Legal Rules of Valid Offer

Meaning of Offer

An offer is the starting point in the making of an agreement. An offer is also called proposal. According to section 2(a) of The Indian Contract Act,1872. A person is said to have made the proposal when signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that offer to such act or abstinence. The person making the offer is known as the offerer and the person to whom the offer is made is known as the offeree.

Thus, an offer involves the following essential elements:

1. It must be made by one person to another person. There can be no proposal by a person to himself.  Example: A says to B that he wants to sell his car to himself for Rs 2 lakh. There is no proposal because there can be no proposal by a person to himself.
2. It must be an expression of readiness or willingness to do or to abstain from doing something.
3. It must be made with a view to obtain the consent of that other person to proposed act. Example: A jokingly says to B “I am ready to sell my car for Rs 100000.” B, knowingly that A is not serious in making the offer, says “I accept your offer.” In this case A`s offer was not real offer as he did not make it with a a view to obtain the consent of B.

Rules for Valid Offer

An offer to be made valid must fulfill the conditions.  Let us discuss the rules one by one.

1. Intention to create Legal Relationship: An offer must intend to create legal relations. An offer must be such that when accepted it will create legal relationship among the parties. If the offer does not intend to give rise to legal consequences, it is not a valid offer in the eyes of law. Sometimes, offers are made which are social in nature. Such social agreements do not make a valid contract because in these cases the intention is not to form a legal relationship. 
2. Certain and Unambiguous Terms: the terms of the offer can be certain and unambiguous and not vague. If the terms of the offer are vague no contract can be entered into because it is not clear as to what exactly the parties intended to do.  Example: x offers to sell to Y his car for Rs 100000 or Rs 150000. Here X`s offer is not certain because it is not clear which of the two prices was to be given by Y. if the terms of the offer are capable of being made certain, the offer is not regarded as vague.
3. Different from a Mere Declaration of Intention: The offer must be distinguished from a mere declaration of intention. Such statement or declaration merely indicates that an offer will be made or invited in future. A declaration of intention to make an offer is not an offer. It is regarded as an invitation to offer. An advertisement for sale in a Newspaper or Magazine etc. is not an offer for sale. Example: A notice that the goods stated in the notice will be sold by the tender does not amount to an offer to sell. (Spencer v. Harding).
4. Different from an invitation to an Offer: An offer must be distinguished from an invitation to offer. In case of an invitation to offer the person making an invitation invites others to make an offer to him. It is prelude to an offer inviting negotiations. Example: goods were displayed in the shop for sale with the price attached on each article and self service was there. One customer selected the goods it was held that the display of goods was only an intention to offer and selection of goods was an offer by the customer to buy and the contract was made when the cashier accepted the offer to buy and received the price.
5. Communication: An offer must be communicated to the person to whom it is made. An offer is complete only when it is communicated to the offeree. One can accept the offer only when he knows about it. Thus, an  offer accepted without its knowledge does not confer any legal rights on the acceptor.
6. No Term the Non- compliance of which Amounts to Acceptance: the offer must not contain a term the non-compliance of which would amount to acceptance. It means that while making the offer the offerrer can not say that if the offer is not accepted before a certain date it will be presumed to have been accepted. Example: X writes a letter to Y. I offer to sell my car for Rs. 500000. If I do not receive your reply by Friday next, I shall assume that you have accepted the offer. Here if Y does not reply, it does not mean that he has accepted the offer.
7. Communication of Special Terms or Standard Form Contracts: the special terms of the offer must also be communicated along with the offer. If the special terms of the offer are not communicated the offeree will not be bound by those terms. The question of special term arises generally in case of standard form of contracts. The special terms of the offer must be brought to the notice of general public. Example: A and his wife took a room on hire in a hotel. After booking the room, they entered the room and saw a notice on the wall of the room. The proprietors not responsible for articles lost or stolen unless handed over to the manager for safe custody.” Due to the negligence of the hotel staff, their property was stolen. Held, the proprietor of the hotel was liable as the notice was not binding, because it came to the knowledge of the client only after the contract to take the hotel on hire had already been made.