DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATANAM, A P., INDIA

PROJECT TITLE: OFFER

SUBJECT:

LAW OF

CONTRACTS

NAME OF THE FACULTY: Ms.

SUNEETHA BVS

NAME OF STUDENT: AKSHARA. A

ROLL NO. : 2019009

SEMESTER : II

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2
 LAW OF CONTRACTS

TOPIC- OFFER

Indian Contracts Act of 1872, section 2(h) defines a contract as an agreement that is enforceable
by law. And according to section 2(e) an agreement is every promise and every set of promises
forming the consideration for each other. All agreements are not enforceable by law and
therefore all agreements are not contracts. Some of these may be because of the sheer
impossibility of task to perform or their nature of being illegal. However all contracts are
agreements.

Elements of a contract are:

1) Agreement
2) Free consent
3) Competency
4) Consideration
5) Lawful object
6) Not expressly declared as void

The expression of an offer may take different forms and which form is acceptable varies by
jurisdiction. Offers may be presented in a letter, newspaper advertisement, fax, email verbally or
even conduct, as long as it communicates the basis on which the offeror is prepared to contract.

The primary element that creates a contract between parties is agreement, which is a result offer
and acceptance, that forms consideration for the parties concerned. When two parties choose to
enter into a contract, the first thing that occurs is an offer.

The project will further delve into the nuances of offers in contract and agreement making.

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 SYNOPSIS

INTRODUCTION

A contract is a lawful agreement that requires to have an offer to start with. An offer can be
defined as "an expression of willingness to contract on certain terms, made with the intention
that it shall become binding as soon as it is accepted by the person to whom it is addressed", the
"offeree".[1] An offer is a statement of the terms on which the offeror is willing to be bound. It is
the present contractual intent to be bound by a contract with definite and certain terms
communicated to the offeree.

The expression of an offer may take different forms and which form is acceptable varies by
jurisdiction. Offers may be presented in a letter, newspaper advertisement, fax, email verbally or
even conduct, as long as it communicates the basis on which the offeror is prepared to contract.

OBJECTIVE OF THE STUDY

To study and analyze importance offer in a contract

SCOPE OF STUDY

Study would cover various aspects and types of offers in contracts and how they work.

SIGNIFICANCE OF STUDY

This study would help us to comprehensively understand the importance of offer in contracts.

LITERATURE REVIEW

The researcher has taken information from various books, case laws, journals and web sources.

RESEARCH QUESTION

Whether the scope covered by offers bears enough significance to merit a contract.

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ACKNOWLEDGEMENT

My sincere thanks to all the timely and incisive help rendered by Ms. Suneetha BVS, my expert
faculty of Law of Contracts. This project wouldn’t have come out without her help.

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 CHAPTERS

1) Introduction of Indian contracts act and some basics

1.1) Some basics of Indian Contracts Act 1872
2) Introduction to offer
3) How is an offer made?
4) Express and implied promises
5) Acceptance- Express and Implied
6) Legal implications of an implied offer/ acceptance
7) Intention to contract
8) General offers
9) Difference between offer and invitation
10) Conclusion

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 INTRODUCTION TO INDIAN CONTRACTS ACT 1872 [Act 9 of 1872]

AND SOME BASICS

The Indian Contract Act, 1872 was enacted on 25th April, 1872 [Act 9 of 1872] and
subsequently came into force on the first day of September 1872 (extends and applicable on all
the states of India except for the state of Jammu and Kashmir). The soul of the India Contract
Act has been written and conceptualized based on the English Common Law. The Indian
Contract Act brings in its scope the contractual privileges that have been bestowed upon the
citizens of India. It grants rights, duties and obligations on the parties in a contract to help them
to successfully carry out business- from everyday life transactions to evidencing the businesses
of multi-national companies and countries even.

The history of the Act entails and talks about origins of the economy procedures and in this
regard, the crucial role of contracts in order to conduct one’s business in daily life. The prevalent
system in the ancient times was the barter system which was a system based on the mutual
system of give and take amongst people for necessities, all this was when trade started centuries
ago in civilizations around the world. This was confined to materialistic necessities only as there
was no method or tool of exchange as is seen in the form of money in today’s world and this
system can be traced back in time to the Indus Valley Civilization (the earliest human
civilization). The system still finds similarity in the contemporary world, where it can be found
in commercially and economically underdeveloped areas.

