Discuss the concept of offer and invitation to offer.
Every contract is bilateral in nature and involves two or more than two persons and each party to contract gives his consent only on the belief that every party to contract will perform his contractual obligations. But it is important to consider that no contract arises on its own. There is a proper procedure which has to be followed by the parties to make a lawful contract.
The first step to make a lawful contract is communication of an offer. Section 2 (a) of the Indian Contract Act, 1872, defines the term ‘offer’ which states that an offer is just a communication of willingness to do or to abstain from doing a particular act with a view to obtain assent of another person to whom offer has been communicated.
Primarily, offer is nothing but a communication of willingness by one person to another person and if latter person accepts the offer of former person, then it becomes an agreement and if that agreement is enforceable by law, then it becomes a contract.
For example: – If A wants to buy a car of B and A asks B that he wants to buy his car for Rs. 1,00,000. It is an offer and if B accepts that offer and agree to sell his car for Rs. 1,00,000, then it becomes a valid contract.
In the leading case of Lalman Shukla vs. Gauri Dutt, the Hon’ble court held that the initial step to make a contract is communication of an offer and if parties want to make a contract, then offer must be communicated to the concerned person and the latter person must accept above mentioned offer.
If a person does not have the knowledge of offer but he acts according to the terms and conditions of an offer, he cannot be deemed to be an acceptor of an offer. The term ‘offer’ is different from the term ‘invitation to offer’.
In case of invitation to offer, a person does not make an offer but he invites another person to make an offer and if the latter person makes an offer, then the former person has discretion whether to accept that offer or not.
For example: – If a bookseller wants to sell his books and for this, he placed all his books in different racks with the price list. This is not an offer but an invitation to offer. If a person wants to buy any book, then he has to take the book out of rack and ask to the bookseller that whether he wants to sell this book and if seller wants to sell the book, then he will accept the offer and sell the book. In this case, the seller did not make an offer. He had invited another person to make an offer and when the latter person made an offer, the seller accepted that offer.
In the leading case of Pharmaceutical Society of Great Britain vs. Boots Cash Chemist ltd., the Hon’ble court held that display of articles even on a self-service basis was not an offer but was merely an invitation to offer. When customer selected an article and brought the same to cash desk, that amounted to an offer to buy and the shopkeeper is free to accept or reject the same.