Introduction. A valid contract begins with a lawful offer and a lawful acceptance. These two components form the foundation of contractual relations by establishing consensus between the parties. The Indian Contract Act, 1872 lays down specific essentials that an offer and acceptance must satisfy to become legally enforceable.
Expanded Discussion: Importance of Offer and Acceptance
Offer and acceptance together constitute the very foundation of a valid contract. They establish consensus-ad-idem — a meeting of minds — which is essential for contractual formation. Without a lawful offer and acceptance, no contractual relationship can arise, regardless of consideration or capacity. Therefore, the essentials of both must be carefully satisfied to ensure enforceability.
Essentials of a Valid Offer (Proposal)
- Must show willingness to do or abstain: The offeror must clearly express readiness to perform or refrain from something.
- Must be made with intention to create legal relations: Casual or social statements are not offers.
- Terms must be definite and certain: Vague or ambiguous offers are invalid.
- Offer must be communicated: No person can accept an offer without knowing it.
- Offer may be general or specific: A general offer is made to the public; a specific offer is made to a particular person.
- Offer should not impose silence as acceptance: The offeree cannot be compelled to respond.
- Legal relationship must be possible: Terms must not be illegal or impossible.
- Invitation to offer is not an offer: Advertisements, price lists, or catalogues are merely invitations.
Essentials of a Valid Acceptance (Expanded)
Acceptance completes the process of agreement and transforms an offer into a binding promise. For acceptance to be valid, it must strictly conform to the terms of the offer and must be communicated in a lawful manner. These requirements ensure clarity, prevent disputes, and establish mutual intention to be bound by the contract.
Essentials of a Valid Acceptance
- Acceptance must be absolute and unqualified: Any conditional acceptance amounts to a counter-offer.
- Must be communicated: Silence does not amount to acceptance.
- Must be given in the mode prescribed: If no mode is prescribed, it must be reasonable.
- Must be given by the person to whom offer is made: Only the offeree can accept.
- Must be within the time prescribed: Acceptance after expiry is invalid.
- Acceptance must be made while the offer is still in force: Once revoked, it cannot be accepted.
- Performance may constitute acceptance: In case of general offers, performance is valid acceptance.
- Communication is complete when it comes to knowledge of offeror: This finalises the contract.
Relationship Between Offer and Acceptance
Both offer and acceptance must correspond and mirror each other. Together they form an agreement which, when supported by consideration, becomes a contract. Any defect in either of them affects the validity of the entire agreement.
Illustrations
- A announces a reward to the public for finding his lost dog; B finds and returns it — valid acceptance by performance.
- A offers to sell his bike for ₹20,000; B accepts without conditions — valid acceptance.
- A offers a job to B but B responds with altered conditions — this becomes a counter-offer, not acceptance.
Conclusion: Lawful offer and acceptance are the building blocks of a valid contract. They must be clear, definite, communicated, and free from conditions. Only when both satisfy the legal essentials do they create a binding agreement.