However, the relevancy of such a methodical system in present world is questioned as the
complexity in the nature of the economies and their systems as well as the increasing demand
and supply systems due to the change in the wants and needs of the human beings came to the
fore. Also, money had evolved as the method of exchange such that the value of every necessity
can now be measured into precise quantities in the prescribed methods. Thus, in such an era of
greater economic transactions and even more complex agreements amongst people, one finds the
existence of Contract Laws and with it, their relevance incredibly important.

The Indian Contract Act codifies the way a contract is entered into and made, execution of a
contract and implementation of provisions of a contract and effects of breach of a contract. The

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contractual capacity is restricted in certain circumstances otherwise it is the prerogative of the
individual to contract. There are specific areas which deal with property, movable gods and
specific performance such as the Transfer of Property Act, The Sale of Goods Act and The
Specific Relief Act. Some of these acts, were originally a part of the Indian Contract Act enacted
in 1872 but were later codified as separate laws. Moreover the Act is not retrospective in nature.
Hence a contract entered into prior to 1st September 1872, even though to be performed after
passing of this Act is not hit by this Act. Hence, we arrive of the conclusion that the basic
framework of contracting is covered in the Indian Contract Act and it is an important area of law,
with roots deep in the history of civilization- and thus forms the subject matter of this project of
this course of Legal History.

SOME BASICS OF INDIAN CONTRACTS ACT 1872

Court decisions provide the base source of development of the contract law in India.

Some basics are to be known before delving into the depth of the taken topic. They are:-

1) The term contract is defined in section 2(h) of the Indian Contracts Act, 1872, as
follows:”An agreement enforceable by law is a contract.”1 (As defined in the case of
Bharti Airtel ltd v Union of India.)
Thus the formation of a contract must have, (1) an agreement and (2) the agreement must
be enforceable by law.
2) Agreement is defined in the section 2(e) of the Indian Contracts Act, 1872, as “Every
promise and every set of promises forming the consideration for each other”.
3) Promise is defined as an accepted proposal.
4) Section 2(b) defines proposal as, “A proposal when accepted becomes a promise” This is
another way of saying that an agreement is an accepted proposal.
5) The process of defining comes down to this: A contract is an agreement, an agreement is
a promise and a promise is an accepted proposal. Thus every agreement, in its ultimate
essence, is the result of a proposal from one side and its acceptance from the other side.
6) The enforceability of any such contracts depends on conditions laid down in the section
10 of the Indian Contracts Act, 1872.

1
Bharti Airtel Ltd v. Union of India, (2015) 12 SCC 1.

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 INTRODUCTION TO THE CONCEPT OF OFFER

As we have already mapped out the steps of making a contract, it is to be understood that
proposal and its acceptance are the steps for an agreement to be made.

An agreement if made enforceable by law becomes a contract for which the parties contracting
will be legally bound. To create such a legal duty to be fulfilled there has to be a proposal in the
first place.

A proposal can also be called an offer. It is the starting point of all contracts. Section 2(a) defines
it as, “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
have made a proposal or offer.’

“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.”

The person who makes the proposal is called the promisor or the “offeror”, the person to who it s
made is called the propose or the “offeree” and when he/she accepts it he is called a “promisee”.
As mentioned in section 2(c ), “The person making the proposal is called the ‘promisor’ and the
person accepting such a promise made is called the ‘promisee’”. In the view of above definition,
a proposal is in the first place an expression of the offeror’s willingness to do or to abstain from
doing something. Secondly, it should be made with a view to obtaining the assent of the offeree
to the proposed act or abstinence.

Example
Mr. A says to Mr. B, “Will you purchase my car for Rs.1,00,000?” In this case, Mr. A is making
an offer to Mr. B. Here A is the offeror and B is the offeree.

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A communication will be treated as an offer if it indicates the
terms on which the offeror is prepared to make a contract (such as the price of the goods
for sale), and gives a clear indication that the offeror intends to be bound by those terms
if they are accepted by the offeree.

An offer may be express, as when Antara tells Bina that she will sell her CD player for
200, but it can also be implied from conduct – a common example is taking goods to
the cash desk in a supermarket, which is an implied offer to buy those goods.

