Communication of offer and acceptance

An agreement that is legally enforceable is referred to as a contract

according to Section 2(h) of the Indian Contract Act, 1872. It can either be a
written or oral agreement/ contract. For a contract to be enforceable by law,
there should be a legal object that legally binds the parties to the contract. A
lease deed, an employment agreement, a loan agreement, a sale deed, an
insurance policy, etc. are some types of valid contracts.

Further a contract is considered valid when it fulfils the three most important
elements, namely, offer, acceptance, and consideration.

The formation of a contract is a fundamental aspect of commercial and

personal interactions. At its core lies the principle of offer and acceptance,
which serves as the foundation for legal agreements. Understanding how
offers and acceptances are communicated, interpreted, and enforced is
essential for anyone engaged in contractual dealings

For making a valid contract there must be a lawful offer and a lawful
acceptance of that offer.

An offer is also called "Proposal'. The words 'proposal' and 'offer' are
synonymous and are used interchangeably. Section 2(a) Of the Indian
Contract Act, 1872 defines the term 'proposal' as follows: "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 t0 make a proposal. "

From the above definition of offer you will notice that an offer involves the
following elements.

i) It must be an expression of readiness or willingness to do or to

abstain from doing something. Thus, it may involve a 'positive' or a
'negative' act.
ii) ii) It must be made to another person. There can be no 'proposal' by
a person to himself,
iii) iii) It must be made with a view to obtain the assent of that other
person to such act or abstinence. Thus, a mere statement of
intention- "I may sell my furniture if I get a good price" is not a
proposal.
The person making the offer is called the 'offerer' or the
'promisor' and the person to whom it is made is called the 'offeree'.
When the offeree accepts the offer, he is called the 'acceptor' or the
'promisee'.
 An offer can be made by any act which has the effect of
communicating it to the other. An offer may either be an 'express
offer' or an 'implied offer'.
Express Offer: When .an offer is made by words, spoken or written,
it is termed as an express offer. When A says to B that he wants to
sell his book to B for Rs. 20, it is an express offer. The oral offer may
be made either in person or over telephone. Section 9 of the
Contract Act reads: "In so far as the proposal or acceptance of any
promise is made in words, the promise is said to be express. "
Implied Offer: It is an offer which is not made by words spoken or
written. An implied offer is one which is inferred from the conduct of
a person or the circumstances of the particular case. For example,
when a coolie picks up your luggage to carry it from railway
platform to the taxi, it means that the coolie is offering his service
for some payment. This is an implied offer by the coolie. A bid at an
auction is an implied offer to buy. Section 9 says that "In so far as
such proposal or acceptance is made otherwise than in words, the
promise is said to be implied. "
According to law, an offer can be accepted only by the
person to whom it is made. Hence, we must know how to identify
the person to whom the offer has been made. From this point of
view, an offer may be 'specific' or 'general'.
When an offer is made to a definite person or particular group of
persons, it is known as specific offer and it can be accepted only by
that definite person or that particular group of persons to whom it
has been made. For example, A offered to buy certain goods from B
at a certain price. This offer is made to a definite person B.
Therefore, if goods are supplied by P, it will not give rise to a valid
contract (Boultan v. Jones).

Boulton v. Jones is a notable case in contract law decided in 1880, which explores the
principles of agency, acceptance, and the binding nature of contracts.

Key Facts:

 Boulton operated a business selling goods and had a contract with a supplier to
receive shipments.
 Jones, who had no direct contract with Boulton, ordered goods from Boulton's
business, believing he was dealing with the original supplier, who had sold the
business to Boulton.
 When Boulton delivered the goods, Jones refused to pay, claiming he was not liable
since he had no contract with Boulton.

Legal Issues:
The primary legal question was whether Jones was liable to pay Boulton for the goods
delivered.

Court's Decision:

The court ruled in favour of Boulton. Key points included:

1. Agency and Authority: The court held that a party cannot simply refuse to pay for
goods received based on an assumption about a different contractual relationship.
Jones, by ordering and receiving the goods, effectively entered into a contract with
Boulton.
2. No Notification of Change: Jones had not been informed of the change in ownership
of the business and continued to deal as if he were still engaging with the previous
owner. Therefore, he could not escape liability merely because he believed he was
dealing with the former owner.
3. Acceptance of Goods: By accepting the goods, Jones accepted the contractual
relationship with Boulton, and thus he was required to pay for them.

Conclusion:

Boulton v. Jones illustrates important principles regarding the formation of contracts and the
obligations arising from the acceptance of goods. It emphasizes that individuals engaging in
business transactions must understand the nature of their contractual relationships and cannot
evade obligations based on mistaken beliefs about who they are dealing with. The case is
often cited in discussions of the necessity of clear communication and proper notification in
contractual dealings.

