Chapter 2: Offer & Acceptance-Theory

Question 1

Define offer/proposal.

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 agreement.

Answer 2

Promises forming consideration for each other are called agreement.
Promise + Consideration = Agreement.

Question 3

Define contract

Answer 3

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

Question 4

Describe the term enforceability by law?

Answer 4

A contract becomes enforceable by law when it creates legal obligations for parties.

Question 5

Enlist all agreements which cannot be enforced by law.

Answer 5

1.Illegal agreements.
2.Impossible agreements.
3.Social, domestic or religious agreements. (Unless agreed by parties)

Question 6

Define offer.

Answer 6

When a person shows his willingness to another person to do or not to do something, to obtain consent of that other person, he said to make an offer/proposal.

Question 7

List down types of offer.

Answer 7

1. Specific offer.
2. General offer.
3. Counter offer.

Question 8

Define specific offer.

Answer 8

An offer which is made to a definite person (or persons). Such an offer can be accepted only by the person (or persons) to whom it is made.

Question 9

Define general offer.

Answer 9

An offer is general when it is made to the world at large or public in general. Any person can accept such offer by acting on conditions of the offer.

Question 10

Define counter offer.

Answer 10

An offer made by the other party in response to a previous offer is called counter offer. Counter offer cancels original offer.

Question 11

List down essentials of an offer/ proposal. (6 points)

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.

Question 12

How offer must be communicated?

Answer 12

It can be communicated expressly. Or impliedly.

Question 13

When offer is considered duly communicated?

Answer 13

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

Question 14

Explain conditional offer.

Answer 14

An offer maybe subject to some conditions. If there are special terms and conditions in an offer:
1. They must be specifically communicated to the other party.
2. Offeree will have to accept all conditions of the offer without modification.

Question 15

An invitation to offer is not an offer, elaborate.

Answer 15

If a person invites others to make offer, this invitation shall not be considered offer. Therefore, response by other person shall be considered offer (and not acceptance).

Question 16

List down four examples of invitation to offer.

Answer 16

1. An advertisement for sale of goods by auction.
2. Display of goods with price tags in departmental stores.
3. Circulation of information (e.g. price list of items)
4. A notice that goods will be sold/purchased by tender.

Question 17

List down all situations which result in lapse/revocation of an offer/proposal. (7 Points)

Answer 17

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

Question 18

Define acceptance.

Answer 18

When the person to whom the offer is made shows his consent, it is called acceptance.

Question 19

List down all essentials of an acceptance.

Answer 19

1. Acceptance must be absolute and unconditional.
2. With stipulated or reasonable time.
3. With stipulated or reasonable manner/mode.
4. Acceptance must be given only by the person to whom offer is made.
5. Acceptance cannot precede an offer.
6. Rejected offer cannot be accepted unless renewed.
7. No negative confirmation.
8. Acceptance of consideration or performance of condition.
9. Acceptance must be communicated.
10. Revocation of acceptance.

Question 20

Acceptance should be within stipulated or reasonable manner/mode. Elaborate.

Answer 20

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

Question 21

What is legality of negative confirmation? Elaborate.

Answer 21

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

Question 22

Acceptance must be communicated, elaborate.

Answer 22

Acceptance must be communicated by offeree to offeror. Acceptance is communicated in two phases:
1. As against offeror.
2. As against offeree.

Question 23

When acceptance is communicated as against offeror?

Answer 23

When it is put in the course of transmission, and is out of power of acceptor. Now offeror is bound by the contract and cannot revoke his offer even if such letter is lost or delayed. However, acceptor can still revoke his acceptance before it reaches to offeror.

Question 24

When acceptance is communicated as against offeree. Elaborate.

Answer 24

When it comes to the knowledge of the offeror. Now contract is complete and no party can revoke it.

Question 25

How revocation of acceptance is done?

Answer 25

Revocation of acceptance is done when acceptor revokes his acceptance by notifying other party before it reaches him.