HOW IS AN OFFER MADE

1) COMMUNICATION OF THE PROPOSAL

The definition of a proposal lays emphasis upon the requirement that the willingness to make a
proposal should be signified. To signify is to convey, declare or indicate. What it means is that
the offer should be communicated to the party for who it is intended. The process of proposal is
complete when the communication is complete. Section 3 consists of the accepted ways of
communication

An offer can be made by (a) any act or (b) omission of the party proposing by which he intends
to communicate such proposal or which has the effect of communicating it to the other (Section
3). An offer can be made by an act in the following ways:

(a) by words (whether written or oral). The written offer can be made by letters,
telegrams, telex messages, advertisements, etc. The oral offer can be made either in
person or over telephone.
(b) (b) by conduct. The offer may be made by positive acts or signs so that the person acting
or making signs means to say or convey. However silence of a party can in no case
amount to offer by conduct. An offer can also be made by a party by omission (to do
something). This includes such conduct or forbearance on one’s part that the other person
takes it as his willingness or assent.

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An offer implied from the conduct of the parties or from the circumstances of the case is known
as implied offer.

Examples
(1) Aproposes, by letter, to sell a house to Bat a certain price. This is an offer by an act by
written words (i.e., letter). This is also an express offer.
(2) Aproposes, over telephone, to sell a house to Bat a certain price. This is an offer by act (by
oral words). This is an express offer.
(3) Aowns a motor boat for taking people from Bombay to Goa. The boat is in the waters at the
Gateway of India. This is an offer by conduct to take passengers from Bombay to Goa. He need
not speak or call the passengers. The very fact that his motor boat is in the waters near Gateway
of India signifies his willingness to do an act with a view to obtaining the assent of the other.
This is an example of an implied offer.
The communication, acceptance and revocation of proposals and acceptances, respectively, are
deemed to be made by any act or omission of the party proposing, accepting or revoking, by
which the party intends to communicate such proposal, acceptance or revocation, or which he
has the effect of communicating it. Thus, a proposal may be communicated in any way which
has the effect of laying before the offeree the willingness to do or abstain.2
It may, for example, be done by words of mouth3

For example, A wants to sell his Television to B for Rs/-10000 and if B wishes to purchase the
same, it amounts to proposal by A for the sale of the television. This intention of obtaining the
assent of the other party can be either implied or express. The Act lays down how the
communication of proposal can be made. Section 3 says – “The communication of proposals, the
acceptance of proposals, and the revocation of proposals and acceptances, respectively, are
deemed to be made by any act or omission of the party proposing, accepting or revoking, by
which he intends to communicate such proposal, acceptance or revocation, or which has the
effect of communicating it.”Hence, the definition clearly states that an offer may be
communicated by the offeror by any act or omission by which the offeror –

2
Ram Krishan Singhal v Executive Engineer, ILR (1991) 1 DEL 275.
3
P. Syamala v R. Gopinathan, (2004) 1 CTC 117.

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1. Intends to communicate such offer;

2. Which has the effect of communicating the offer.

Therefore, an offer can be made by words spoken, or by writing or conduct in a manner, which
carries the effect of communicating the offer to the offeree. An express offer is made by some
positive act by the offeror or it may also be implied from the conduct of the offeror. Section 9
further validates the aforementioned statements. It runs as – “In so far as the proposal or
acceptance of any promise is made in words, the promise is said to be express. In so far as such
proposal or acceptance is made otherwise than in words, the promise is said to be implied.”

Implied Proposals

People generally express their desire to do or not to do something in actions. As stated in the
American Law Institute journal, “Words are not the only medium of expression, conduct may
often convey as clearly as words a promise, or an assent to a proposed promise”. An offer and
acceptance need not always be formal, nor does the law of contract of any sort require that
consent to a contract must be in writing. This was said in the case of P. Poppa v Karia Gounder,
where the validity of an oral contract was questioned along with the issue of time being an
essence of the contract.4 Therefore offers or acceptances can be derived by people’s acts or even
omissions.

Offer that is conveyed through conduct is called an implied offer and an offer that is expressed
through words, written or spoken, is called an express offer. An acceptance may likewise be
made expressed or impliedly as section 9 declares.

4
P. Poppan v Karia Gounder, (2002) 2 CHN 40.

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 EXPRESS AND IMPLIED PROMISES

Promises that are conveyed in words are called express promises and those conveyed in actions
and conduct are called implied promises.

A contract implied in fact requires meeting of minds. The courts have to refuse to read an
implied term into a contract which is silent on the point or did not clearly indicate the nature of
terms.

For example:

An auction bid is an implied offer to buy. Similarly consuming eatables at a self serve restaurant
is also an implied offer. Both of which conjure a implied promise to pay for the benefits enjoyed.

