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    Saturday, 18 March 2017

    Proposal, Promise and Agreement

    1. Proposal

    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 to make a proposal. Section 2(a)

    a. Proposal or offer
    A proposal is merely an offer to be bound by a promise. It is declaration by the proposer of his intention to be bound by an obligation if the offeree fulfill or undertakes to fulfill certain conditions. It is only on the acceptance of the offer or proposal that the offer becomes a promise. Therefore, when an instrument is so worded as to be binding on the proposer, it is in point of law only an offer and until both parties are bound, neither party is bound. Such instrument was no more than proposal because unless the person to whom the offer was made signifies his willingness's to accept it, the proposer would not in law, ripens into an agreement.

    An agreement between the parties, wherein, vendee had agreed to re-convey the property to the vendors as soon as they themselves had raised the money was a unilateral offer by the vendee to vendors, containing no indication that such offer was accepted by the vendors, for none of them had signed that lqrarnama in token of its acceptance.

    b. Offer must be clear
    An offer which does not contain any particulars as to the thing offered does not constitute a proposal properly so called. Therefore where one person by a letter asks the consent of another to a certain transaction without stating the consideration, it is not an offer.

    c. Term of proposal
    A "term of the proposal" signifies a condition without the fulfillment of which the proposer is not willing to undertake the' obligation. Whether a particular condition proposed amounts to a term of the proposal depends upon the intention of the proposer.

    d. Inquiry or negotiations prior to offer
    An inquiry or negotiation between the parties prior to the making of an offer cannot be called an offer or proposal. A where the Honorary Secretary of a bank had an informal talk with a person to enquire whether he would purchase a land made a report to the bank on certain conditions but not as representing the bank and later made a report to the bank that the person had assured to purchase the land; it was held that what took place between the two was only an enquiry on the one hand and an assurance on the other. It could not amount either to offer or a contract.

    e. Statement not requiring acceptance is not an offer
    To constitute an offer the statement by one party must be such as would require acceptance by the other party to become effective. A statement which is unilateral in nature and complete in it would not amount to an offer. Thus a circular by a bank to its debtors which signifies them its intention to raise the rate of interest without obtaining their consent to the increase and only intimates to them its unilateral decision to enhance the rate as from the date of the notice, cannot be said to be a proposal as defined.

    f. Undertaking to make an offer
    A mere undertaking to make an offer in the future in case of certain contingency is not an offer. Thus a term in a partition deed that in the event of any of the brothers wishing to sell his share of the house. he should sell it to the other brothers at the market value is not an offer itself but merely, an undertaking to make an offer of sale upon the arising of a certain contingency.

    g. Place where offer is made
    Where the offer 'is made to a party within the jurisdiction of the High Court at B but the latter neither resides nor carries on business within the jurisdiction of the High Court at the offer cannot be said to have been of action in respect of that transaction can, be have arisen within the jurisdiction of the High Court.

    h. Invitation to offer
    In cases of invitations for orders, a contract would come into being only when the invitee places an order and the invitor accepts the same catalogue of the good of a company for sale is not a series of offers but only invitation for offers.

    i. Bids at auction sale
    An advertisement for auction was merely an invitation to bid as distinct, from an offer to be bound to sell. Therefore a bidder at an auction merely makes an offer to buy which he can withdraw until it is accepted.

    j. Pre-conditions for making a proposal
    Where there is a precondition for making an offer such as pre-qualification for making a bid for a contract. An offer made by petitioner who had not applied for pre-qualification in response to respondent's notice, having missed the bus had to lag behind on account of their own lethargic conduct. The petitioner would thus be disqualified from making an offer and their offers may not be considered while granting the contract.

    2. Promise


    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. Section 2(b)

    a. Promise
    The word 'promise' in the act is used in a Narrow sense to mean an accepted proposal .It is not the same thing as an agreement which is defined under clause (e). The technical use of the word 'promise' in the Court Act is far narrower that the popular use. Express' words of promise often are in law no narrower than a proposal. A proposal is merely an offer to be bound by a promise and a promise in law is an accepted proposal. It is the promise only which can give rise to an agreement which, if enforceable by law, is a contract, but if not, is a void agreement.

    b. Agreement to be bound oath
    An offer to abide by the oath of opposite party and acceptance of such offer by the other party is in the nature of agreement. Where defendant having him offered to be bound by the oath and having signed a statement to that effect along with his counsel, was bound by such oath.

