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This article is written by Satyendra Pratap Singh, B.A.LL.B (Hons.), 5th Sem. , Shri Ramswaroop Memorial University, Lucknow, Uttar Pradesh


A contract is defined as one that is legally enforceable by Section 2(h) of the Indian Contract Act, 1872. Rights in personam, or private rights that solely impact two private people entering into a contract with each other, are normally the focus of contract law.

What is the meaning of the contract?

“The rights and obligations of two or more parties are established, made clear, and governed by a legally enforceable agreement known as a contract. Contracts frequently include the commitment to transmit goods, services, money, or any combination of those at a later date.”

How a Contract is formed?

  • Offer + acceptance = Promise
  • Promise + consideration = Agreement
  • Agreement + enforceable by law = Contract

The use of case laws can help people understand a number of crucial ideas in regard to contract law. Let’s briefly explore the requirements for a valid contract that are presented here before getting into the case laws:

  1. Offer
  2. Acceptance of the offer
  3. To enter into a contract, both parties must be competent
  4. A consideration that is legal in nature must exist
  5. Free consent of the parties
  6. Desire to establish a legal partnership
  7. The agreement must be unambiguous
  8. A contract cannot be explicitly ruled invalid / void

Offer / Proposal

The Indian Contract Act of 1872 states in Section 2(a) that when one person indicates to another that he is prepared to do or refrain from doing anything with the intention of securing the other person’s consent to such act or refrainment, he is said to make a proposal.

The person who Is being proposed to is referred to as the Promisee / Offeree, while the person who is being proposed to is referred to as the Promisor / Offeror. The proposition turns into a promise when the person to whom it is being made accepts it.

A valid offer must have the following qualities:

  1. An offer needs to be made with the goal of establishing legal responsibilities : Section 10 of the Indian Contract Act, 1872 states that the desire to establish a legal relationship is not a need for a contract, although English law views this idea as a prerequisite for an offer. In the Balfour V. Balfour case, Mr. Balfour, a resident of Sri Lanka, and his wife travelled to England for a holiday during which Mrs. Balfour became extremely ill and was advised not to return to Sri Lanka. After giving his wife a monthly payment of 30 Euros, Mr. Balfour consented to let her stay in England while he went back to Sri Lanka. After some time, the relationship between the two became tense, and Mr. Balfour stopped giving his wife a monthly stipend. Mrs. Balfour sued her husband, but the judge dismissed the case, saying that social agreements are outside the purview of the courts and that Mr. Balfour made his pledge to his wife without intending to impose any legal responsibilities.
  2. A proposal may be explicit or inferred : According to Section 3 of the Indian Contract Act, an express offer is one that is made verbally, in writing, or orally, whereas an implicit offer is one that is made by the offeror’s actions or conduct, according to Section 9 of the Indian Contract Act. In the Uptron Rural District Council v. Powell case, the defendant summoned the Uptron Fire Brigade after a fire started on his property because he thought he was entitled to their free assistance. Because the defendant’s farm was outside of the brigade’s free service area, the brigade sought payment for extinguishing the fire. The defendant desired and requested Upton’s services, and in response, they were delivered, the court decided. As a result, it was decided that the services were provided with an implicit guarantee of payment.
  3. The offer’s conditions must be specific and not ambiguous : At the time of the contract, all of its conditions must be agreed upon. A future agreement to agree is not a contract since the details are hazy. The term “present style” is extremely ambiguous and can mean different things to different people, so an agreement to take a lease of a house for a set period of time at a set rate that includes a clause stating that the lease will only be fulfilled if repairs are made to the house and the drawing room is decorated in accordance with current trends is not a valid offer.
  4. Silence cannot be required as a form of acceptance by an offer : If the offeror states that the offer will be deemed accepted if acceptance is not expressed by a specific date, the offer is deemed void. In Felthouse V. Bindley, a person offered to buy his nephew’s horse, and they stipulated that the offer would be deemed accepted if it was not acknowledged by a specific date. The nephew declined the offer, but he did instruct his auctioneer not to sell that particular horse. When the auctioneer accidentally sold the horse, the uncle sued the auctioneer. The court ruled that the nephew and his uncle had no communication regarding the purchase of the horse.
  5. It is not necessary to expressly accept a generic offer : A universal offer is one that is extended to the entire globe; anybody may accept it, and the offeror need not be informed of the acceptance. In the Carlill V. Carbolic Smoke Ball Co. case, the defendants prepared several balls (a medicinal remedy against influenza) and advertised in a newspaper that they would provide a prize of 100 Euro to anyone who acquired the illness after using their product. The defendant made a 1000 euro goodwill deposit at a bank. After utilising a ball in the way instructed on it, the plaintiff, Mrs. Carlill, developed influenza and filed a lawsuit against the defendants seeking damages. Since it was a general offer and the defendants broke it as soon as Mrs. Carlill had the sick, they were held accountable.
  6. An invitation to offer is different from an offer : The Latin word “Invitatio ad offerendum” which expresses a desire to bargain, is where the English term “invitation to offer” originates. When offering an invitation to give, the maker does not intend to be obligated after the remark is accepted by the intended recipient. It is an activity that requests an offer from the other side. An offer, on the other hand, specifies the essential elements of the contract with the understanding that no further discussions will be held. Some of the different sorts of invitations to provide include advertisements, product exhibitions, product auctions, tenders, etc. A consumer chose a medicine from a self-service store shelf and brought it to the pay register in Pharmaceutical Society of Great Britain V. Boots Cash Chemists (Southern) Ltd. case. The issue arose as to whether the customer’s behaviour was an acceptance of the offer or an offer itself. According to the courts, it was an offer to purchase, and no deal would be finalised until the buyer’s bid was accepted at the amount stipulated.
  7. Offer must be made known : A crucial component of an offer’s validity is that it must be made known. The communication of a proposal is complete, in accordance with Section 4 of the Indian Contract Act, when it comes to the knowledge of the person to whom it is made. A person who is the subject of an offer cannot accept it unless they are aware of it. In the case of Lalman Shukla v. Gauri Dutt, the defendant’s nephew ran away, and the defendants ordered his employees in various directions to look for the youngster. When the defendant posted an advertisement offering a prize of Rs. 501 to anybody who discovers the youngster, the plaintiff, one of the defendant’s slaves, was dispatched to Haridwar. The youngster was located by the plaintiff, but he was unaware of the incentive and continued to work for the defendant until he was fired before filing a lawsuit to recover the award. The courts determined that because the plaintiff was unaware of the offer, he was not eligible for the award.