On the other hand, if an offer which is not made to a definite

person, but to the world at large or public in general, it is called a
general offer. A general offer can be accepted by any person by
fulfilling the terms of the offer. Offers of reward made by way of
advertisement for finding lost articles is the most appropriate
example of a general offer. For example, B issues a public
advertisement to the effect that he would pay Rs. 100 to anyone
who brings hack his missing dog. This is a general offer and any
member of the public can accept the said offer by finding the lost
dog.
Two offers which are similar in all respects, made by two parties to
each other, in ignorance of each other's offer are known as 'cross
offers". Cross offers do not amount to acceptance of one's offer by
the other and as such no contract is concluded.
An offer or proposal made by a person cannot legally be regarded
as an offer unless it satisfies the following conditions.
1) Offer must intend to create legal relations: An offer will not
become a promise even after it has been accepted unless it is
made with a view to create legal obligations. It is so because the
 very purpose of entering into an agreement is to make it
enforceable in a court of law. A mere social invitation cannot be
regarded as an offer because if such an invitation is accepted it
will not give rise to any legal relationship. This point is very well
illustrated by the case of Balfour v, Balfour.

Balfour v. Balfour is a landmark case in contract law, decided in 1919 by the Court of
Appeal in England. The case primarily addressed the issue of whether a domestic agreement
between spouses could be legally enforceable as a contract.

Key Facts:

 The case involved a husband and wife, Mr. and Mrs. Balfour. While living in Ceylon
(now Sri Lanka), Mr. Balfour had to return to England for work.
 During his departure, he promised to send Mrs. Balfour a monthly allowance to
support her. However, after some time, he ceased payments.
 Mrs. Balfour sued Mr. Balfour for breach of contract, claiming that his promise
constituted a binding agreement.

Legal Issues:

The main legal question was whether the promise made by Mr. Balfour was enforceable as a
contract. The court needed to determine if there was an intention to create legal relations.

Court's Decision:

The Court of Appeal held that the agreement was not legally enforceable. The key points
included:

1. Intention to Create Legal Relations: The court found that there was no intention
between the spouses to create a legally binding contract. Domestic agreements,
especially between spouses, are typically considered to lack this intention.
2. Public Policy: The court noted that enforcing such agreements could lead to
numerous legal disputes within family relationships, which would not be in the public
interest.

Conclusion:

Balfour v. Balfour established a precedent that agreements made in a domestic context,

particularly between spouses, generally do not carry the intention to create legal obligations.
This case highlights the principle that for a contract to be enforceable, there must be clear
intention from the parties to be bound by their agreement.

This decision has been influential in subsequent cases involving domestic arrangements and
the enforceability of informal agreements.

2. Terms of offer must be certain, definite and not vague: No

contract can be formed if the terms of the offer are vague, loose
and indefinite. The reason is quite simple. When the offer itself is
 vague or loose or uncertain, it will not be clear as to what exactly
the parties intended to do. A vague offer does not convey what it
exactly means. If, however, the terms of the offer are capable of
being made certain, the offer is not regarded as vague.
Sometimes, the parties agree to enter into a contract on some
future date, such agreement is not valid because the terms of the
offer are uncertain and they are yet to be settled. The law does
not allow making of an agreement to agree in future.
3. The offer must be distinguished from a mere declaration of
intention: Sometimes a person may make a statement without
any intention of creating a binding obligation. Such statement or
declaration only indicate that he is willing to negotiate and an
offer will be made or invited in future.
4. Offer must be distinguished from an invitation to offer: An offer
must be distinguished from an invitation to receive an ~offer or
to make on offer or to negotiate. In the case of invitation to offer
there is no intention on the part of the person sending out the
invitation to obtain the assent of the other party to such
invitation. On the other hand, offer is a final expression of
willingness by the offerer to be bound by his promise, should the
other party choose to accept it. In case of an invitation to offer,
his aim is to merely circulate information of his readiness to
negotiate business with anybody who on such information comes
to him, An invitation to offer is not an offer in the eyes of law and
does not become a promise on acceptance.
5. The offer must be communicated: An offer must be
communicated to the person to whom it is made. The first part
of the definition of proposal emphasises this fact by saying that
“When one person signifies to another his willingness to or to
abstain." It means that an offer is complete only when it is
communicated to the offeree. You should note that a person can
accept the offer only when he knows about it. An offer accepted
without his knowledge does not confer any legal rights on the
acceptor. There can be no valid acceptance unless there is
knowledge of the offer.
6. Offer should not contain a term the non-compliance of which
would amount to acceptance: The offer should not impose on the
offeree an obligation to reply. While making the offer the offerer
cannot say that if the offer is not accepted before a certain date
it will be presumed to have been accepted. Unless the offeree
sends his reply, no contract will arise.
7. Special terms or conditions in an offer must also be
communicated: The offerer is free to lay down any terms and
conditions in this offer, and, if the other party accepts the offer
then he will be bound by those terms and conditions. The
important point is that if there are some special terms and
conditions they should also be duly communicated, The question
of special terms arises generally in case of standard form of
contracts. if the special terms and conditions have been brought
 to the notice of the offeree, he will be bound by them even if he
has not read them or is an illiterate. Note that the special terms
and conditions should be brought to the knowledge of the offeree
before the contract is concluded and not ' afterwards. A
subsequent communication will not bind the acceptor unless he
himself agrees thereto.

