Offer & Acceptance in Business Law | Definition & Essentials

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. – Section 2(a) Contract Act

Parties

Offeror: Person making an offer

Offeree: Person to whom the offer is made

Essentials of Valid Offer

• It may be express or implied
• It must create legal relations
• It must be definite and clear
• It is different from invitation to offer
• It may be specific or general
• It must be communicate to offeree
• It should not contain negative condition
• It may be subject to any terms and conditions
• It must not contain cross offers

Revocation or Termination of Offer

• Notice of revocation
• Lapse of time
• Failure to fulfill condition
• Revocation of offer by offeree
• Counter offer by offeree
• Death or insanity of the Offeror or offeree
• Subsequent illegality
• Destruction of subject matter

Acceptance

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 the promise. – section 2(b) Contract Act

Essentials of Acceptance

• It must be given by the offeree
• It must be absolute and unconditional
• It must be in a prescribed manner
• It must be communicated to the offeror
• It may be express or implied
• It must follow the offer
• It must be given within reasonable time