Communication of offer

The communication of a proposition is complete, in accordance with Section 4 of the Indian Contract Act of 1872, when it comes to the knowledge of the person to whom it is made. While the communication of an acceptance of a proposal as against the acceptor is complete when it comes to the proposer’s knowledge, the communication of an acceptance of a proposal as against the acceptor is complete when it is put in a course of transmission to him so that it is outside the control of the acceptor.

In the case of Household Fire Insurance Co. V. Grant, the court determined that when an offer is legitimately accepted via letter or another acceptable form of communication, the acceptance is complete and a binding contract is created as soon as the letter is mailed, even if the offeror never receives the letter because it is lost in the mail.

In the case of Entorse Ltd. V. Miles Far East Corporation, the plaintiff was a London-based business that sent the defendant, an American business, a telex offer to sell a certain amount of meat, and the defendant’s business accepted the offer. The question that emerged was when the contract was in effect and which court would have jurisdiction over the subject if there were any legal difficulties. Since a contract is considered to be made in the location where the acceptance is received, or at the location of the offeror, it was concluded that the deal was completed in London.

Revocation of offer

A proposal may be withdrawn at any time until the transmission of acceptance is complete as against the proposer but not later, according to Section 5 of the Indian Contract Act of 1872. This suggests that the transmission of an offer revocation can only be successful if it reaches the offeree before he posts his acceptance and renders it powerless. In the case of Henthorn v. Fraser, the appellant was contacted in the Liverpool office of a building society to negotiate purchasing specific homes from the society. The society offered him the chance to buy for a period of 14 days for 750 Euros. The group withdrew the offer in a letter that was posted the next day between 12 and 1 pm. While the letter of acceptance was posted at roughly 4 p.m. on the same day, the letter of withdrawal did not reach the appellant until after 5 p.m. Since the letter of acceptance arrived after the office had closed for the day, it was opened by the secretary at the society office the next day. Since the appellant had no control over the acceptance at 4 PM and had not yet received the notice of cancellation, it was determined that the contract was legitimate.