A perfect illustration of a contract arising out of implied conduct is the case of Upton-on-Severn
RDC v Powell;5

There was a fire at the defendant’s farm. He believed that he was entitled to the free services of
Upton Fire brigade and, therefore, summoned it. The Brigade came and put out of the fire. It
then turned out that the defendant’s farm was not within free service zone of the Upton, which
therefore, claimed compensation for the services. The court had said, “The truth of the matter is
that the defendant wanted the services of Upton; he asked for the services of Upton and Upton,
in response to that request, provided the services. Hence the services were rendered on an
implied promise to pay for them”.

In the same way this can also be seen in Example 2 as in the case of Steven v Bromley & Son.
6

Where the charterer of a ship chartered for loading steel billets, instead loaded general
merchandise, for which the rate of freight was higher, he was held to have done so under an
implied promise to pay higher rate, here the ship owner forgot about it and it remained under
the use of the other party.

5
Upton-on-Severn RDC v Powell (1942) 1 ALL ER 220 (CA).
6
Steven v Bromley & Son, (1919) 2 KB 722 (CA).

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 The Supreme Court said that a silent agreement arose under which current charter becomes
applicable. This can also be seen in the case of Haridas Ranchordas v Mercatile Bank of
India ltd7 where the customer of a bank did not object to the charge of compound interest on
him and it was considered by the bank that he impliedly accepted it.

In another case we also see the rules of a yacht club regatta provided that the competitors would
be liable for damage done by fouling, they were held bound to each other by the rules and where
one of them fouled and sank the yacht, he was held liable. 8 This shows that in order to know
whether an agreement has risen, regard must be taken to all the circumstances in total where the
parties had contracted and not merely to the formality of offer and acceptance. Sometimes a
sequence of events may exhibit an agreement, though offer and acceptance are indiscernible.

ACCEPTANCE- Express and implied.

When an offer is accepted it results in an agreement. Without acceptance of the offer a contract
between two parties cannot arise. Here is the definition of acceptance according to the Indian
Contract Act, 1872] – “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.”

Once the offer is made and accepted both the parties become bound by the agreement and not
before that. When the proposal or acceptance is made in any other way than words then the
promise is deemed to be implied. Acceptance must carry the effect of communication even if it is
implied. Acceptance can also be made in words either written or spoken. The most important
thing in either case is that acceptance must be communicated to the offeror either by the offeree
or by some duly authorized agent on his behalf. Also, performance of the conditions of the
proposal is acceptance of the proposal. Under certain circumstances, offeree’s silence, along with
his conduct also amounts to acceptance. This is known as ‘agreement sub silentio.’

Example for an implied acceptance

7
Haridas Ranchordas v Mercantile Bank of India Ltd, (1919-20) 47 IA 17.
8
Clarke v Earl of Dunraven (The Satanita), 1897 AC 59 (HL).

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When a bus company runs buses on a particular route inviting passengers over the route at
scheduled fares. The offer of the company is an implied offer and passengers agreeing to pay the
fare is implied acceptance.

The case of Wright v Jockey Club9 can be taken as an example where-

A member of a Jockey Club sought to recover damages from his club for causing him loss of
earnings by refusing him a racing license on medical grounds. He based his contentions on the
contractual duty of the club carrying out his licensing functions with care. The claim was struck
out. The Jockey Club was a domestic tribunal and no contractual duty could be implied in
respect of its functioning.

It was held that the duties of a body exercising a licensing function in connection with a member
as implied by law were limited to acting fairly. There was no extra duty of care. The was no
authority to say that a domestic tribunal of this nature owed any contractual duty of care to its
members.

Section 9 was a applied by the supreme ocurt in a case where on the orders of a go between man
certain goods were supplied by the plaintiffs on his account to the defendants. The defendants
clearly and unerringly accepted the goods and paid a part of the price. Accordingly a liability to
pay the balance arose. “The defendants by their clear conduct of accepting the goods and never
repudiating any of the numerous letter and telegrams of the plaintiff demanding money from
them, clearly showed that a direct contract which in law is called implied contract by conduct
was brought about between them”. 10

Another instance where this happened the facts were- A contract was signed between an Indian
and a yugoslavian party. One of the terms provided for arbitration by the international chaber of
commerce in paris. Immediately thereafter the Indian party cabled and also wrote its objection
about the arbitration clause. The other party made no reply to it but permitted the work to go on.

