Meaning and definition of proposal
Proposal under the Indian Contract Act defines under section 2(a). As we already discuss what is contract and type of contract. Here we will discuss proposal under the Indian Contract Act. The term of ‘offer’ comes from the Latin word ‘offeree’ which means ‘present’ or ‘provide’.’
Offer’ as a noun is the substance of ‘a proposal to do a thing’ a proposal can be accepted or rejected. ‘Offer’ as a verb is the substance of brings to or before ‘to hold out’ to present for acceptance or rejection to exhibit to proffer to create a proposal to.
The word proposal under the Indian Contract Act 1872 is a synonym of the term ‘offer’ of the English Contract Act. Writers of English law have defined the offer as “an invitation, by the word or conduct, of a willingness to enter into a legally binding contract, and which in its term expressly or impliedly indicate that it is to become binding on the offeror as soon as it has become accepted by an act forbearance or return promise on the part of the present to whom it is addressed.
Section 2(a) of Indian Contract Act,1872 define that when a person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other or others to such act or abstinence, he is said to make a proposal. Thus an offer or proposal consists of two parts.
- A promise by the offeror and
- A request to the offeree for something in return
Section 2(b) of the Indian Contract Act provides that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.
Thus, the person making the proposal is called ‘proposer’ or ‘offeror’ or ‘promisor’. The person to whom the proposal is made is called ‘proposee’ or ‘offeree’ or ‘promisee’.
Example- “Ram” offers to sell his land to “Rahim” for an amount of 5 lakhs this is a proposal. Here “Ram” is the ‘offeror’ and “Rahim” is the ‘offree’.
Essential element regarding a valid proposal
An offer may be expressed or implied
An offer may be expressed or implied. If the offer is made by word it is called ‘expressed offer’. When the word or spoken it is called ‘oral offer’. If the word is used but the offer is derived from the conduct of the parties it is called ‘implied offer’. Whether it is expressed or implied it is valid. It may be oral or written.
Proposal must create legal relationship
An offer to be enforceable only if, its create legal relationship. An offer for social or moral act is not offer.
“X” offers “Y” to come back in a dance party on his home however he didn’t prepare the party for a few reasons. “Y” cannot sue within the court of Law against “X” as a result of failure to organise dance party doesn’t produce legal liability.
Relevant case on this point is-
Balfour vs. Balfour (1919) 2 KB 571:- Fact of the case the defendant in the instant case was a civil servant at the salon. When he left for England, he promised his wife to send 30 pound per month but he did not send the amount as promised. The plaintiff (wife) filed a suit against her Defendant (husband).
Decision/judgement:- Lord Atkin dismissed in the above suit as it is not actionable/maintainable on the ground that it does not give rise to legal consequences.
In S V R Mudaliar vs Raja babu, AIR 1995 SC 1607,:- It has been held by the supreme court even if an agreement is described as gentleman understanding, yet if there is a clear agreement that the property which is being converted will be reconvened to the vendor, the agreement is binding and there is no need to prove that there was an intention to create legal relationship because that is presumed in such case
Hansari J. observed
“It is not possible to accept the argument that an agreement will not, by itself, yield legal obligation unless it is not it is one which can reasonably be regarded as having been made between the party in contemplation of legal consequences”.
Term must be clear and certain
The term of the offer must be clear and certain, and must not be vague.
In India section 29 of Indian Contract act, 1872 provide “an agreement, the meaning of which is uncertain, or capable of being made certain, are void.
Example “Ram” agrees to transfer to “Rahim” one house of his three houses. But there is nothing to show which of those three houses was intended. The agreement is void of uncertainty.
Similarly, where “A” agrees to sell to “B” my white horse for rupees 500 or rupees 1000 the agreement will be void because there is nothing to show which of two price was to be given.
Taylor v. Portington (1885) 109 R.R. 107:- The plaintiff in the instant case “A” promised to take defendant “B”s house on lease for a period of 3 years provided, it is thoroughly repaired and the drawing-room are decoder according to the present style. It was held to be not enforceable, since the terms are too vague and uncertain.
It may be specific or public
When an offer is made to a person or group of person it is called ‘specific offer’. If it is made to the public in general or society or community as a whole, it is called ‘public offer’. The special offer can be accepted by the individual or individuals to whom it is made only. The general (universal) offer can be accepted by any person.
Relevant leading case in this regard-
Carlill vs carbolic smoke ball co. (1893) 1QB.256:- The defendant company advertised a reward of a hundred pounds, to any person who suffers from influenza, even after using their ‘smoke ball’ medicine as per the printed description. For this purpose, they deposit 1000 pounds in the bank. The plaintiff sued the different for the reward. Held the defendant was liable.
Section 8 of Indian Contract Act, 1872 provides that- “performance of the condition of a proposal, or acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an assent of the proposal”.
Thus, there may be a general offer or an offer can be made to the whole world. But it becomes a contract only when a specific person come forward and accept it or perform the condition of the offer.
Proposal must be communicated to the offeree
An offer is valid only when it is conveyed to the acceptor of the offer. The communication may be expressed or implied. It may be communicated by means of word of mouth, telegram; messenger etc. communication of offer is completed when it comes to the knowledge of the offeree.
Relevant leading case on this point is-
Laxman Shukla vs Gauri Dutt:- in this case, the different send his servant in search of his missing nephew. Later, he announces a reward to one, who could hand over his missing nephew. The defendant’s servant brought him and claims the reward. In the action against the different, it was held not in foreseeable on the plant that the offer, the award was not communicated to the offeree.
Williams v. Carwardine,:- In this case, the plaintiff, who knew that reward has been announced to be given to anyone who gives information relating to the convection of an assailant of murder, gave the necessary information, the plaintiff mentioned that she had given the information to ease her conscience.
Around then she didn’t have any plan to take the prize.. See, however, subsequently brought an action to claim the same. It was held that since the offer has been accepted with its knowledge, there was a valid contract and, therefore, she was entitled to claim the reward.
Proposal/Offer and invitation of offer
Invitation to offer is no offer since it is different from the offer. It is a proposal to get an offer..
Example:- “car” showed in the car showroom.
In the above case, a person makes an offer to purchase the can after seeing that can in the showroom, his price, showcase model and etc. a person enter into the showroom after seeing the car and offer to purchase the car, then the showroom owner may accept or refuse to sell that car
Thus the invitation to offer is something precedent to offer. Invitation to offer is not an offer, but, an act to draw the attention of the public to get the offer. The person who extends the offer is called “Offeror”, while the person who extends the invitation to offer will be called as “Offree” or “Acceptor” if he/she accepts the offer.
Thus, a tender notice does not amount to an offer or proposal, but merely an invitation to making an offer. An advertisement for tender is not a proposal which would bind the authority to sell to the person who makes the highest tender. It merely an attempt to ascertain whether an offer can be obtained within such a margin as the seller intended. The advertisement calling tender is not a proposal under the Indian Contract Act, 1872.