The term “proposal” has been defined in Section 2(a) of the act, 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 make a proposal”. For eg. A’s willingness to sell his radio set to B for Rs. 500 with intention to consent of B. But if a statement is made without any intention to obtain the assent of the other party thereto, that cannot be termed as proposal.
Thus the person making the proposal is called the ‘proposer’, or ‘offeror’ or ‘promisor’ and the person to whom the proposal is made is called as the ‘proposee’, or ‘offeree’, or ‘promisee’. Offers must be communicated Section 2(a) of the Act explains that a person is said to make a proposal “when he signifies to another person his willingness to do or to abstain from doing something”. The emphasis, here, is upon the requirement that the willingness to make a proposal should be “signified”. The terms signify means to or communicate to make known. It thus requires that the offer must be communicated to the other person.
Offer is either express or implied. When the offer is made by express communication then the offer is said to be an express offer. The express offer can be either in words or in written format. Whereas when the offer is not communicated expressly but communicated by conduct or by the circumstances of the case, the offer is called an implied offer. For eg. A says to B that he will sell his bike to B for Rs.30, 000, it is an express offer. For eg, a bid at an auction is an implied offer.
S. 4 The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. An offer cannot be accepted unless and until it has been brought to the knowledge of the person to whom it is made. For eg. A cannot be said to make an offer to B unless A brings the offer to the knowledge of B. Thus, acting in ignorance of an offer does not amount to acceptance of the offer. In Lalman Shukla v. Gauri Dutt, The plaintiff was in defendants service as a servant. The defendant’s nephew absconded and the plaintiff went to find the missing boy. In the plaintiff’s absence, the defendant issued handbills, offering a reward of Rs 501 to anyone who might find the boy. The plaintiff traced him and claimed the reward. The plaintiff did not know of the handbills when he found the boy. The court held that the plaintiff was not entitled to a reward. If the person has the knowledge of the offer, his acting in accordance with the terms thereof amounts to the acceptance of the same. In such a case, it is immaterial that at the time of accepting the offer, the acceptor does not intend to claim the reward mentioned in the offer.
In order that an offer, after acceptance, can result in valid contract, it is necessary that the offer should be made with an intention to create legal relationship. Promise in case of social engagements is generally without an intention to create legal relationships. Such an agreement, therefore, cannot be considered to be a contract. For eg. An agreement to go for movies, for a walk, to play some game, cannot be enforced in a court of law. The test to know the intention of the parties is objective and subjective, merely because the promisor contends that there was no intention to crate legal obligation would not exempt him from the liability. In Balfour v Balfour, Mr. Balflour who was employed on a government job in Ceylon, went to England with his wife on leave. For health reasons the wife was unable to accompany the husband again to Ceylon. The husband promised to pay 30 euros per month to his wife until she rejoined him in Ceylon. The husband failed to pay her the said amount hence the wife sued him for the amount. The court held that the husband was not liable as there was no intention to create a legal relationship. Intention of the parties to be gathered from the terms of the contract and surrounding circumstances. Generally in all social matters it is presumed there is no intention to create legal relation. But in business matters it is presumed to intend such relation. In Jones v. Padavatton, A divorced daughter lived in Washington with her son who employed on attractive terms and her mother living in Trinidad, who wished to live near the lady as she was attached to grandson so she persuaded the daughter much against her will to leave the job, take legal education in England & finally come back to Trinidad as practicing lawyer and mother agreed to pay all expenses, purchased a house in England, part of it was rented out & a part was allowed to her daughter and for 5 long years daughter could not complete law, in the meantime she got remarried and differences arose between mother & daughter and mother stopped payments and also commenced eviction proceedings. It was held that there was no intention to create a legal relationship and gave possession to the mother.
When the offer is made to a specific or ascertained person, it is known as specific offer. It can be only accepted by the person to whom the offer is made or to the person duly authorized by him. When the same is made to any particular person but to the public at large, it is known as general offer. A general offer can be accepted by any person.
Illustration ‘A’ advertises in the newspaper that whosoever finds his missing son would be rewarded with 2 lakh. ‘B’ reads it and after finding the boy, he calls ‘A’ to inform about his missing son. Now ‘A’ is entitled to pay 2 lakh to ‘B’ for his reward. In Carlill v. Carbolic Smoke ball Co., The smoke ball company offered by advertisement a reward of $100 as reward to anyone who contacted influenza after having used the Smoke Ball with the printed directions. Mrs.Carlill (plaintiff) relying on the advertisement purchased a smoke ball from a chemist, used the same in accordance with the directions of the defendants, but still caught influenza. She sued the defendant to claim the reward of $100 advertised by them. There may be general offer and acceptance of the general offer may not be communicated. By fulfilling the conditions of such offer the offeree is said to accept the offer.
A proposal or an offer has to be distinguished from an invitation to offer or treat. A person may not offer to sell his goods, but makes some statement or give some information with a view to inviting others to make offers on that basis. For eg. Displaying goods or dress or books in window of the shop. This is an invitation to offer. It is on the discretion of the shopkeeper if he wants to sell his article or not. An invitation to offer is not the final willingness but the interest of the party to invite the public to offer him. In Harris v. Nickerson, The defendant advertised a sale by auction. The plaintiff travelled to the advertised place of auction to find that the defendant had cancelled the auction sale. He brought an action against the defendant to recover the expenses of his travel. It was held that he was not entitled to the same as there was as yet no contract between the two parties, which could make the defendant liable.