9
Wright v Jockey Club, The Times, 16-6-1995.
10
Haji Mohd Ishaq v Mohd Iqbal and Mohd Ali & Co, (1978) 2 SCC 493, 500; AIR 1978 SC 798.

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A dispute having arisen, it was held that the arbitration clause had become deleted from the
contract by an implied agreement11. A suit could lie in a court of law.

Legal implications of an implied offer/ acceptance

The case of Thovensen Car Ferries v Weymouth Borough Council can be taken as an
example for understanding legal implications of such implied acceptances.

Facts- A Harbor authority offered to an operator birthing facilities for his operations.
Correspondence between the two followed with a view to operate a service from there to another
port. Subsequently, the port authorities attempted to withdraw their facilities, The operator was
allowed to recover damages for breach of contract. The correspondence had already given rise
to an implied agreement that the proffered facilities had been accepted. Where the parties had
conducted their business transactions on the basis of a clause in their agreement, it was held
that that clause became embedded into their contract and they would not be heard to say that the
clause was intended to be only a general term.

In a similar case of value or was engaged by a bank for evaluating properties offered by the
borrower for the purpose of an equitable mortgage. There was nothing to indicate that the bank
made any promise to pay him his professional fee. The practice, on the other hand, was that such
fee was paid by the borrowers. The bank was headed not liable under any implied promise, nor
for compensation under the quantum meruit principle.

No implied contract to pay a higher price was deemed to have arisen where the government
being bound under a contract to supply material at a fixed price supplied at enhanced rate and
someone on the behalf of the contractor happened to accept the material#34. In a contract for
supply of specified quantity every month by the government to a dealer, the court said that,
because the date of supply was not prescribed, no term could be implied that supply should be
made in the first week of the month. Supply made in the last week of the month was headed not
to be a breach of contract

11
Ramji Dayawala & Sons (P) Ltd v Invest Import, (1981) 1 SCC 80: AIR 1981 SC 2085.

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In the case of Airport Authority of India v R R Singhal,

Facts: An auction purchaser failed to deposit the balance amount. The auction seller to prove his
loss by showing that he had to sell the machine at a lower price. But he neither pleaded not
approved any loss. He was not allowed to forfeit the earnest money.

Communication when complete

The communication of the proposal is complete when it comes to the knowledge of the person to
home it is made. Until the offer is communicated it cannot be accepted. Thus, an offer accepted
without its knowledge does not confer any legal rights on the accepter.

Example: Lalman Shukla v Gauri Datt

Facts: S sent his servant L to raise his missing nephew. He then announced that anyone who
finds his nephew would be entitled to Rs.501. The servant when leaving to find a boy did not
have any knowledge of this offer. He had found the boy and returned him to the defendant. Later
he got to know about this offer and went to claim his part. When denied the award he brought an
action to recover it. But his action failed. Explaining this principle Justice Banerjee said “In my
opinion a suit like the present can only be founded on a contract. In order to constitute a contract,
there must be an acceptance of an offer and there can be no acceptance unless there is knowledge
of the offer.”

During the deciding of this case, the English law regarding this principle of acceptance of an
offer was uncertain. But the principle, that that can be no acceptance without knowledge of offer
had already been accepted in the United States. We know this as in 1868, a judge remarked:
“how can there be consent or assent to that off which the other party has never heard?"12

This was also seen in Australian law. In the case of R v Clarke 13 it was held that even if the
accepter had once known of the offer but had completely forgotten about it at the time of

12
Fitch v Snedkar, (1868) 38 NY 248 at p. 249.
13
R v Clarke, (1927) 40 CLR 227.

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acceptance, he would be no better position than someone who has no knowledge of it altogether.
To elucidate the same one of the judges had given the following illustration:

“An offer of hundred pounds to any person who would swim 100 yards in the harbor on the first
day of the year would not in my opinion be satisfied by a person who was accidentally or
maliciously thrown overboard on that date and swam the distance simply to save his life, without
any thought of the offer"

This principle was given in relevance to the following case which had provoked the making of
this principle in Australia.

Williams v Carwardine14

Facts: The Australian government had offered a report of thousand pounds to anyone giving
information about certain murderers. The offer further added that if the information was given by
an accomplice, not being himself the culprit, he would also be entitled to a free pardon. The
plaintiff, being an accomplice, saw the offer and having been so excited by the hope of pardon,
he gave the information to save himself, completely forgetting the reward. He could not recover
the reward. Where in the same case a woman who gave information about the person who had
killed her husband out of sorrow and loss and not to seek award, was allowed to recover.

