informed that she would be taking this legal action but did not reply. The plaintiff argued that the advertisement was an offer to the world, and since one of the smoke balls had been bought and used as per the instructions, a contract has been made, and she should receive the £100.

An offer is a statement evidencing willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed. The case is Carlill v Carbolic Smoke Ball Co [1893]. The defendants placed an advertisement in the newspaper claiming that they would pay £100 if the smoke ball failed to prevent someone from catching influenza after using it. The advertisement also contained various statements saying that £1000 has been deposited in a bank showing their sincerity, that the smoke ball was prepared by qualified medical practitioners, and it was a legitimate offer for everyone.

3. Acceptance and Its Requirements

Case law demonstrates a preference on the part of the courts to find agreement and to give it legal effect, applying an objective standard. This approach was restated by the court in Smith v. Hughes. The plaintiff had made an offer to purchase oats of a particular description, knowing that the defendant might have to change his mind. They then met and the plaintiff was shown oats of the kind he wanted, which the defendant wanted to sell. When the plaintiff asked if these were the oats, the defendant said “yes,” but he was actually mistaken and the oats were not his own. The court held that there was agreement on the plaintiff’s offer to buy the defendant’s oats, as it was irrelevant whether the answer was honest or not. What mattered was how it would appear to a reasonable man whether there was agreement.

Acceptance is an express act or implication by conduct that demonstrates agreement to the terms of an offer. The requirements for a valid acceptance are a mirror image of the requirements for a valid offer. The correspondence of offer and acceptance is expressed by the Latin phrase “consensus ad idem,” i.e., meeting of the minds. It is often difficult to determine whether agreement has been reached, particularly in the case of a business wherein the transactions are numerous and the terms are complex. The field of battle for litigation is most often the existence of an agreement.

4. Communication of Acceptance

In the case of The Secretary of State v/s R. Dinamani Das, it was ruled that the difference in an offer and acceptance signifies that the acceptance must be on the same terms as the offer.

The third point to be noted here is that the draft he made shall be clear and unequivocal. S.7 writes that an acceptance is absolute and unqualified assent to all terms of the offer. Any change in the terms of the act would be rendered a counter offer under S. 2 (h) read with S. 7 and 8.

So the act proposed was only to be a purely formal act (on the act of acceptance of service comparable to that from the CCS for a brief period). In an English case, when the Secretary of State for India offered a pension to a civil servant to surrender his post or an election, he can at the last of this time and actually take release his office, which shall be the subject matter of the next lecture.

In this example, Mr. A offered Mr. B to sell his watch through the act of Mr. B making an inlay. This was an act of acceptance because the act of acceptance can be any act which the offeree does to decide whether he wants to give consent to the contract or not, and in this case, the act was to be done in the given way.

Here, the act to be done was left to the choice of the offeree, i.e. Mr. B. If he consents to act in a manner, the act proposed in the manner of acceptance was to be a final one.

Mr. A offered to Mr. B, “I shall sell you my golden watch for ₹ 80.” The golden watch in this case is the subject matter and ₹ 80 is the price of the subject matter which is required to be paid. Until and unless both of these determinants are fixed, an agreement cannot take place. But with this offer, he gave an option to reply either by word of mouth or by conduct, i.e. conduct post, telegram, etc. The option was to be put into practice within 15 days.

5. Conclusion

If acceptance is communicated by post, the contract is made when the letter is actually posted rather than when it is received, as shown by the case of Adams v Lindsell. This can cause various problems and is the reason why many businesses still use the phrase “receipt of order” as a guideline to when a contract is actually made. However, there are certain ways in which communication of revocation of an offer does not validate until received. An example of this is the revocation of a telex offer in Entores v Miles Far East Corp, where the acceptance of telex was the only and quickest method to communicate, and so the revocation had to be communicated in the same way. Where the parties are negotiating a contract, it is a continuous process, and the offeree may be reluctant to refuse an offer which he would normally accept due to awkwardness or possible loss of future business. Thus, he has a right to know if an offer has been revoked, and the case of Dickinson v Dodds shows that this may be through a reliable third party. It has been suggested that negotiations may become a “protective bubble,” and the offeree should have a right to expect a reasonable time to see if he can succeed in the acceptance, especially if he has relied on the negotiations, come to the case of Bath v Swindon Rugby Club.

Before a contract can be created, there must be an agreement reached between the parties involved. This is usually done through offer and acceptance. An offer is made by the offeror to the offeree. It is the promise or statement made which the offeror is prepared to be bound to. On the other side, the acceptance made by the offeree is an unqualified agreement to all the terms of the offer, often tested using the “objective” test of what a reasonable person would consider the meaning of the words used to make the agreement. If the offer is clear, final, and unambiguous, it may be that the refusal to accept is a breach of contract by the offeree. However, the general rule is that an offer can be revoked at any time before acceptance, given the case of Payne v Cave where it was stated that the purchase of goods at an auction was not a contract until the hammer was brought down, and the auctioneer was entitled to withdraw goods at any time before that.