Introduction
Hey there! If you’ve ever wondered how contracts come to life, you’re in the right place. Today, we’re diving into the fascinating world of offers in Indian contract law. Trust me, it’s not as dry as it sounds! Offers are like the spark that ignites the contractual fire, marking the start of a legal commitment between parties. So, let’s explore the various types of offers, as defined under the Indian Contract Act (ICA) 1872, in a fun and conversational way.
What is an Offer?
First things first, what exactly is an offer? Under Section 2(a) of the ICA, an offer (or proposal) is when one person indicates to another that they are willing to do or refrain from doing something, to get the other person’s agreement to such an action or inaction. In simpler terms, an offer is like saying, “Hey, I’m ready to do this or not do this—are you in?”
The person making the offer is called the “Promisor,” and the person to whom the offer is made is known as the “Promisee.” Offers can involve doing something positive or refraining from doing something negative. Now, let’s get into the different types of offers!
Types of Offers in Contracts
Offers come in various flavours, and there are essentially seven types of offers you should know about:
- Express Offer
- Implied Offer
- General Offer
- Specific Offer
- Cross Offer
- Counter Offer
- Standing Offer
Let’s break each one down with some examples and see how they work in real life.
Types of Offer in a Table
| Type of Offer | Definition | Examples | Result | CaseLaws |
| Express Offer | Clear, direct offer in words, oral or written | A offers to sell a car for $10,000 to B. | Creates potential contract. | |
| Implied Offer | Offer inferred from actions or circumstances | A leaves a car with a price tag at B’s shop. | Potential contract if accepted. | Upton-on-Severn RDC v. Powell – Defendant’s actions implied a request for services. |
| Genral Offer | Open offer to the public or a wide audience | A offers a reward for finding a lost dog in a poster. | Potential contract when accepted. | Carlill v. Carbolic Smoke Ball Co. – Advertised reward was deemed a binding offer. |
| Specific Offer | Directed at a particular person or group | A offers to sell a car to B for a specific price. | Creates potential contract. | Boulton v. Jones – Offer made to a specific individual cannot be accepted by someone else. |
| Cross Offer | Simultaneous identical offers by two parties | A offers to sell a car to B while B offers to buy it at the same time. | No contract; mutual rejection. | Tinn v. Hoffman – Simultaneous offers did not create a binding contract. |
| Counter Offer | Response with modified terms to the original offer | A offers to sell a car for $10,000; B offers $8,000. | Rejects the original offer. | Hyde v. Wrench – Counter proposal rejected the original offer, no contract was formed. |
| Standing Offer/Open Offer | An offer open for acceptance over a period | A invites tenders for a year-long supply contract. | Accepted orders form contracts. | Percival Ltd. v. London County Council Asylums and Mental Deficiency Committee – Standing offer became binding upon acceptance. |
Express Offer
An express offer is clear and direct, communicated through words—either spoken or written. It’s like saying, “I’ll sell you my car for $10,000.” Simple, right? This type of offer creates a potential contract once accepted.
Implied Offer
An implied offer is inferred from actions or circumstances rather than words.
For example, if you leave a car with a price tag in a shop, it’s implied that the car is for sale. No words are needed!
If you ever get on a bus and get ticket is also implied.
Imagine an auction where bids are made without verbal offers—this is an implied offer. Another example is the case of Upton-on-Severn RDC v. Powell, where the defendant called a fire brigade, assuming the service was free. The court found that although no verbal offer was made, the defendant’s actions implied a request for Upton’s services. And Upton, by responding and providing those services, created an implied promise to pay.
General Offer
A general offer is open to the public or a wide audience. Imagine you see a poster that says, “Reward for finding my lost dog.” Anyone who finds the dog and returns it can claim the reward. The classic case here is Carlill v. Carbolic Smoke Ball Co., where a company promised £100 to anyone who still caught the flu after using their product. Mrs Carlill did, and the court ruled she deserved the reward.
An Indian case, Lalman Shukla v. Gauri Dutt, also illustrates the concept of a general offer. In this case, a servant was sent by his master to find his missing nephew and announced a reward for anyone who could locate the nephew. This is another example of an offer made to the public at large.
Specific Offer
A specific offer is directed at a particular person or group. If you offer to sell your car to your friend for a specific price, that’s a specific offer. Only your friend can accept it, not the general public.
