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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