Cheat Sheet: Offer and Acceptance

1. Offer (Proposal) - Section 2(a)

1.1 Definition and Essentials

1.2 Types of Offer

1.3 Offer Distinguished From

1.4 Communication of Offer - Section 4

• Complete when it comes to knowledge of person to whom it is made
• Offer cannot be accepted in ignorance of offer (Lalman Shukla v. Gauri Dutt)
• Communication may be express or implied
• Communication to agent is communication to principal

1.5 Revocation of Offer - Section 5, 6

• Revocation must be communicated before acceptance is complete
• Revocation complete when it comes to knowledge of offeree (Section 6)
• General offer can be revoked by same mode as made

2. Acceptance - Section 2(b)

2.1 Definition and Essentials

2.2 Mode of Acceptance - Section 7

2.3 Communication of Acceptance - Section 4

2.3.1 General Rule

• Complete when it comes to knowledge of offeror
• Communication may be express or implied
• Must be communicated by acceptor or authorized agent

2.3.2 Exception: General Offer

• Acceptance complete by performance of conditions without communication to offeror
• Carlill v. Carbolic Smoke Ball Co.: Performance of conditions is acceptance

2.4 Communication, Acceptance and Revocation - Section 3, 4

2.5 Postal Rule (Adams v. Lindsell)

• Acceptance complete against offeror when letter properly addressed and posted
• Revocation must reach offeree before or at time of posting acceptance
• Risk of delay/loss in transit is on offeror
• Does not apply to instantaneous communication (telephone, telex, email, fax)
• Can be excluded by express terms of offer

2.6 Revocation of Acceptance - Section 5

• May be revoked before communication of acceptance complete against acceptor
• Cannot be revoked after acceptance complete against acceptor
• Revocation must reach offeror before acceptance reaches him

3. Time Limits - Section 6

3.1 Lapse of Offer

4. Important Case Laws

5. Key Distinctions

5.1 Offer vs. Invitation to Offer

5.2 Acceptance vs. Counter-Offer

5.3 Cross Offer vs. Acceptance

• Cross Offer: Two identical offers made simultaneously in ignorance of each other; no contract
• Acceptance: Response to offer with knowledge of offer; contract formed

6. Special Situations

6.1 Standing Offer

• Open for acceptance over period of time
• Each order/requisition is separate acceptance creating separate contract
• Can be revoked for future supplies but not for orders already placed
• Great Northern Railway v. Witham: Standing offer for supply over period

6.2 Conditional Offer

• Offer subject to fulfillment of conditions
• Acceptance valid only when conditions fulfilled
• Non-fulfillment of condition: offer lapses

6.3 Offer in Ignorance

• Two persons make identical offers in ignorance of each other (cross offer): no contract
• Person performs act in ignorance of offer: no acceptance, no contract

7. Examination Tips

7.1 Essential Points to Remember

• Offer must be communicated; cannot accept unknown offer
• Invitation to offer is not offer (display of goods, advertisements, catalogues)
• Counter-offer destroys original offer
• Acceptance must be absolute, unqualified, communicated
• Postal rule: acceptance complete when posted against offeror
• Silence is not acceptance unless clear from circumstances
• Revocation effective only when communicated to other party
• General offer: acceptance by performance without communication

7.2 Section References

• Section 2(a): Definition of Proposal/Offer
• Section 2(b): Definition of Acceptance/Promise
• Section 3: Communication, acceptance, revocation of proposals
• Section 4: Communication when complete
• Section 5: Revocation of proposals and acceptances
• Section 6: Revocation how made
• Section 7: Acceptance must be absolute
• Section 8: Acceptance by performing conditions or receiving consideration