This concept is well illustrated in the landmark case of Boulton v. Jones. In this case, the Plaintiff had taken over the business of a person named Brocklehurst. However, the defendant, unaware of this change in ownership, placed an order for certain goods with Brocklehurst.
Defendant only learned about the change in ownership when he received an invoice, by which time he had already consumed the goods. The defendant refused to pay for the goods. Claiming that he had a set-off against the original owner and the plaintiff sued him.
The judges delivered a unanimous judgment, absolving the defendant from liability. Pollock CB clarified that the legal principle was clear: if you intend to contract with person A, person B cannot insert themselves as A without your consent and to your disadvantage. It was also established that in cases where a contract is made with a specific individual for personal services, such as writing a book, creating a painting, or any service unique to that person, or if there is a set-off owed by any party, no one else has the authority to assert that they are the contracted party. In other words, the offer was meant for a specific person and couldn’t be transferred to someone else without consent.
Cross Offer
Cross offers happen when two parties independently and unknowingly make identical offers to each other. The Cross offer is generally considered as void.
For instance, if you and your friend both send each other messages at the same time offering to buy each other’s cars, it’s a cross offer. However, these don’t form a contract since there’s no acceptance of the other’s offer.
An important case that illustrates this concept is Tinn v. Hoffman. In this case, the defendant offered to sell 800 tons of iron to the complainant at a specific price per ton. Simultaneously, the complainant also made an offer to buy the same quantity of iron from the defendant at similar terms. The key issue was whether a contract existed between the parties and whether simultaneous offers constituted a valid acceptance.
The court ruled that these were indeed cross offers because they were made simultaneously and independently without knowledge of each other. Consequently, these offers did not bind the parties and no contract was formed.
Counter Offer
A counter offer is when the offeree responds to an original offer with modified terms. Let’s say you offer to sell your car for $10,000, and your friend replies, “How about $8,000?” That’s a counter offer and effectively rejects the original offer. The ball is back in your court now!
This principle is well illustrated by Sir Jenkins CJ in the case of Haji Mohd Haji Jiva v. Spinner, where it was established that any departure from the original offer constitutes a rejection. In other words, when an acceptance contains variations or modifications, it is not a valid acceptance but rather a counter proposal. The original offeror must agree to this counter proposal for it to form a contract.
This legal concept is rooted in the landmark case of Hyde v. Wrench. In this case, an offer to sell a farm for 1000 Pounds was initially rejected by the Plaintiff, who instead offered 950 Pounds for the farm. Later, the Plaintiff provided an acceptance at the original price. The court ruled that the Defendant was not bound by a contract because the Plaintiff’s response amounted to a counter proposal. If the Plaintiff had simply accepted the original offer to purchase the farm at the price of 1000 Pounds, a valid contract would have been formed. However, the counter-proposal effectively rejected the original offer.
Standing Offer
A standing offer remains open for acceptance over some time. Think of it like a long-term tender for the supply of goods or services. For example, if a company invites tenders for a year-long supply contract, each acceptance of the offer during that year forms a separate contract.
In the case of Perclval Ltd. v. London County Council Asylums and Mental Deficiency Committee, the Plaintiff had advertised for tenders for the supply of goods. The defendant submitted a tender in which they agreed to supply various special articles to the company for a duration of 12 months. However, during this period, the defendant failed to supply a particular consignment.
The court held that the tender made by the defendant was a standing offer, which was meant to be converted into a series of contracts through subsequent acts of the company. When a company issues an order based on a standing offer, it prevents the offeror (in this case, the defendant) from revoking the offer for that specific portion. Consequently, the company succeeded in taking legal action for breach of contract when the defendant failed to supply a consignment as per their standing offer. This case exemplifies how standing offers work and how they can lead to contractual obligations when accepted by subsequent orders or actions.
Conclusion
Understanding the various types of offers in contract law is essential for navigating legal agreements. From express and implied offers to general and specific offers, each type plays a crucial role in the formation of contracts. Cross offers might seem interesting but don’t create contracts, while counter offers and standing offers shape how negotiations and long-term agreements are managed.
Contracts may seem complex, but breaking down the types of offers makes it easier to grasp the dynamics of agreement formation. So next time you find yourself in a contractual situation, you’ll know exactly what kind of offer you’re dealing with!
Also Read: Types of Contract
For More Info: lawbhoomi