Proposal and its Essential conditions
Proposal in Law of Contract [The Essentials]
Introduction:
A contract cannot, ordinarily, be created by a bare promise or even a set of promise. It is essentially -i bilateral transaction which can only be concluded by the acts of both parties. For its creation, it is necessary that two or more panics should have reached an agreement, and before this can be done, it is necessary that one party should have slated his terms to the other party, and that other party should have accepted those terms. For this purpose, one must look for a proposal, on the one hand, and an acceptance, on the other hand. In fact, both these elements are usually present in a contract, even if they are implied, rather than expressed. The first requirement is a proposal, that is, a promise by the person making the proposal to do, or abstain from doing something, provided that the person to whom the proposal is made will accept it, and pay, or promise to pay, the consideration of the proposal.
2. Meanings and Definitions of Proposal:
For understanding the concept of proposal or offer the following definitions are helpful:
- Webster's College Dictionary: Offer is “a proposal supported by adequate consideration the full and complete acceptance of which constitutes on contract”.
- Chitty's Definition: The offer is an expression of willingness to contract made with the intention (actual or apparent) that it shall become binding on the person making it as soon as it is accepted by the person to whom it is addressed.
- Black's Law Dictionary: Offer is “a display of willingness to enter into a contract on specified terms, made in a way that would lead or reasonable person to understand that an acceptance, having been sought will result in a binding Contract”.
- Section 2(a), Contract Act 1872: 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.
3. Kinds/Modes of Making Offer/Proposal:
An offer or proposal can be made in the following ways:
(a) Express Proposal:
An offer may be made either by words or by conduct. An offer which is made by words spoken or written, is called an ‘express offer’.
Illustrations:
(a) M says to N that he will sell his motorcycle to him for Rs. 40,000 It is an express offer.
(b) A offers to sell his car to B for Rs. 2, 50,000. B promises to pay Rs. 2, 50,000 for the car, It is also an ‘express offer’.
(b) Implied Proposal:
When offer is made otherwise than in words. The promise is “Implied" Conduct may convey as clearly as words. Thus when offer is “expressed by conduct”, the offer is Implied.
Illustrations:
(a) A fire broke out in the defendant’s farm. He believed that he was entitled to the free services of Upton Fire Brigade and, therefore, summoned it. The Brigade put out the fire. It then turned out that the defendant’s farm was not within free service zone of the Upton, which therefore, claimed compensation for the services. It was held that the services were rendered on an implied promise to pay for them. [Upton Rural District Council vs Powell. (1942) 1 All ER 220]
(b) A railway coolie carries the luggage of a passenger without being asked to do so. In such circumstances one can guess that he carries the luggage in order to get some wages. It is an implied offer.
(c) Specific Proposal:
"When offer is made to a definite person or definite class of persons, it can be accepted by that particular person only.
(d) General Proposal:
When offer is made to the world at large and which could be accepted by anyone e. g. reward to a person supplying information pertaining to something. But the contract is not made with the entire world. Contract is made with the person who comes forward and performs the conditions of the proposal.
Illustrations:
(a) In Carlill vs. Carbolic Smoke Ball Co. Ltd. A company offered to pay Rs. 100 to any person who contracts influenza after using the smoke balls manufactured by them, in accordance with printed directions. A lady used the smoke balls and subsequently suffered from influenza. She was held entitled to recover the reward, because she was considered to have accepted a general offer by the company. [(1893) IQBD 256]
(b) Lal v. Charan Lal, a youngster ran away from his father’s home. The father issued a pamphlet, offering a reward to anyone who found trace of the boy and brought him home. The plaintiff found the boy and claimed the reward. It was held that the pamphlet was an offer open to the whole world and capable of acceptance by any person, and the acceptor who fulfilled the condition was entitled to the reward offered. [AIR 1925 A 539]
4. Essential Conditions of a Valid Proposal:
A proposal in order to be a valid one, must fulfill the following conditions:
(1) Proposal must contemplate the Creation of Legal Relations:
A proposal can fructify into a promise by acceptance only when it is such that it can be reasonably regarded as having been made with a view to produce legal consequences A mere statement of intention, hope or desire, does not constitute a binding promise, though acted upon by the party to whom it is made. Where there is no intention to enter into a binding contract, or no legal consequences are contemplated, an acceptance of the proposal does not create a promise.
Illustrations:
(a) A invites B to dinner and B accepts the invitation. It does not create any legal relations, so there is no agreement.
(b) But if A offers to-sell his watch to B for Rs. 200 and B agrees to buy it at the same price, there is an agreement because here the parties intend to create legal relations.
(2) Proposal must be communicated:
An offer is effective only when it is communicated to the offeree. If an offer is not communicated to the offeree, it cannot be accepted. An acceptance of offer in ignorance of it, is not valid acceptance according to the law and does not create any legal obligations.
Illustration:
In Lalman Shukla vs. Ghauri Dutt A’s nephew absconded from home. He sent his servant in search of the boy. Subsequently, A published an advertisement offering to pay Rs. 50 to anybody communicating the whereabouts of the boy. The servant came to know of it only after he had traced the missing boy. He, however, brought an action to recover the reward. But his action failed because in order to constitute an offer there must be its acceptance and there can be no acceptance unless there is knowledge of the offer”.