When an offer is accepted, it results in an agreement. Acceptance is an

expression by the offeree of his willingness to be bound by the terms of
the offer. This results in the establishment of legal relations between the
offerer and offeree.

Section 2(b) of the Indian Contract Act defines the term 'acceptance' as
"when the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A proposal when accepted
becomes a promise. "

An offer can be accepted only by the person or persons to whom it is

made. An offer made to a particular person (specific offer) can be
accepted only by him and none else.

the acceptance may also be either express or implied. When the

acceptance is given by words spoken or written, it is called an 'express
acceptance. The acceptance may also be implied by conduct.

The following are the most important elements where an acceptance made
by the offeree/promisee is deemed to be valid:

 The proposal must be unconditionally accepted in order for it to be

turned into a promise, according to Section 7(1) of the Indian
Contract Act.
 The acceptance shall not be taken under any coercion, undue
influence, or threat. It should be given with the free consent of the
offeree/promisee.
 The offeree/promisee must reflect his intention to enter into a
contract.
 The acceptance must be communicated in a proper manner to the
offeror/promisor. Acceptance can be either implied or expressed.
 If any specific time period is mentioned in accepting the offer, the
offeree/promisee should be accepted within that specified time
period.
 The offer should be accepted without making any modifications or
prescribing any conditions. It must be accepted unconditionally.
 If the offeree/promisee remains silent after receiving the offer, then
in that case, it does not imply that the offer has been accepted by
the offeree/promisee. There should be proper communication about
the same.
According to ~section 4 of the Contract Act, the communication of an offer
is complete when it comes to the knowledge of the person to whom it is
made i.e., when the letter containing the offer reaches the offeree. For
example, A of Delhi sends a letter by post to B of Bombay offering to sell
his house for Rs. 10 lakh. The letter is posted on April 5, and this. Letter
reaches B on April 7. The ' communication of the offer is complete on April
7. In the above example, if the letter containing the offer never reaches B,
but B comes to know about the proposal from some other source and
sends his acceptance, it will not amount to proper communication of the
offer and so no contract will arise.

The rules for communication of acceptance are different for the person who
makes it and the one who gets it because the communication of acceptance
is completed at different times for both parties, i.e., the offeror and the
offeree.

According to Section 4 of the Contract Act, "the communication of

acceptance is complete : (a) as against the proposer, when it is put in a
course of transmission to him, so as to be out of the power of the
acceptor, and (b) as against the acceptor, when it comes to the
knowledge of the proposer.

Thus, the offerer becomes bound by the acceptance as soon as the letter
of acceptance is duly posted by the acceptor, but the acceptor is bound
by his acceptance only when the letter of acceptance reaches the offerer.
It is quite interesting to note that a valid contract arises even if the letter
of acceptance is lost in transit or is delayed. You should remember that
the offerer will be bound by the acceptance only when the letter of
acceptance was correctly addressed, properly stamped and actually
posted. Thus, if the acceptance letter is not correctly addressed, it will not
be binding upon the offerer. From the above rules, it must be amply clear
that so far as the acceptor is concerned, he is not bound by acceptance till
it reaches the offerer.

If an offer is made to the world at large (general offer) any person can
accept the offer provided he has the knowledge of the offer.

Carlill v. Carbolic Smoke Ball Co. is a foundational case in English contract law, decided in
1893. It addresses the enforceability of unilateral contracts and the concept of offer and
acceptance.

Key Facts:

 The Carbolic Smoke Ball Company advertised a product that claimed to prevent
influenza. They promised a reward of £100 to anyone who contracted influenza after
using their product as directed.
 To demonstrate their seriousness, they deposited £1,000 in a bank to show they were
able to pay the reward.
  Mrs. Carlill purchased the smoke ball, used it as directed, and later contracted
influenza. She sought to claim the £100 reward.

Legal Issues:

The main legal questions revolved around:

1. Whether the advertisement constituted a valid offer.

2. Whether Mrs. Carlill had accepted the offer and was entitled to the reward.

Court's Decision:

The Court of Appeal ruled in favor of Mrs. Carlill. Key points of the judgment included:

1. Offer vs. Invitation to Treat: The court held that the advertisement was a unilateral
offer, which could be accepted by anyone who fulfilled the conditions specified (i.e.,
using the smoke ball and contracting influenza).
2. Acceptance: It was determined that Mrs. Carlill accepted the offer by performing the
conditions of the contract (using the smoke ball and subsequently contracting
influenza). Acceptance did not require her to notify the company beforehand.
3. Intention to Create Legal Relations: The court found that the company's deposit of
£1,000 demonstrated an intention to create legal relations, as they were serious about
their offer.
4. Consideration: The court established that Mrs. Carlill’s use of the smoke ball
constituted consideration, as she had engaged with the product based on the terms of
the offer.

Conclusion:

Carlill v. Carbolic Smoke Ball Co. is significant for establishing important principles in
contract law, particularly regarding unilateral offers and acceptance. It illustrates that
advertisements can constitute binding offers, provided they are clear and specific about the
terms, and that acceptance can occur through conduct rather than explicit communication.
This case remains a cornerstone in understanding how offers and acceptance operate within
contract law.