What Is an Offer?
The principle element in any legal contract is an agreement made by the parties that bind to that contract. In any agreement, one party makes a proposal, or an offer, while the other party accepts that proposal. Offer’ and proposal’ means the same thing. When one party signifies another party of its willingness to carry out an activity, or to refrain from doing something, with an aim of obtaining consent from it, the former party is making an offer. An offer is the initial step towards forming a contract. A display of goods in a shop is not an offer, but a form of encouragement to propose an offer. This report will discuss what an offer is, in addition to analyzing different cases that revolve around an offer.
The contractual concept of an offer can be expressed as an act by which a party making an offer (offeror) confers on the party receiving the offer (offeree) the power to formulate a legally binding agreement by creating a situation amounting to an acceptance (Gilles 2000, p. 144). This concept illustrates that an offer should always indicate the willingness to abstain from, or continue undertaking an activity. There is no contract that involves only one party. The willingness to undertake a given activity or abstaining from carrying out a certain activity must obtain an assent from the other party to such act.
Essentials of a Valid Offer
The following are essentials of a valid order:
An offer can either be expressed by words or conduct, or inferred from a conduct. An expressed offer is an offer stated in words, in writing or in spoken words. Implied, or inferred offer is an offer that is orally understood, where both parties make promises by taking actions. In the case of The Moorcock, the plaintiff, who was the ship owner, contracted with the defendant, the wharf owner to drop off the cargo at the wharf (Latimer 2010, p.433). Both the ship owner and the wharf owner had the notion that the ship would certainly hit the bottom of the river at low tide. However, neither the ship owner nor the wharf owner had the idea that this would result to any breakage to the ship. The ship was badly damaged upon hitting the bottom of the river. The ship owner sued the wharf owner, but the court considered the foreseen event by both parties. The defendant had implied that utmost care was taken to conclude that no harm could occur to the ship.
An offer should contemplate on giving rise to a legal consequence, in addition to creating a legal relation. If an offer fails to show any intention of leading to a legal consequence, then the offer is not valid before the law. Baird Textile Holdings Ltd vs. Marks & Spencer plc, expresses this possibility in the case where the plaintiffs had been supplying clothing to the defendants for 30 years, but the defendants opted to terminate this arrangement with effect from the following season (Chitty on contract 2012, p. 277). The plaintiffs decided to claim for damages, citing an implied contract, which stated that the arrangement could not be terminated without a three-year notice. The claim was disallowed because the offer did not show any agreement on rising to a legal consequence, as well as the establishment of a legal relation. The defendants had intentionally ignored signing an agreement that could bind them with the plaintiff for a long time, whereas the plaintiff accepted to take the risk of operating in such a relationship.
An invitation to present an offer is not actually an offer. When a person invites another person to receive offer, he/she merely invites an offer so that the other person can make an offer. An invitation can be made about an offer, but it is not bound by any rule since it indicates no specific time. A good example is the case of Harris vs. Nickerson, where the defendant had advertised for an auction of some goods, but the auction did not happen (Sharma 201, p. 19). The plaintiff went up to the place that the auction was supposed to happen, but he found out that the auction was not held in that day. The plaintiff sued the advertiser for telling lies and wasting the plaintiff’s money. However, the court ruled on the defendant’s favor, as the auction was just an intention, and not an actual offer.
An offer can be general offer or a specific offer. A general offer is an offer made to the public and can only be acceptable to any person who can attain the mandatory conditions. An example of a case of general offer is the case of Carlil v Carbolic Smoke Ball Co. in 1893. Carbolic Smoke Ball Co. had indicated in the ad that any person who would contract flu after using smoke ball would be paid 100 pounds (Stone 2013, p. 42). Carlil, the plaintiff, used the ball and contracted the flu. Carlil sued the company in order to claim 100 pounds. The plaintiff argued that the advertisement was indeed an offer, and the company had an obligation to accomplish since the ad was not a futile boast. She asserted that this was not an empty promise. The defendant argued that Carbolic Smoke Ball Co. did not sign any binding contract, and the words used in the ad amounted to no promise. A specific offer is granted to a definite party or parties.
The offeror must communicate an offer to the offeree. An offer can only be effective if it is communicated on time to the party receiving the offer. This applies to both specific and general offer. No contract or acceptance can occur without communication. This notion can be illustrated in the case of Handerson vs. Stevenson, where the plaintiff purchased a steamer ticket indicating that the steamer was leaving Dublin for Whitehaven ((Bharadwaj 2003, p.155). The plaintiff did not bother to read the back of the ticket, where terms and conditions were indicated. No one bothered to tell him to read those terms. The terms stated that the company cannot bear the liability of any loss, harm or delay to the travelers or their luggage. During the journey, the plaintiff lost his luggage in the shipwreck. He opted to sue the ship owners for damage. The judgment ruled on the plaintiff’s favor, as the company did not offer sufficient information on terms indicated at the back of passengers’ tickets.
An offer can be subjected to terms and conditions. An offeror can decide to attach terms and conditions that guide his/her offer. He/she may even set modes of acceptance. It is upon the offeree to decide whether to accept these terms and conditions. In the case involving Parker vs. S.E. Rail Co., the plaintiff placed his bag in the cloakroom at the railway station without bothering to read the words see back’ on the face of the ticket (Tulsian 2000, p. 2.5). At the back of the ticket, the railway company had indicated that it can bear a liability for any luggage up $10. In the course of the journey, the plaintiff’s bag got lost. The plaintiff claimed that the genuine value of his bag amounted to $24. However, the plaintiff admitted that he knew the conditions printed at the back of his ticket, although he denied having read the conditions. The plaintiff could only recover $10 worth of his luggage since the railway company had issued sufficient information on terms and conditions of its offer.
The terms used in the offer should be definite, and not vague. An offer should identify the party to it, as well as the subject matter. No contract can bind if the terms that refer to an offer are vague or uncertain. It should also specify time and performance. In general, rules and courts are not responsible for correcting vague terms that parties indicate on the offer, since they capitalize on reasonableness in delivering their verdict.
An offer can result from any act that involves communication between the offeror and offeree. It may be communicated orally or through inference from a conduct. It is paramount to consider an offer that leads to legal consequence to avoid conflict of interest in the future. The terms used in reference to an offer should be definite, rather than vague. An invitation to a market an offer is not actually an offer since it may not indicate a period. The offeror has the capacity to subject hi/her offer to terms and conditions. Both parties should develop good communication to avoid misunderstandings.
Bharadwaj 2010, Study Package For Clat. New Delhi, Tata McGraw-Hill Education.
Chitty on Contracts vol. 1 vol. 1. (2012) London, Sweet & Maxwell Ltd.
Gillies, P 2004, Business law. Sydney, Federation Press.
Latimer, P. S 2011, Australian business law 2012. North Ryde, N.S.W., CCH Australia.
Sharma, A 2011, Business law. New Delhi, Vaibhav Printers.
Stone, R 2013, The Modern Law of Contract. New York, Routledge.
Tulsian 2006, Business Law For B.Com Hons. New Delhi, Tata McGraw-Hill Publishing Company.
What Is An Offer? 6