1. Introduction

An offer/proposal is the first stepping stone towards formation of a legally binding contract, between two parties. Therefore, understanding the same is essential. An offer is defined under Section 2(a) of the Indian Contract Act, 1872, which goes as follows: “When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a “proposal”. Offer is the term used under English Law; under Indian Law, the term Proposal is used. However, both words have the same meaning. Therefore, they can be used interchangeably.

2. Types Of Offer

Offer is of many types, but essentially there are 7 types of offer:-

1. Express Offer

2. Implied Offer

3. Counter Offer

4. Cross Offer

5. Specific Offer

6. General Offer

7. Standing Offer

1. Express Offer:- Express Offer refers to an offer made with clear words. These words can be verbal or written, because we use words in both types of conversations. According to Section 9 (Promises, express and implied) of the Indian Contract Act, 1872 (ICA), if a proposal or acceptance is made with words, then it results in an express promise. That means an express offer or express acceptance results in an express promise.

2. Implied Offer:- An offer or proposal made with conduct refers to an implied offer. In such offers, a person’s certain conduct or actions form an offer. According to Section 9 of ICA, a proposal or acceptance made otherwise than in words, then it forms an implied promise.

In Upton-on-Severn RDC v Powell (1942) defendant called the fire brigade, assuming its services were free for him. Later, it was discovered that his

farm didn’t fall in the territory of the said fire brigade, hence he needed to pay. But, defendant refused. The court held that by availing the service of the fire brigade, there was an implied promise to pay them. Another example can be availing the services of a rickshaw, where there was an implied promise to pay in exchange for its service.

It is notable that in Express and Implied proposals, the proposee doesn’t need to accept the proposal in the same way of communication as the proposal. The acceptance of an express proposal can be implied or vice versa. This is also evident in Section 9 of ICA, which says “In so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. Insofar as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.” As per the wording of Section 9, if a proposal or acceptance, either of them, is made expressly or impliedly, it will form an express or implied promise, as the case may be.

3. Counter Offer:- When a person alters any condition of the offer given to him and asks the offeror to accept his altered conditions to accept the offer, then such an altered condition of the original offer is known as counter offer. In simpler language, for understanding purposes, we can also call it bargaining, where we often reduce the original price of the goods offered to us to purchase them. There is one significant property of a counter offer that it revokes the original offer. We can understand it better by this illustration- A offered B his watch for Rs. 3000. But B said that he would purchase the watch for Rs. 2,500. This is the counter offer. Here, this counter offer has revoked A’s original offer, which was selling his watch for Rs. 3000. Now, let’s assume A rejected B’s counter offer after which B said that he is ready to buy the watch for Rs. 3000. So, here B is not accepting the original offer, but he is giving an new offer to A; because his counter offer has already revoked the original offer. Now, A is not bound to sell his watch to B. If A refused to sell his watch, he would not be held liable for breach of contract because he only refused to accept B’s new offer.

4. Cross Offer:- A Cross offer is a type of offer where two persons give each other similar offers, with similar conditions, unknowingly or unaware of each other’s intentions at the same time.

Illustration- A offered B to sell his watch for Rs. 3000. At the same time, unaware of A’s offer, B also gave an offer to A to purchase his watch for Rs. 3000. Such situations are known as a cross offer. A significant property of the cross offer is that it doesn’t form any promise because here both parties are only giving offers. So, to form a promise, one party has to become the promisee and accept the offer.

5. Specific Offer:- An offer which is made to a particular person is specific. Such offers can only be accepted by the person to whom it is made.

6. General Offer:- Such offers which are made to the public or world at large are called a general offer. Carlill v Carbolic Smoke Ball Co. (1893) case law is a landmark judgement regarding a general offer. In this case, Carlill Smoke Ball Company made a general offer promising £100 to whoever caught epidemic influenza or cough, or cold after taking it medicines as prescribed. They also stated that they deposited £1000 into the Alliance Bank for the same for show their sincerity. Mrs. Carlill took the medicines as prescribed and still caught influenza, hence demanded compensation, but the company denied. Therefore, Mrs. Carlill sued the company. The company argued before the court-

· There was no intention to enter into a legal contract while giving an offer.

· Also, the advertisement was a mere puff for marketing purposes.

· There was no communication of acceptance.

· The offer was not made to any particular person.

The court rejected all these contentions of the company and said that,

· Such offer that are made to the world at large is general offer.

· In such offers, communication of acceptance is not necessary.

· Merely performing the conditions of the offer is enough to accept the offer.

· Also, the offer is not puff as by depositing £1000 in Alliance Bank, they showed there was the intention to create a legal contract.

7. Standing Offer:- A Standing offer is a type of offer where an offer remains open for acceptance for a certain time. In such offers, two types of situations can happen:-

1. An offer that can be accepted by multiple people, and a separate contract will be created with each individual. General offers can be an example of this. Illustration- A made a general offer in which he said whoever takes their medicines as prescribed will not get influenza. In case someone gets it, A will pay them Rs. 2000 as compensation (Carlill v Carbolic Smoke Ball Co.). In this illustration, taking the medicines as prescribed by people shall be an acceptance of the offer, and a contract shall be created between each individual and A. However, if such a general offer is of such a nature that it states to find something, then as soon as the thing is found or information is given about it, the offer shall cease to exist. Illustration- A made a general offer that whoever finds his dog shall be rewarded Rs. 1000. B found the dog and informed A immediately. Now, the general offer has ceased to exist.

2. An offer to supply any goods to the other party for a particular time. Ex- Receiving the newspaper daily is one of such examples. Here, the newspaper supplier gives us a standing offer to supply newspapers over a period, and we accept this offer. Here, a series of contracts is created with each supply.

3. Difference Between Offer & Invitation to Offer

An invitation to offer is not an offer, but understanding the difference between offer and invitation to offer is necessary. An offer is showing final willingness to sell something with clear conditions; whereas an invitation to offer, as its name suggests, is merely an invitation to give an offer to the person who is inviting such offers. This concept was explained in Harvey v Facey (1893) by the Privy Council. In this case plaintiff asked two questions of the defendant in a telegram, which was “Will you sell us a Bumper Hall Pen? Telegraph lowest cash price”. Defendant only answered the second question, which was about the lowest price. Later, the defendant refused to sell, hence the plaintiff sued him. The court held that the defendant’s response of stating the lowest price was an invitation to offer. Here defendant was only providing information about his property.

In this case, it was made clear that merely providing information about something, like stating price, etc, only constitutes an invitation to offer.

Also, in the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists Southern Ltd. (1953) court also established that displaying goods in a shop is also an invitation to offer. In such a case customer goes into the shop and gives an offer to the shopkeeper to purchase the displayed goods. This case also made it clear that advertising about offers in the shops, e.g., discounts, is also a mere invitation to offer.

Conclusion

Indian law doesn’t expressly mention types of offer. But it is essential to understand the types of offers, as different rules apply to different offers. We hope that this article helped you make the concept easier to understand.