A proposal may be withdrawn in the following circumstances:

  • A proposal may be withdrawn by giving the proposee notice of withdrawal in writing.
  • If the time term specified in the proposal has passed, it may be withdrawn; otherwise, if no time period is specified, the proposal will expire after a reasonable amount of time.
  • When the proposer passes away or goes mad, and if the acceptor learns of his passing or sanity before to acceptance.
  • If the acceptor doesn’t satisfy a requirement before accepting the proposal, it might be revoked.

The types of offers

  1. General offer : A generic offer is one that is given to the whole public and does not have any limits on who can take it. The Harbhajan Lal v. Harcharan Lal case, in which the defendant sent out a notice promising a prize of Rs. 500 to anybody who could help him find his missing son after the boy had escaped from his house, is an example of a broad offer. At a train station, the plaintiff discovered the missing son and told the defendant. Due to the fact that the defendant’s announcement was a generic offer that anyone might accept, the plaintiff had already received the award.
  2. Specific offer : A particular offer is one that is given to a certain group of individuals and establishes limitations on the kinds of persons who are permitted to accept it. For instance, X offers to pay Rs. 13 lakh to purchase a car from Y. This is a specific offer that has been made to a particular person, Y, and only Y is eligible to accept it. In the Boulton v. Jones case, the defendant used to do business with Brockle Hurst and sent Hurst an order to buy certain items, but by the time Hurst received the offer, he had already sold his company to Boulton. Without letting Jones know that the company had changed ownership, Boulton took the order and sent the goods to him. When Jones learned that the company had changed ownership, he refused to pay Boulton for the goods because he claimed that Hurst was the person with whom he intended to enter into a contract, not Boulton. Therefore, it was decided that Jones won’t be required to pay Boulton since he made a particular offer to Hurst.
  3. Counter offer : When the offeree rejects the first contract but is prepared to accept the offer after making certain modifications, such as additions or deletions from the original contract, it is said that a counter offer has been made. In this case, the initial offer is declined and cannot be reconsidered later. In such circumstances, both the offeror and the offeree change roles and become the new parties. Only the person that made the first offer has the authority to accept or reject a counteroffer, and a contract is only created if that party does. In the case of Hyde v. Wrench, the defendant offered to the plaintiff to sell the farm he owned for £1,200, but Mr. Hyde rejected the offer. The defendant then made him a second offer to buy the farm for £1,000 while announcing that it would be his last bid for the property. Mr. Wrench rejected Mr. Hyde’s offer of £950 for the property in his letter in response. Following that, Mr. Hyde consented to buy the farm for £1,000, which was the original price. As soon as Mr. Hyde rejected the offer, he made a counter offer, which the defendant did not accept, rendering the initial offer void. As a result, Mr. Wrench refused to sell his property.
  4. Cross offer : When two parties make the exact same offer to each other at the exact same moment, it is said that a cross offer has occurred. Since such an offer is entirely dependent on chance, it seldom occurs in the actual world. There won’t be a contract in this case since it cannot be said that one party’s offer has been accepted by the other. The Hon’ble Supreme Court noted in Bhagwandas Goverdhandas Kedia v. M/S Girdharilal Parshottamdas & Co. and Others (1966 AIR 543) that “the acceptance and such an intimation of acceptance of the offer are both essential to establish a binding contract.” This instance so demonstrates the significance of an offer and acceptance as fundamental components of a contract. Cross offers are thus void as a result. They are never to be thought of as contracts.
  5. Standing offer : If an offer is intended to be valid for a specific period of time and may be accepted at any moment prior to the deadline, it is referred to as a standing offer. It is also known as an ongoing or open offer. In the case of Ramsgate Victoria Hotel Company v. Montefeire, M volunteered to purchase shares in company R on June 8th, and on November 23rd, he got his letter of allotment. M declined to accept the shares because M was allowed to decline the offer since it was not a standing offer and the 5-month timeframe was not a fair one.


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