Analyse the law relating to “offer” and “acceptance” in the making of contract in India.
Indian Contract Act, 1872, deals with the provisions regarding making a valid and lawful contract. This act prescribes some steps which parties have to be taken if they want to enter into a legally binding contract. According to Indian Contract Act, 1872, the initial step to enter into a contract is communication of an offer.
Section 2 (a) of the Indian Contract Act, 1872, defines the term “offer” and according to this section, an offer is nothing but a communication of a willingness by one person to another person. If a person wants to enter into a contract, then he will have to communicate his willingness to another person with respect to the subject- matter of the contract and if another person accepts the offer made by former person, then only they will enter into a contract.
In the leading case of Lalman Shukla vs. Gauri Dutt, the Hon’ble court held that to make a valid contract there must be communication of an offer. If there is no communication of an offer and without knowing the offer if any person acts according to the terms and conditions of the offer, that will not be considered a valid acceptance.
Whereas, section 2(b) of the Indian Contract Act, 1872, defines the term ‘acceptance’. According to this section, if a person makes an offer to another person and the latter person accepts the offer, then only it will be considered a valid acceptance. According to this section, it is essential that an offer must be accepted by that person to whom it has been made. If any third person accepts the offer, that will not be considered a valid acceptance.
In the leading case of Bhagwan Dass vs. Girdhari Lal & Co., the Hon’ble court held that to create a valid contract, the offer must be accepted by that person to whom it has been made and the communication of acceptance must be made in such manner which the law considers valid.
Moreover, in the leading case of Felthouse vs. Bindley, the Hon’ble court held that since the offeree does not communicate the acceptance, no contract comes into existence and offeror cannot impose duty to reply upon offeree. It is the discretion of the offeree whether to accept the offer or not.