This just goes to say that when an offer has been accepted with knowledge of the reward, the fact
that the informant was influenced by motives other than the reward have no effect on the case in
hand.

Should there be an intention to contract?

14
Williams v Carwardine, (1833) 2 LJKB 101.

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There is a provision in the Indian contract act requiring that an offer or acceptance should be
made with the intention of creating a legal relationship. But in English law it is an age old
principle that “to create a contract there must be a common intention of the parties to enter into
legal obligations” this was stated by Justice Atkin. The case of Balfour v Balfour15 has become
the most well-known illustration for this principle.

Facts: the defendant and his wife were enjoying vacation in England. When the defendant was
due to return to Ceylon, where he was employed, his wife was advised, but the reason of her
health, to remain in England. The defendant agreed to send her an amount of €30 a month for the
probable expenses of maintenance. He did send the amount for some time, but afterwards the
fences arose which resulted in the separation and the allowance fell into arrears. The wife’s
action to recover the arrears was dismissed.

The reason for this dismissal was explained by Justice Atkin as, “there are agreements between
parties which do not result in contract within the meaning of the term in our law. The ordinary
example is when two parties agree to take a walk together, or where there is an offer and
acceptance in hospitality. Nobody would suggest in ordinary circumstances that the
arrangements result in what we know as contracts, and one of the most usual forms of agreement
which does not constitute a contract appears to be the arrangements which are made between
husband and wife. These arrangements do not result in contracts at all, even though there may be
what would constitute consideration for the agreement. They are not contracts because parties
did not intend that they shall be attended by legal consequences.”

This was an example of matrimonial arrangements

whether they result in contracts are not.

Family and social matters are also a matter of question when it comes to the intention of contract.
This can be seen in the case of Jones v Padavatton16. Facts of this case are:

15
Balfour v Balfour (1919) 2 KB 571 at pp. 578-79.
16
Jones v Padavatton (1969) 1 WLR 328 (CA) at p. 620.

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A divorced woman was living in Washington with her son where she was employed as an
assistant accountant in the Indian Embassy on attractive terms. Her mother was in Trinidad and
wished her daughter to be near her. She was particularly attached to the grandson. The mother
persuaded her daughter, much against her will, to leave service, to take legal education in
England and finally come back to Trinidad as a practicing lawyer. The mother undertook to foot
the expenses. Subsequently, the mother bought a house in England part of which was allowed to
the daughter and rest tenanted out. For five long years the daughter could not complete her
education. She also remarried in the meantime. Differences arose between them and the mother
stopped payments and also went ahead and started proceedings to evict daughter.

Mother’s appeal was allowed, his Lordship said: “There is no doubt that this case is the most
difficult one, but is one of those family arrangements which depend on the good faith of the
promises which are made and are not intended to be rigid, binding agreements.” Another justice
on the same case also allowed the mother’s appeal but on different grounds. He felt that acting
on the mother’s promise, the daughter had left an attractive service and gone to another country
for education and the mother could not in the circumstances get out of the promise at the sweet
will and leave the daughter in that condition. The engagement, therefore, did not result in a
contract, but the agreement could be lost only for a period reasonably sufficient for the daughter
to complete her education and the period of five years was more than sufficient for that purpose.
She could not have expected her mother to support her, her son and her husband in perpetuity.

The results of cases on this principle are bound to be variable, for this matter wholly depends
upon the fact whether the conduct of the parties in the surrounding circumstances affords
evidence of objective intention. For example in the case of Merritt v Merritt 17 an agreement to
transfer to the wife the beneficial ownership of the matrimonial home made at the time of
separation was held to be binding but in a similar case an agreement made was held to be not
binding as the husband undertook to pay only as long as he had the means to pay. Uncertainty of
these words showed that no legal relations were thought to be made.

17
Merritt v Merritt, (1970) 1 WLR 211 (CA).

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 Supreme Court’s take on requirement intention

Supreme Court has expressed its reservation about the need for a separate requirement intention
to contract under the contract act. Criticism is already there in the Western countries, the court
found that it was in the systems consideration was not a requisite off and foreseeability. Thus it is
still an open question whether the requirement of intention to contract is applicable under the
Indian contracts act in the way in which it has been developed in England

Letters of intent

A letter of intent merely indicates a party’s intention to enter into a contract on the lines of
suggested in the letter. It may become a prelude to a contract. However, where a letter stated that
it would be followed by a detailed purchase order which carried an arbitration clause, it was held
that the letter was not a supply order and the arbitration clause contained in it did not by itself
transform into an arbitration agreement.

