Rules of Offer in Business Contract Law

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Rules of Offer in Business Contract Law

The following rules shall be with an offer to gain the lawful offer.

An Offer may be both expressed and Implied

An offer can be express or implied/ latent in nature. Both of these offers are regarded as lawful. Express offer can be retained in word spoken and written form whereas implied or latent offer is made on the basis of the manner and conduct of an individual or other circumstances. The circumstance can be ratified by the way of doing or manner. Let’s clarify it through the examples: If ‘A’ individual offers words spoken or in written form to sell his house to ‘B’ individual for Rs. 1,00,000. This offer is an express or direct offer. But if a cobbler is on the road to polish and mend the shoes and in return he receives a fee. This is meant to say that this cobbler has made an implied or latent offer that has been implicitly expressed and can be understood via his action or conduct. When the passerby gets his shoes polished and pays him back, it is assumed that the implicit offer has been assented to, and the transaction is over.

An Offer must be Capable of Creating Legal Relation

The intention of the offer must be oriented to retain legal relations between the offeror and the offeree. If the objective or intention is not to create a statutory relation, it is void in the eyes of the law. It has no legal status. Thus the offeror must always seriously think that whether his offer is capable of creating legal relations with the offeree or not. To be a valid offer, it should always be capable to keep legal relation or it must have legal effect. If the offer can’t create a legal effect or relation, it becomes void. On the other hand, this legal relation creates a legal obligation (liability) to the contracting parties. Ultimately both of the parties perform the liability and the contract is over. This offer must be capable of retaining legal relations.

Also, Read the Meaning and Definitions of Offer in Business Law

Rules of Offer in Business Contract Law
Rules of Offer in Business Contract Law

Terms of the Offer must be Certain and not Loose of Vague

The terms of the offer must be clear and certain so that it can be easily understood. This leads the contracting party to know the result as well. If the terms of the offer are loose and vague there is the possibility of multiple meanings which makes it more difficult to know the intended meaning. The offers with vague and loose terms do not receive legal status. Therefore, it must be certain and vivid to subscribe to legal status.

An Offer may be General and Specific

Both of these, the general and specific nature of an offer have legal validity. Specific offer refers the offer intended to a certain or specific party whereas general offer is the offer intended to the general public to be assented. Muluki Civil Code 2074, section 511(1) refers to a general offer. According to the gist of this section, an individual advertises that he would pay due remuneration if somebody does the assigned job. If any individual does that assigned job the advertiser is bound to pay him the fee as avowed in the advertisement. This is how the offer may be specific and general in nature.

An Offer must be Communicated to the Offeree

The offer must have been known by the offeree. In other words, the recipient of the offer must be familiar with the offer. There must have been communication of the offer with the recipient. Only the communicated offer holds a legal mandate. By incidence, if there is no information of the offer to the offeree, and he has no information of the offer to the offeree, and he is unknown and has done the job he can’t claim the liability because there is no contract concluded via communication. To be a contract, there must be a meeting of mind between contracting parties. If the offeree is unknown about the offer there is no contract that can garner legal status. According to Muluki Civil Code 2074, section 508(1) “The communication of a proposal shall be deemed to be completed when it comes to the knowledge of the person to whom it is made.” This is why to hold legal validity offer must have been communicated to the recipient.

Two Identical Cross-offers do not Make a Contract

Two identical cross-offers can’t make a contract. Two identical cross-offers that have the same nature do not also hold legal status. If there are two cross offers for the same matter and substance and they have been sent simultaneously without informing the other, it holds no legal position. For the offer to hold legal status must have the assent of others. For instance, ‘A’ offers ‘B’ to sell 100-ton iron with a market price of Rs 8,800 per ton. On the same day ‘B’ also offers ‘A’ to buy 100-ton iron for Bs 8,800 per ton via post office. Here the contract is not possible because none of the parties has been familiar with the offer and there are similar two offers here, only the offer has been sent but not been accepted. To be contracted offer must be accepted. If there is no acceptance, it can’t be a contract. Yet the price of the iron is identical in case of the offer of two parties, it is not supposed to be the contract.

An Offer may Propose the Mode of Acceptance Subject to Any Terms and Conditions

An offer has various modes of acceptance which may be proposed to the offeree for the acceptance of the terms and conditions included in the offer. In this condition, if it is accepted by the offeree, it is lawfully regarded as a contract. If it gets accepted beyond the terms and conditions of the offer, it is legally null or void. For example, the information of the acceptance needs to be communicated via fax but if it is sent through the post office it becomes out of norm and does not hold lawful status. In other words, the mode of acceptance varies from the mode of the assent as prescribed in the offer or it is accepted wrongly so that it turns to be void.

An Offer should not Contain a Term the Non-Compliance of which would Amount to Acceptance

The negotiating parties should be aware of the fact that if the offer contains a term that would be regarded as agreement even if there is non-compliance or defiance of it. Contract Muluki Civil Code 2074, section 508(4) entails that if the offer has mentioned in the proposal that he would regard the proposal to have been accepted unless he receives the notice of refuse within the specified period the proposal shall not be deemed to have been accepted to have been notice of refusal has been sent within that period. But within that specified time the proposee failed to respond to the proposer, the proposal shall be regarded as non-compliance. This proves the fact that there must not be terms like this to amount assent even in the non-compliant conditions. If this term is there, it becomes unlawful.

An Invitation to Offer is not an Offer

It is clear that an invitation to offer and an offer are two distinctive different cases. The invitation to offer in term is known as bid or bidding. The bid is not an offer rather it is a prerequisite of an offer. Sometimes there can be confusion for bid and offer since they are identical in nature. In the legal parlance, they bear great differences. The acceptance of an offer is a contract. But the acceptance of the bid cannot refer contract. It is merely an invitation. To conclude a contract there must be an offer after an invitation bid and an acceptance accordingly. The contract is created only after the lawful combination of offer and acceptance. For example, the things under auction, advertisement of tender to sell things, and price list in the shop are the invitations to offer or bid.

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Rules of Offer in Business Contract Law

1. An Offer may be both expressed and Implied
2. An Offer must be Capable of Creating Legal Relation
3. Terms of the Offer must be Certain and not Loose of Vague
4. An Offer maybe General and Specific
5. An Offer must be Communicated to the Offeree
6. Two Identical Cross-offers do not Make a Contract
7. An Offer may Propose the Mode of Acceptance Subject to Any Terms and Conditions
8. An Offer should not Contain a Term the Non-Compliance of which would Amount Acceptance
9. An Invitation to Offer is not an Offer

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