Chapter 2: Offer, Acceptance and Revocation

Question 1

Define Offer.

Answer 1

Offer means showing willingness to do or not to do something, to obtain the consent of other person.

[Chapter 2: LO 1]

Question 2

Define Acceptance.

Answer 2

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

[Chapter 2: LO 1]

Question 3

Define Promise, Promisor and Promisee.

Answer 3

Promise:
If an offer is accepted, it is called Promise: [Offer + Acceptance = Promise]

Promisor:
A person who is liable to do something, is called Promisor.

Promisee:
A person for whom something is to be done, is called Promisee.

[Chapter 2: LO 1]

Question 4

What is Express and Implied Acceptance.

Answer 4

Express Acceptance is made by words (whether written or oral).
Implied Acceptance is made by conduct (not in words) e.g. if offeree nods, or picks the good/service/cash.

[Chapter 2: LO 1]

Question 5

Define Agreement:

Answer 5

Promises forming consideration for each other, are called agreement.
Promise + Consideration (i.e. another promise) = Agreement

[Chapter 2: LO 1]

Question 6

Which Agreements are not enforceable by law:

Answer 6

1. Illegal Agreements
2. Impossible Agreements
3. Social, Domestic or Religious Agreements (unless legal relation is agreed by parties)

[Chapter 2: LO 1]

Question 7

Define Contract:

Answer 7

Contract is an agreement which is enforceable by law.
Agreement + Enforceability by Law = Contract

[Chapter 2: LO 1]

Question 8

What is a Specific offer and who can accept it.

Answer 8

 Specific offer is an offer which is made to a definite person (or persons).
 Only that specific person can accept it to whom it is made.

[Chapter 2: LO 2]

Question 9

What is a General offer and who can accept it.

Answer 9

 General Offer is an offer which is **made to the world at large or public in general. **
 Anyone who knows it, can accept offer.

[Chapter 2: LO 2]

Question 10

What is a Counter offer and its effect.

Answer 10

 Counter offer is an offer which is made by Offeree **in response to original offer. **
 Counter offer cancels original offer.

[Chapter 2: LO 2]

Question 11

List down Essentials of an Offer/Proposal:

Answer 11

1. Two persons:
2. Intention to create legal relationship:
3. Certain and definite:
4. Offer must be communicated:
5. Conditional Offer:
6. An invitation to offer is not an offer:

[Chapter 2: LO 3]

Question 12

Briefly Explain the essential of Offer “Two persons”.

Answer 12

For a valid offer there must be two persons i.e.
 person making the offer (called offeror), and
 the person to whom offer is made (called offeree).
A person cannot make offer to himself.

[Chapter 2: LO 3]

Question 13

When is an offer duly communicated.

Answer 13

An offer is duly communicated when it reaches the person to whom it is made.

[Chapter 2: LO 3]

Question 14

Briefly Explain the essential of Offer “Conditional Offer”.

Answer 14

An offer may have certain terms and conditions. Such conditions must be:
 Communicated to offeree at time of acceptance.
 Accepted by offeree as it is. [if offeree makes further negotiation, it will be counter offer]

[Chapter 2: LO 3]

Question 15

**Give some examples of situations which are NOT offer, but are just “invitation to offer”
**.

Answer 15

1. An advertisement for sale of goods by Auction.
2. **Goods on display **in a store with price tags.
3. Advertisements or Circulation of information (e.g. through email, social media) that Good X is available for Rs. X.
4. A notice that goods will be sold/purchased by** Tender**.
5. Menu in restaurant, Online market places (eBay, Amazon).

[Chapter 2: LO 3]

Question 16

List down the ways in which an Offer/Proposal can be revoked.

Answer 16

1. Revocation by offeror.
2. Rejection by offeree.
3. Non-fulfilment of condition.
4. Passing of specified or reasonable time0
5. Death or Insanity of parties before acceptance.
6. Counter-offer.
7. Subsequent illegality or destruction of subject matter.

[Chapter 2: LO 4]

Question 17

Explain how offer can be revoked by Offeror.

Answer 17

 Offeror can revoke offer by notifying other party.
 However, notice should be given before communication of acceptance is complete as against offeror (i.e. before acceptor posts acceptance).

[Chapter 2: LO 4]

Question 18

Explain how offer can be revoked by Death or Insanity of Parties.

Answer 18

 If offeree dies or becomes insane before acceptance, offer lapses.
 If offeror dies or becomes insane before acceptance, offer lapses if offeree knows about death or insanity.

[Chapter 2: LO 4]

Question 19

List down the essentials of Acceptance:

Answer 19

1. Acceptor must be aware of offer.
2. Acceptance must be absolute and unconditional.
3. With Stipulated or Reasonable Time.
4. With Stipulated or Reasonable Manner/Mode.
5. Acceptance must be given only by offeree.
6. Acceptance cannot precede an offer.
7. Rejected offer cannot be accepted unless renewed.
8. Negative confirmation.
9. Acceptance of consideration, or Performance of a condition.
10. Acceptance must be communicated.

[Chapter 2: LO 5]

Question 20

Briefly Explain the essential of Acceptance “Acceptance must be “With Stipulated or Reasonable Manner/Mode”.

Answer 20

Acceptance should be made in the manner specified in proposal, or in usual manner (if no manner is specified).
If acceptance is not made in prescribed mode, Offeror:
 may accept the deviated acceptance, or
 may insist offeree to accept only in the prescribed manner. If offeror does not ask within a reasonable time, it is deemed that he has accepted it.

[Chapter 2: LO 5]

Question 21

Briefly Explain the essential of Acceptance “Acceptance must be absolute and unconditional”.

Answer 21

An acceptance must be absolute and unconditional in respect of all terms of the offer. If any condition is imposed in return, it becomes counter-offer instead of acceptance.

[Chapter 2: LO 5]

Question 22

Briefly Explain the essential of Acceptance “Negative Confirmation”.

Answer 22

A proposal is not accepted if offeree remains silent (or does not respond). Similarly, just mental acceptance by offeree is not a valid acceptance.

[Chapter 2: LO 5]

Question 23

Briefly Explain the essential of Acceptance “Acceptance must be communicated”.

Answer 23

Acceptance is communicated in two phases:

When Acceptor Posts it:
It is called “Communication against offeror”. Now, offeror cannot cancel the contract. However, Acceptor can still cancel the acceptance before it reaches offeror.

When it reaches offeror:
It is called “Communication against offeree”. Now contract is complete and no party can cancel it.

[Chapter 2: LO 5]

Question 24

When can Acceptance be revoked:

Answer 24

Acceptance can be revoked before communication of acceptance is complete as against acceptor (i.e. before acceptance reaches offeror).

[Chapter 2: LO 5]