CHP#2 Offer and Acceptance Business Law.ppt

Business Law By Khalid MehmoodCheema

1. Business Law
Topic: Offer and Acceptance
By: Riaz Hussain Ansari
Lecturer Department of Business Administration
University of Sahiwal
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2. 1.Learning Objectives
You will be able:
On the successful completion of this paper,
candidates will be able to demonstrate
knowledge of laws relating to offer and
acceptance of a contract.
Define offer and acceptance
Identify different types of offers
Explain how offer is different from invitation of an
offer
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3. 2.Learning Objectives
Identify essential elements of offer and
acceptance
Understand the timing of revocation and its
communication
Identify circumstances when an offer lapses.
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4. 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.
Thus, an offer is a proposal by one person to another for
entering into a legally binding agreement with him.
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What is Offer?
Example
A offer to sell his car to B for Rs. 3 Lac A makes an
offer to B.

5. 1.Express or Implied
2.Legal and Relations
3.Definition and Clear
4.Invitation to Offer
5.Specific or General
6.Communication to Offer
7.Negative Condition
8.Condition in Offer
9.Cross Offer
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Essentials of Valid Offer

6. Express or Implied
An offer created by words i.e. verbally or in writing
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1. Essentials of Valid Offer
Example
A says N that he will sell his motorcycle to him for Rs.
40,000. It is an express offer

7. Example
AinvitedBonadinnerathishome.Bacceptedtheinvitation.Itis
asocialagreement.IfAfailstoservedinnertoBthanBcannotgo
tocourtforenforcingtheagreementandsimilarlyifBdidnotturn
upthanAcannotgotocourtforenforcingtheagreement.
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2. Essentials of Valid Offer
Legal Relations
Acontracttobecomevalidmusthavealegalrelationship.Incaseof
socialordomesticagreements,theusualpresumptionisthatthe
partiesdonotintendtocreatelegalrelationshipbutincommercialor
businessagreements,theusualpresumptionisthatthepartiesintend
tocreatelegalrelationshipunlessotherwiseagreedupon.

8. Example
Ahastwomotorcycles.HeoffertosellonemotorcycletoBforRs.
27000.itisnotavalidofferbecauseitisnotclearwhich
motorcycleAwanttosell.
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3. Essentials of Valid Offer
Definition and Clear
Avalidofferisonewhichiscertainanddefinite.Thus,nocontract
cancomeintoexistenceifofferisuncertain.

9. Example
Goodsweredisplayedinadepartmentalstoreforsaleandself-
servicesystemwasthere.Onecustomerselectedanitem.Here
thedisplayofgoodsisaninvitationtoofferandselectionbythe
customerisanoffertobuy.
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4. Essentials of Valid Offer
Invitation to Offer
Anofferisdifferentfromaninvitationofanoffer.Theintentionin
invitationofanofferistocirculateinformationofhisreadinessto
dothetransaction.Suchintentionsarenotoffersanddonot
tantamounttopromiseonacceptance.

10. Example
AofferstobuybikefromBforRs.50,000.
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5. Essentials of Valid Offer
Specific or General
Ifanofferismadetodefiniteoraparticularpersonorspecific
groupofpersonsitissaidtobespecificoffer.Suchoffercanbe
acceptedonlybythatdefinitepersonorthatspecificgroupof
persons.

11. Example
(a)A,withoutknowingthatarewardhasbeenofferedforthe
arrestofaparticularcriminal,catchesthecriminalandgivesthe
informationtothesuperintendentofpolice.A,cannotrecoverthe
rewardashecannotbesaidtohaveacceptedtheofferwhenhe
wasnotatallawareofit..
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6. Essentials of Valid Offer
Communication to Offer
Theoffermustbecommunicatedtotheofferee.The
communicationiscompletewhenitcomestotheknowledgeofthe
persontowhomitismade.Incaseanofferismadebypost,its
communicationwillcompletewhentheletterreachestheofferee.
Anoffercanbemadebywordsspokenorwrittenorthrough
conductoftheperson.[Section4]

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7. Essentials of Valid Offer
Negative Condition
NegativeconfirmationAnoffercannotbeintheformofnegative
confirmationi.e.ifitisnotacceptedwithinaspecifictimethenit
willbepresumedtohavebeenaccepted.

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8. Essentials of Valid Offer
Condition in Offer
Anoffermaybesubjecttosomecondition.Itisonthesole
discretionofthepersontowhomsuchofferismadetoeither
acceptorrejectit.Aconditionalofferlapseswhenconditionisnot
accepted.

14. Example
AofKarachisendsbyposttoBofLahoreofferingtosellhisbike
forRs.50,000.Theletterispostedon1stDecemberandonsame
day,BofLahoresendsaletterbyposttoAofKarachiofferingto
buyA’sbikeforRs.50,000
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9. Essentials of Valid Offer
Cross Offer
Iftwopartiesignorantofeachother’soffermadesimilaroffersto
eachothertheyarecalledcrossoffers.Crossoffersarenotequal
toacceptance.