    c. Conditional offer
    Where an offer is made subject to a condition and that offer is accepted, the person accepting the offer must be presumed to have accepted it with the condition so attached and he cannot be heard to say that though he accepted the offer, he was not bound by the condition.

    d. Acceptance of offer
    A mere offer is not binding. It is only when an offer has been perfected by acceptance that parties. Thus 'where fixation of rate at specified amount was permissible under terms of contract and the same was accepted buy respondent, such rate became conclusive and could not be recalled.

    e. Communication of offer Necessary
    An offer unless it is communicated to the other party is not capable of acceptance. Hence, where a' party merely makes a have made any offer.

    f. Knowledge of Offer
    There cannot be an acceptance of an offer which has not come to the knowledge of the offeree. A reward offered for the search of a missing boy cannot be claimed by a person who found the boy if he did not undertake the search with knowledge of the offer.

    g. Intention of offeror
    Where intention of the offeror was to sell all the properties, at a uniform rate, the offeree cannot accept a portion of it and claim specific performance of that portion of the contract.

    h. Addition to and variation of terms of offer
    The offeree cannot add to or vary the terms of the offer and accept t s so varied. He can only make a counter offer if he does not accept the offer made. But he can, if his counter offer fails, accept the original offer repeated by the offeror on the occasion of his refusal to accept the addition or variation.

    i. Silence of offeree
    Where a person receiving an offer through a letter remains -silent, he cannot be taken to have accepted it by his silence. A communication by one party to another to reply within a definite time, or else he would lose the benefit of his contract, would be only a one-sided offer, and no acceptance of such offer can be presumed from his mere silence or the omission to reply by the offeree within the time.

    j. Acceptance subject o reducing contract into writing
    Where an offer is accepted and it is said that the contract would be reduced into writing, the contract is 'complete as soon as the offer is accepted and the writing would be only incidental to the completion of the contract.

    k. Shares of companies
    In the case of an ordinary member of public to take shares in a company is completed when an application for shares has been submitted, and allotment on the foot of that application has been made and the notice of the allotment has been communicated to the applicant.

    l. Resale or repurchase of shares
    Where in case of a contract of re-sale and re-purchase of shares, defendants entered into the contract of sale of shares as independent owners and not as Managing Agents of third party and made certain guarantees in relation thereto. They were liable to re-purchase the shares on the expiry of stipulated period of four years.

    m. Contract by correspondence
    Where it is sought to establish a contract by correspondence, the rule is that whole of the correspondence relating to the matter in question must be locked at for the purpose of finding out at what stage there was, if at all, a complete are definitely agreed upon by letters, the mere fact points of a proposed contract are definitely agreed upon by letters, the made to a more fact that in the course of the correspondence reference had been made to a more formal agreement to subsidiary non-essential stipulations, will not prevent the Court from considering the agreement arrived at by the letters as concluded, of once a definite offer has been made and it has been accepted without qualification and it appears that the letter of offer and acceptance contain all the terms agreed upon between the parties, the complete contract thus arrived at cannot be affected .by subsequent negotiations, and no testimony aliened is' admissible. Subsequent letters cannot be referred to, to aid in construing the contract contain d in the material letters.

    3. Agreement

    Every promise and every set of promises, forming the consideration for each other, is an agreement. Section 2 (e)

    a. Promise and agreement
    Every "promise" as defined by clause (b) of section 2 is not necessarily an "agreement" falling within clause (s) also. The acceptance a promise ripens into an agreement only after an offer has been accepted by, the offeree and until there is such an agreement the question whether there was any consideration for the promise would not arise at all.

    Where elements of offer of sale, acceptance of such offer and consideration were fully established by evidence on record, the same was held to be specifically enforceable.

    b. Executed and executory agreement
    Agreement is of two kinds executed and executory. In an executed agreement one party has already performed his part of the agreement while the other party has to perform his part. In an executory agreement both the parties have to perform their mutual promises and the fact that they have to perform their parts of the contract does not affect the validity of the contract. Once the contract has passed the executory stage and become a completed transaction, non-payment of price no longer remains a ground for avoiding the contract itself. The only remedy of the seller is to recover the price.
     
    c. Agreement to sell
    An agreement to sell does not create any right, title or interest in immovable property.

    d. Agreement for sale

    There can be an agreement for sale of future goods. These goods include growing crops and things attached to or forming part of the land which are agreed to be severed before sale or under eth contract of sale. Thus corn, grain, potatoes, can from subject matter of contract for sale of goods.
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    Item Reviewed: Proposal, Promise and Agreement Rating: 5 Reviewed By: Usman Ali
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