(3) Proposal must Signify Willingness of Proposer to Obtain Assent to It:
A proposal, to be valid, must signify to another person the willingness of the proposer to do, or abstain from doing, anything, with a view to obtain the assent of that other to such an act or abstinence. A unilateral decision to do, or to abstain from doing anything, when the other party has hardly any opportunity to accept or reject the proposal, does not amount to a proposal.
Illustration:
IN Hulas Kunwan v. Allahabad Bank, Ltd., intimated by a circular, sent to its constituents, to increase the rate of interest. It was held, that the circular did not amount to a proposal, as it did not signify; to the constituents the intention to raise the rate of interest with a view to obtain their consent. It was a unilateral decision to enhance the rate of Interest.
(4) Proposal must be made with a View to Obtain the Assent.
The offer to do or not to do something must be made With a view to obtaining the assent of the other party to whom the offer has been addressed and not merely with a view to disclosing the intention of making an offer.
(5) Proposal must contain a Promise:
By the proposal, the person making it expresses his agreement that something shall be done or shall not be done, or shall or shall not happen, if the proposal is accepted. In this sense, a proposal contains a promise. A signification of willingness to do or abstain from doing anything, which does not give, to the person to whom it is made, an assurance that, on some contingency at least, something will or will not be done, does not amount to a proposal.
(6) Proposal must be certain and Definite:
To constitute a valid proposal, essential’ that it should sufficiently define “the terms of the proposer’s undertaking, so that it can be ascertained just what is that the proposer has promised. A promise, too vague in its terms to be understood, is too vague to be capable of enforcement. The proposal must define, with the same degree of certainty, the act or promise which the person to whom the proposal is made is to give to the proposer in exchange-A proposal must define the essential terms of performance on both sides with a reasonable degree of certainty, so as to be capable of enforcement.
The essential terms include:
- (a) Identification of the subject-matter
- (b) The consideration to be paid,
- (c) The time of performance
- (d) The work to be done.
Illustrations:
(a) In Taylor vs. Portington X purchased a horse from Y and promised to buy another, if the first one proved lucky. X refused to buy the second horse. Y could not enforce the agreement as it is vague. [(1855) 44 ER 128]
(b) A has two motorcycles. He offers B to sell one motorcycle for Rs 27 000. B cannot enforce the agreement because it is not clear that which mote wanted to sell.
(7) Proposal must not be a Mere Expression of Intention:
According to the definition, “proposal” is signification to another of the willingness of the person making the proposal to do or to abstain from doing anything, with a view to obtaining the assent of that another to such act or abstinence. A proposal involves a promise. Therefore, a mere expression of intention, or a general willingness to do something on the happening of a particular event, or in return for something to be received, does not amount to a proposal.
Illustration:
Where a person, in reply to a letter inquiring whether the property is to be sold, communicates his willingness to sell for a certain sum of money, the communication amounts to a proposal. But, where a person sends his quotations, or terms of business, to others, he merely intimates his readiness to transact business on those.
(8) Proposal must be distinguished from Preliminary Negotiations:
Preliminary negotiations, such as those evidenced by advertisements, catalogs and circular letters containing price quotations or requests for bids, or other general statements f intention, are normally invitations for proposals rather than proposals. The reason is, that they do net manifest an apparent present contractual intent A general statement from which no promise can be inferred cannot constitute a proposal.
(9) Proposal must not Contain Negative Terms:
Proposal should not contain a term, the non-compliance of which would amount to acceptance. Thus the offer should not contain a term like that “if the acceptance is not communicated up to Sunday next, the offer would be considered as accepted.” An offeror cannot say that if acceptance is not communicated up to a certain date, the offer would be presumed to have been accepted. If the offeree does not reply, there is no contract, because no obligation to reply can be imposed on him.
Illustration:
A writes to B “I will sell you my horse for Rs 500. If I don’t receive a reply, I shall assume you have accepted the offer”. There will be no contract if B does not reply.
(10) Proposal must not Contain Untrue Statements:
If any of the statements in the proposal are the basis of its acceptance and form the basis of the contract between the parties, and are found to be untrue, they vitiate the contract, which becomes void and unenforceable in law] irrespective of the question whether the statement in question which is found untrue is of a material nature or not.
(11) Proposal may be Subject to Conditions:
A proposal can be made subject to a condition. In that case, it can be accepted only subject to that condition Where an offer is made subject to a condition and that other is accepted, the person accepting the offer is presumed to have accepted it with the condition so attached, and he cannot be heard to say that, although he accepted the offer, he is not bound by the condition.
Illustration:
A asks B to send the reply of his offer by telegram but B sends reply may reject such acceptance, because it is opposed to the press communication.
(12) Proposal must contain all the Terms of the Contract:
In order to be legally operative and to create a power of acceptance, the proposal must contain all the terms of the contract to be made. It is not enough for the proposer to say merely what he himself will promise to do. It must also say what he will do it for, that is, what the other party must do in exchange in order to make an agreement, the proposal must state the terms of both the promises to be made. By the proposal, the proposer offers to exchange his specified promise for a similarly specified promise by the person to whom the proposal is made.
5. Final Words:
There may be said. To be three basic essentials to the creation of a contract: agreement, contractual intention and consideration. The normal lest for determining whether the parties have reached agreement is to ask whether an offer has been made by one party, if so, whether it bears a contractual intention and is capable of creating legal relations; whether it is certain, unambiguous and definite; whether its purpose is to obtain the assent of the other or is a mere expression of intention to offer; and above all whether it has been communicated duly If the answer to all these propositions is positive, it is a complete and valid offer to all intents and purposes.
Searches and Questions:
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