query on offer and acceptance

Hypothetical and academic question.

There are umpteen examples in textbooks with such examples and citations in the Indian Contract Act.  In a normal sense, this is just an inquiry.  When a product is displayed for a sale, and a price was quoted it is offered and the moment that price is paid as consideration the contract comes to an end.

Dear Querist,

The difference between offer and invitation to offer is very basic and lies mainly in the ‘intention’ of the parties. While an offer directly allows the other party to enter into a contract (that is, a legally binding agreement) as soon as it is accepted, an invitation to treat mainly invites the other party to make negotiations and himself make an offer to the seller. This might sound complicated, but it is a very fundamental difference that we see very often in our day to day lives.

The term offer/proposal has been defined in Sec 2 (a) of the Indian Contract Act. According to the Act, “when one person signifies to another his willingness to do or abstain from doing something with a view to obtaining the assent of the other to such an act or abstinence, he is said to make a proposal”. It means when a person tells another person that he would or wouldn’t do something for them, they are said to be making a proposal to them. For instance, a person may offer to sell you their bicycle at a certain sum, say Rs. 5,000. This is an offer. As soon as you and the seller come to an agreement about the sale, and the details are explicitly laid down, a contract comes into existence. Once you accept the offer and pay the consideration (the sum of Rs 5,000), and the bicycle is delivered to you, the contract is said to have been ‘performed’.

 Hence, the seller's reply doesn’t amount to acceptance of the offer.

Regards,

Palak

Dear Palak,

Could you please cite some more examples?

Thanks!!

Dear Querist,

There is a thin line difference between both the concepts, ie. Offer and invitation to offer. An offer is basically a proposal while an invitation to offer (treat) is inviting a potential buyer to make a proposal. Intention to enter into a contract  plays a great role in an offer. On the other hand, an invitation to offer is an act which leads to the offer, which is made with an aim of inducing or negotiating the terms. Therefore under invitation to offer, the offeror doesn’t make an offer rather invites other parties to make an offer. 

As per this situation which is given in the query, it is an invitation to offer and not an offer in itself. And also the seller's reply doesn’t amount to acceptance because he had just stated the price that doesn’t amount to acceptance of the offer. There could be many day to day examples like Menu card of a restaurant showing the prices of food items, Railway timetable on which the train timings and fares are shown, Government Tender, Company invites application from public to subscribe for its shares and Recruitment advertisement inviting application.

Regards,

Palak