Tuesday, 4 September 2012

CONTRACT LAW - PART I (OFFER & UNQUALIFIED ACCEPTANCE)



Agreements enforceable by law are contracts.
The Contract Law is mostly Commonsense
Points for discussion as based on The Indian Contract Act 1872



Formation of agreements
An agreement is about meeting of two minds.This can be formed when one party makes an offer and the other accepts it. An offer or proposal can be accepted or rejected. If the offer is rejected, that is the end of it. However, if an offer is accepted, an agreement is formed.

Offer and acceptance can be express (spoken or written in words) or implied in gestures, body language, actions, commissions and omissions.

Contracts formed through spoken or implied offers and/or acceptances, are as valid as contracts formed through a written offer and acceptance

The founding principle for the formation of agreements is the meeting of minds (consensus ad idem), offer and acceptance is only a modality.

Offer

An offer is an expression to contract without further negotiations.It requires only acceptance from the other party to form a contract.
  • Offer must be communicated to the offeree. It is the duty of the offeror to communicate all the terms of the offer to the offeree. Actual communication of such terms may not be required.
  • Offer constitutes a willingness to do some act or abstinence.
  • Offer must be made to some other person. Offer can be made to a particular person. Offer can be made to a group of persons. Offer can be made to the whole world (such offers can be Continuing Offers or Offers of Reward for Information)
  • Offer may be expressed or implied.
  • Offer must be made with a view to obtaining the assent of the other and should not be an expression of intention or enquiry.
  • Offer may be conditional.
  •  The terms of the offer must be certain.
  • An offer must not thrust the burden of acceptance on the offeree.

Revocation of Offer
  • An offer can be revoked.
  • It may come to an end due to lapse of time.
  • It may be revoked when the acceptor fails to fulfil the condition precedent to acceptance.
  • It may be revoked by the death or insanity of the proposer.
  • A long silence implies rejection of an offer.

 Summary
  • Internet is only a medium for communication. The content of the communication decides whether it is an invitation to offer or an offer.
  • Advertisements can be offers or invitations to offer depending upon the intended communication.
  • Ordinarily, displays in shop windows, product catelogues and price lists are invitations to offer.
  • Ordinarily, in a self-service store, the customer offers.
  • Ordinarily, in auctions and tenders, the bidders offer.
  • Choice of words used to express an offer will not decide whether a communication is an offer or not. The essence of the communication is important for this purpose.


Unqualified Acceptance
  • An offer should be accepted without changing its terms.
  • Changing the terms of the offer amounts to an implied rejection of the offer.
  • An acceptance changing the terms of an offer is a counter-offer.
  • Acceptance should be directed and communicated to the person making the offer.
  • Mental acceptance is no acceptance
  • Silence can only imply rejection, not acceptance
  • An offer can specify the modality of communication of acceptance.
  • It cannot be made in ignorance of the offer.
  • It must be given before the offer lapses.

Intention to create legal relations

The requirement of intention to create legal relations in contract law is aimed at sifting out cases which are not really appropriate for court action. Not every agreement leads to a binding contract which can be enforced through the courts. For example you may have an agreement to meet a friend at a restaurant. You may have a moral duty to honour that agreement but not a legal duty to do so. This is because in general the parties to such agreements do not intend to be legally bound and the law seeks to mirror the party's wishes. In order to determine which agreements are legally binding and have an intention to create legal relations, the law draws a distinction between social and domestic agreements and agreements made in a commercial context.


1 comment:

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