Chapter 2 Introduction to the Law of Contract

Question 1

Define Offer or Proposal?

[Chapter 2]

Answer 1

A person makes an offer when he shows his willingness to do or not to do something, to obtain the consent of other person.

Question 2

Define “Acceptance”:

[Chapter 2]

Answer 2

When the offeree shows his consent to offer, it is called acceptance.

Question 3

What is the difference between Agreement and Contract?

[Chapter 2]

Answer 3

Agreement:
Promises forming consideration for each other, are called agreement.

Contract:
Contract is an agreement enforceable by law.

Every contract is an agreement, but every agreement is not contract.

Question 4

List down the Essentials of an Offer?

[Chapter 2]

Answer 4

1. Two persons
2. Intention to create legal relationship
3. Certain and definite
4. Offer may be conditional
5. An invitation to offer is not an offer

Question 5

What is the legal rule if an offer has some conditions?

[Chapter 2]

Answer 5

1. Conditions must be clearly communicated to offeree.
2. Offeree has to accept all conditions without modifications. Otherwise, it will become counter offer.

Question 6

Give some examples of invitations to offer?

[Chapter 2]

Answer 6

1. An advertisement for auction.
2. Display of goods in stores.
3. Circulation of information .
4. A tender notice.

Question 7

When is an offer communicated?

[Chapter 2]

Answer 7

When it comes to the knowledge of offeree.

Question 8

When is an offer revoked?

[Chapter 2]

Answer 8

When revocation comes to the knowledge of offeree.

Question 9

When is an acceptance communicated?

[Chapter 2]

Answer 9

Acceptance is communicated in two phases:

1. As against offeror: when it is sent by offeree.
2. As against offeree: when it is received by offeror.

Question 10

When is an acceptance revoked?

[Chapter 2]

Answer 10

When it comes to the knowledge of offeror.

Question 11

How an offer is revoked (or lapsed)

[Chapter 2]

Answer 11

1. Revocation by offeror.
2. Rejection by offeree.
3. Non-fulfilment of condition.
4. Passing of stipulated or reasonable time.
5. Death or Insanity before acceptance.
6. Counter-offer.
7. Subsequent illegality or destruction of subject matter.

Question 12

• *What is the effect on offer if:
  (a) offeree dies before acceptance.
  (b) offeror dies before acceptance.**

[Chapter 2]

Answer 12

(a) Offer lapses.
(b) Offer does not lapse, until death is known to other party (i.e. offeree).

Question 13

List down essentials of Acceptance?

[Chapter 2]

Answer 13

1. Acceptance must be absolute and unconditional.
2. Stipulated or Reasonable Time.
3. Stipulated or Reasonable Manner/Mode.
4. Acceptance must be given only by the person to whom it is made.
5. Acceptance cannot precede an offer.
6. Rejected offer cannot be accepted unless renewed.
7. Performance of Condition, or Acceptance of consideration.

Question 14

What happens if acceptance is not made in prescribed manner?

[Chapter 2]

Answer 14

Offeror may accept it, or may ask offeree to communicate in prescribed manner.