15. 1.An offer lapses after stipulated or reasonable time.
2.An offer lapses by not being accepted in the mode prescribed
or if no mode is prescribed, in some usual and reasonable
manner.
3.An offer lapses by rejection.
4.An offer lapses by the death or insanity of the offeror or the
offeree before acceptance.
5.An offer lapses by revocation.
6.Revocation by non-fulfilment of a condition precedent to
acceptance.
7.An offer lapses by subsequent illegality or destruction of
subject matter
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Revocation and lapse of offer

16. When the person to whom the proposal is made
signifies his assent to it, the proposal is said to be
accepted. [Section 2(b)].
Thus, an acceptance means assenting to an offer made.
An offer when accepted becomes a promise.
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What is Accept?
Example
AoffertosellhishousetoBforRs.5Lac.Baccepts
theoffer.Thisisanacceptance.

17. 1.Acceptance by Offer
2.Absolute and Un-condition
3.Prescribed Manner
4.Communication with Offeror
5.Express or Implied
6.Acceptance after Offer
7.Reasonable Time
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Essentials of acceptance Offer

18. Acceptance by Offer
An offer can be accepted only by the person to whom it
is made. It cannot be accepted by the another person
without the consent of offeror. When an offer is made to
a particular group, it can be accepted by any member of
the group. If the group offer is made to general public, it
can be accepted by any person who has knowledge of
the other
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1. Essentials of acceptance Offer
Example
X offered to sell his house to Y. Z who was aware of such
offer said that he ready to buy X’s house. There is no
contract with Z

19. Absolute and Un-Conditional
An offer should be accepted without any
condition. If any condition is imposed on an offer
then it turns out to be counter offer instead of
acceptance. [Section 7]
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2. Essentials of acceptance Offer
Example
A offers to sell his watch to B for Rs. 500. B replies that
he can buy it for Rs. 300. There is no acceptance on the
part of B.

20. Prescribed Manner
Iftheoffereedoesnotaccepttheofferaccordingtothe
modeprescribed,theofferdoesnotlapseautomatically.It
isfortheofferortoinsistthathisproposalshallbeaccepted
onlyintheprescribedmanner,andifhefailstodosoheis
deemedtohaveacceptedtheacceptance.
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3. Essentials of acceptance Offer
Example
AmakesanoffertoBandaskshimtoaccepttheofferby
telegram.Bsendshisacceptancebypost.Itisnota
validacceptance.

21. Communication with offeror
Theacceptancemaybecompletewhenitiscommunicated
totheofferor.Anoffercanbeacceptedbywordsspokenor
writtenorthroughconductoftheperson.Further,avalid
acceptanceiscommunicatedeitherbytheoffereehimself
oranypersonauthorizedbyhimtocommunicatetothe
offeror.
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4. Essentials of acceptance Offer
Example
AofferbylettertopurchaseB’shouse,Bexpresseshis
intentiontosellitbutdoesnotreply.BsellstoC.Ahas
nolegalremedyagainstB.

22. Express Acceptance
Whenanacceptanceisgivenbywordsspokenorwritten,it
iscalledexpressacceptance.
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5. Essentials of acceptance Offer
Example
AofferedbylettertosellhiscycletoBforRs.2,000.B
acceptedhisofferandsentaletterofacceptance.Itisan
expressacceptance.

23. Express after Offer
Acceptancemustbegivenafterreceivinganoffer.
Acceptancecannotprecedetheoffer.Ifacceptanceismade
withouthavingknowledgeoftheoffer,thereisnocontract
becausenoacceptancecanbemadewithoutanoffer.
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6. Essentials of acceptance Offer
Example
Aofferedrewardforanyonewhofindshislostdog.B,in
ignoranceoftheoffer,findsandreturnsthedog.B
cannotclaimthereward.

24. Reasonable Time
Avalidacceptanceiswhenitisacceptedwithinthetime
specifiedorwithinareasonabletimewherenotimeis
specified.
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7. Essentials of acceptance Offer
Example
AappliedforsharesofacompanyinJunebutallotment
wasmadeinNovember.Mrefusedtotakedeliveryof
shares.ItwasheldthatMcouldrefusebecausetheoffer
hadlapsedafterexpiryofareasonabletime.

25. 1.Communication of an offer
2.Communication of an Acceptance
3.Communication of a Revocation
A.Time during which an offer or acceptance can be
revoked
B.Effect delay or loss of letter of acceptance in postal
transmit
C.Accidental formation of Contract
D.Contract over the Telephone
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Communication to offer, acc & revo

26. Any Question?
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27. Many Thanks
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