GENERAL OFFERS

As time went by it was seen that the component of offer got trickier as some offer were not
directed to one party but to public at large. It was suggested in an old case that an offer must be
made to a definite person. The case arose out of the defendants declaration to the public at large
that he would give hundred pounds to whosoever that should marry his daughter with his
consent. The plaintiff alleged that he did so and sued the defendant. Rejecting the action, the
court said: “It is not averred nor declared to whom the words were spoken.” The difficulty
suggested was that if an offer of this kind addressed to several persons could be accepted, the
offeror would find himself bound to innumerable contracts. This was, however, soon overruled.
The modern position is that an offer may be made to the world at large. But the contract is not
made with all the world. Contract is only made with that one person who comes forward and
performs all the functions and conditions of the proposal made. The principal is thus stated in
Anson: “An offer need not be made to and ascertained person, but no contract can arise until it

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has been accepted by an ascertained person.” An offer of this kind which is addressed to public
largely can be seen in the case of Carlil v Carbolic Smoke Ball co18:

Synopsis of Rule of Law:

This case considers whether an advertising gimmick (i.e. the promise to pay 100£ to anyone
contracting influenza while using the Carbolic Smoke Ball) can be considered an express
contractual promise to pay.

Facts

Defendant: Carbolic Smoke Ball Company

The company made a product called “Smoke Ball”. It claimed to be a cure to influenza and many
other diseases, in the context 1889-1890: Flu pandemic which is estimated to have killed 1
million people. The smoke ball was a rubber ball with a tube fixed to its opening. The ball is
filled with Carbolic acid (Phenol). The tube is supposed to be inserted in one of your nostrils and
the bottom part of the rubber ball is to be pressed. The gas enters your respiratory tract and
flushes out all the viruses.

Advertisement:

The Company published advertisements in the Pall Mall Gazette and other newspapers on
November 13, 1891, claiming that it would pay £100 to anyone who got sick with influenza after
using its product according to the instructions set out in the advertisement.

“£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the
increasing epidemic influenza colds, or any disease caused by taking cold, after having used the
ball three times daily for two weeks, according to the printed directions supplied with each ball.
£1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.
During the last epidemic of influenza many thousand carbolic smoke balls were sold as

18
Carlill v Carbolic Smoke Ball Co [1892] 2 QB 484

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preventives against this disease, and in no ascertained case was the disease contracted by those
using the carbolic smoke ball. One carbolic smoke ball will last a family several months, making
it the cheapest remedy in the world at the price, 10s post free. The ball can be refilled at a cost of
5s. Address: “Carbolic Smoke Ball Company, “27, Princes Street, Hanover Square, London.”

Plaintiff: Louisa Carlill

She, believing in the accuracy of the statement made in the advertisement with respect to
efficacy of the smoke ball in cases of influenza, purchased one packet and used it thrice everyday
from mid November, 1891 until 17th Jan, 1892, at which latter date she had an attack of
influenza.

Thereupon, her husband wrote a letter for her to the defendants, stating what had happened, and
asking for £100 as promised in the advertisement. They refused and this action was brought in
court before Hawkins J. and a special jury. Arguments were heard on both the sides and finally
the verdict was given in favor of Mrs. Carlill.

Issue. 

Lindley, L.J., on behalf of the Court of Appeals, notes that the main issue at hand is whether the
language in Defendant’s advertisement, regarding the 100£ reward was meant to be an express
promise or, rather, a sales puff, which had no meaning whatsoever.

Held

The Court of Appeal unanimously rejected the company’s arguments and held that there was a
fully binding contract for £100 with Mrs. Carlill

Among the reasons given by the three judges were

(1) That the advertisement was a unilateral offer to the entire world

(2) The satisfying conditions for using the smoke ball constituted acceptance of the offer.

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(3) That purchasing or merely using the smoke ball constituted good consideration, because it
was a distinct detriment incurred at the behest of the company and, furthermore, more people
buying smoke balls by relying on the advert was a clear benefit to Carbolic

(4) That the company’s claim that £1000 was deposited at the Alliance Bank showed the serious
intention to be legally bound.

Defendant’s Appeal was dismissed, Plaintiff was entitled to recover 100£.

