Offer and Acceptance under Indian Contract Act, 1872

Offer and Acceptance under Indian Contract Act, 1872: One of the essential elements of a valid contract is the mutual consent of the parties to enter into a legal obligation. This consent is expressed by the process of offer and acceptance. According to section 2(a) of the Indian Contract Act, 1872, an offer is 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. Similarly, section 2(b) defines acceptance as when the person to whom the proposal is made signifies his assent thereto.

The offer must also be made with an intention to create a legal relationship and not merely as an intention, wish or joke or a social invitation. The offer must be distinguished from an invitation to offer, which is only a preliminary step to invite others to make an offer. For example, an advertisement in a newspaper or a display of goods in a shop window are not offers, but invitations to offer.

The acceptance must be given by the person to whom the offer is made, and it must be in conformity with the terms of the offer. Any deviation from the terms of the offer amounts to a counter-offer, which rejects the original offer and creates a new one. The acceptance must also be given within a reasonable time, before the offer lapses or is revoked by the offeror. The revocation of an offer can be done by communicating it to the offeree before he accepts it, or by performing an inconsistent act that indicates the withdrawal of the offer. For example, if A offers to sell his car to B for Rs. 1 lakh, and before B accepts it, A sells his car to C, then A has revoked his offer to B.

The Indian Contract Act, 1872 also lays down some rules regarding the communication of offer and acceptance. According to section 4, the communication of an offer is complete when it comes to the knowledge of the offeree, and the communication of an acceptance is complete when it comes to the knowledge of the offeror. However, section 5 provides an exception for cases where the parties agree that the acceptance will be signified by some act or performance, such as posting a letter or delivering goods. In such cases, the acceptance is complete as soon as the offeree does the act or performs his part of the contract, even if it does not reach the offeror.

The concept of offer and acceptance is based on the principle of consensus ad idem, which means meeting of minds. The parties must agree on the same thing in the same sense, and their intention must coincide at the same point of time. If there is any mistake, fraud, coercion, undue influence or misrepresentation affecting the consent of either party, then there is no valid contract.

The doctrine of offer and acceptance has been developed by various judicial decisions over time. Some of the landmark cases on this topic are:

1. Carlill v Carbolic Smoke Ball Co. (1893): In this case, the defendant company advertised that they would pay £100 to anyone who contracted influenza after using their smoke ball product as per their instructions. The plaintiff bought and used the product, but still contracted influenza. She sued for the reward money. The court held that there was a valid contract between the company and anyone who fulfilled their conditions, and that the plaintiff was entitled to claim the reward.
2. Balfour v Balfour (1919): In this case, a husband promised to pay his wife £30 per month as maintenance while he was working abroad. Later, they separated and he stopped paying her. She sued for breach of contract. The court held that there was no contract between them, as they did not intend to create a legal obligation by their domestic arrangement.
3. Harvey v Facey (1893): In this case, the plaintiff telegraphed to the defendant "Will you sell us Bumper Hall Pen? Telegraph lowest cash price." The defendant replied "Lowest price for Bumper Hall Pen £900." The plaintiff then telegraphed "We agree to buy Bumper Hall Pen for £900 asked by you." The defendant did not reply and sold the property to someone else. The plaintiff sued for specific performance. The court held that there was no contract between them, as the defendant's reply was not an offer but only a statement of price.
4. Lefkowitz v Great Minneapolis Surplus Store (1957): In this case, the defendant store advertised in a newspaper that they would sell three fur coats worth $100 each for $1 each on a first-come first-served basis. The plaintiff was the first person to arrive at the store and asked for one of the coats. The store refused to sell it to him, saying that the offer was only for women. The plaintiff sued for breach of contract. The court held that there was a valid contract between the store and the plaintiff, as the advertisement was a clear and definite offer that did not specify any gender restriction.
5. Tinn v Hoffman (1873): In this case, the plaintiff and the defendant were both iron merchants who exchanged telegrams on the same day regarding the sale and purchase of iron. The plaintiff's telegram offered to sell 800 tons of iron at 69s per ton, and the defendant's telegram offered to buy 800 tons of iron at 69s per ton. However, they did not refer to each other's telegrams. Later, they disagreed on whether there was a contract between them. The court held that there was no contract between them, as there was no acceptance of either offer, but only a cross-offer.

These cases illustrate the importance of offer and acceptance in forming a valid contract. They also show the various factors that can affect the validity of an offer or an acceptance, such as the mode of communication, the intention of the parties, the terms of the offer, the time of acceptance, and the existence of a counter-offer.