The Court acknowledges that in the case of vague advertisements, language regarding payment
of a reward is generally a puff, which carries no enforceability.  In this case, however, Defendant
noted the deposit of £1000 in their advertisement, as a show of their sincerity.  Because
Defendant did this, the Court found their offer to reward to be a promise, backed by their own
sincerity. In the concurrences of Bowen L.J. and A.L. Smith, L.J., the notion of contractual
consideration also becomes an issue of relevance.  Both of these Judges note that while the
Defendant could argue lack of consideration, Plaintiff, in buying the Carbolic Smoke Ball and
using it as directed, provided adequate consideration through the inconvenience she experienced
by using the product.

General offer of continuing nature

Where a general offer is of continuing nature, as it was, for example, in the smoke balls case, it
will be open for acceptance to any number of people until it is retracted. That means that any
number of people who see the offer and fulfill the required conditions can convert it into a valid
contract. But where an offer requires some information as to a missing thing or a person, it is
retracted as soon as the first information of such missing thing or a person comes in.

Differentiation between offer and invitation

An offer should be distinguished from an invitation to receive offers. When a man advertises that
he possesses a stock of books to sell, or houses to let, there is no offer to be bound by any
contract. “Such advertisements are offers to negotiate-offers to receive offers-offers to chaffer”
An offer is the final expression of willingness by the offeror to be bound by his offer, should the

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other party choose to accept it. This may be inferred from the definition of proposal in section
2(a) which emphasizes that there should be the expression of willingness to do or abstain with a
view of obtaining the assent of the other. The offeror must have expressed his willingness to
contract in terms of his offer with such finality that the only thing to be waited for the asset of the
other party. Where a party, without expressing his final willingness, propose a certain terms on
which he is willing to negotiate, he does not make an offer, but only invites the other party to
make an offer on those terms. This is the basic differentiation between an offer and an invitation
to receive offers. The privy Council in the case of Harvey v Facey19

Facts

Harvey, Anor (plaintiffs), and L.M. Facey (defendant) resided in Jamaica, which at the time was
a British colony. The three men negotiated for the sale and purchase of Jamaican real property
owned by Facey's wife, Adelaide Facey. Harvey and Anor asked Facey if he would sell them the
property and the minimum price at which Facey would sell it. In response, Facey stipulated his
minimum price for the property, but he was silent as to whether he was ready to sell the property
to Harvey and Anor. Harvey and Anor sent Facey a telegram in which they agreed to pay Facey
the stipulated price. Harvey and Anor regarded this telegram as obligating Facey to sell them the
property at that price. When Facey attempted to sell the property to other buyers, Harvey and
Anor accused Facey of breaching their contract and sued Facey for specific performance. The
Jamaican trial judge dismissed the suit, finding there was no completed sale contract. On appeal,
the Jamaican Court of Appeal found there was a valid contract and awarded Harvey and Anor
monetary damages. However, the court of appeal declined to order specific performance because
there was no proof that Adelaide Facey had consented to the sale. The Jamaican Supreme Court
of Judicature affirmed the court of appeal's decision, and Harvey and Anor appealed to the Privy
Council of the United Kingdom.

Issue

Was there an explicit offer from Facey to sell the land for $900 to Harvey?

19
Harvey v Facey, 1893 AC 552 (1893)

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Held

No there was not,

 Because (from Harvey) 1st question was willingness to sell, 2nd question asks the lowest
price.

 Facey only replied to the second question in regards to the price.

 Harvey treated his response as an unconditional off to sell them the price named…Only
binding aspect is the lowest price in regards to a contract being formed.

 Agreement could have ONLY been legit if Facey responded to the third telegram from
Harvey.

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 Conclusion

After thorough research in regard to offers in Indian Contracts Act 1872 we can conclude that:

An offer refers to a promise that one party makes in exchange for another party's performance. In
other words, it is an invitation to enter into a contract on certain terms. It can be expressed in
many different ways, from a short and simple oral statement to a long and detailed written
statement. However, you have to make sure that your offer is clearly communicated and
reasonable in order to convince the other party that you are actually making an offer. In order
to create a valid contract, one party must make an offer, another party must accept the offer, and
consideration must be exchanged. The one who makes the offer is known as the “offerer,” while
the person who receives the offer is called the “offeree.” Although you can make an offer with
just a single-sentence verbal statement, you and the other party will generally benefit from a
detailed written description of the offer and its terms.
An offer refers to a promise that is dependent on a certain act, promise, or forbearance given in
exchange for the initial promise

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