Offer in Contract Law 

An offer is a proposal made by one person to another, showing a clear intention to form a legally binding agreement. It is the first step in making a contract. Without an offer, no contract can be created because an agreement requires both a proposal and its acceptance.

Contract law plays a crucial role in business transactions and daily interactions. Whether you are purchasing goods, hiring services, or signing a lease, contracts ensure that agreements are legally enforceable. Understanding the concept of an offer helps individuals and businesses avoid misunderstandings and disputes.

In this article, we will explain offers in contract law in detail, covering their features, types, and termination, with practical examples and legal case references.

What is an Offer?

An offer is when one person (the offeror) clearly states what they are willing to do, and another person (the offeree) can accept it to create a legally binding contract. The offeror must express their willingness in a way that the offeree understands that accepting it will result in a contract.

Key Features of an Offer:

• Clear Terms: The offer should be specific and not vague. It must include essential terms such as price, quantity, and parties involved.

• Communication: The offeror must tell the offeree about the offer. An unknown offer cannot be accepted.

• Legal Intention: The offer must show a serious intention to create a contract if accepted. Social agreements (such as inviting a friend to dinner) do not count as offers.

Example:

If Alice tells Bob, "I will sell you my phone for 200," this is an offer because it is clear, communicated, and shows intention to form a contract.

If Alice instead says, "I might sell my phone for 200 if I feel like it," this is not an offer because it is uncertain.

Types of Offers

There are different kinds of offers, depending on how they are made and to whom they are addressed.

1. Express Offer

• An offer that is made clearly in spoken or written words.

• Example: "I offer to sell my house for 50,000."

2. Implied Offer

• An offer that is not spoken or written but understood from the actions or circumstances.

• Example: A taxi driver stopping to pick up a passenger implies an offer to take them to their destination for a fare.

3. General Offer

• An offer made to the public at large, meaning anyone who meets the conditions can accept it.

• Example: Carlill v. Carbolic Smoke Ball Co. (1893) – A company advertised that they would pay 100 to anyone who used their medicine and still got sick. This was considered a valid offer to the public.

4. Specific Offer

• An offer made to a particular person or group.

• Example: "John, I will sell my laptop to you for 500."

5. Cross Offer

• When two parties make identical offers to each other at the same time, without knowing about the other offer.

• Example: A and B both write letters to each other offering to sell their cars for 10,000. This does not form a contract because neither has accepted the other’s offer.

6. Standing Offer

• An offer that remains open for acceptance over a period of time.

• Example: A company invites suppliers to provide materials at a fixed price for one year. This is a standing offer that can be accepted multiple times during the year.

Offer vs. Invitation to Treat

An invitation to treat is not an offer. It simply invites others to make an offer. The difference is that an offer can be accepted to form a contract, but an invitation to treat cannot.

• Examples of Invitations to Treat:

  • Price tags in stores (customers must make an offer to buy)

  • Display of goods on shelves (Pharmaceutical Society of Great Britain v. Boots Cash Chemists Ltd. (1953))

  • Auction listings (Payne v. Cave (1789)) – A bid at an auction is an offer, and the auctioneer can accept or reject it.

Case Study: Fisher v. Bell (1961)

In this case, a shopkeeper displayed a flick knife in his shop window with a price tag. He was charged with offering an illegal weapon for sale. However, the court ruled that displaying the knife was an invitation to treat, not an offer. This case highlights the distinction between an offer and an invitation to treat.

How an Offer Ends

An offer does not stay open forever. It can end in several ways:

1. Revocation

The offeror takes back the offer before it is accepted.

• Example: If Alice offers to sell her phone to Bob but withdraws the offer before he accepts, there is no contract.

• Case: Byrne & Co v. Van Tienhoven (1880) – An offer was revoked by letter, but the revocation was only effective when received, not when sent.

2. Rejection

If the offeree refuses the offer, it is terminated.

• Example: Bob tells Alice, "No, I don’t want your phone." Alice’s offer no longer exists.

3. Counteroffer

A new offer is made, which cancels the original offer.

• Example: If Alice offers to sell her phone for $200 and Bob says, "I’ll buy it for $150," the original offer is canceled. Now, Alice must decide whether to accept Bob’s counteroffer.

• Case: Hyde v. Wrench (1840) – A counteroffer destroys the original offer.

4. Lapse of Time

The offer expires if not accepted within a certain time.

• Example: If Alice’s offer is valid for 3 days and Bob tries to accept it after a week, it is too late.

5. Failure of a Condition

If the offer is conditional and the condition is not met, the offer ends.

• Example: Alice offers to sell her house if she gets a new job. If she does not get the job, the offer is no longer valid.

6. Death or Incapacity

If the offeror or offeree dies before acceptance, the offer usually ends.

• Example: If Alice offers to sell her car to Bob but dies before he accepts, the offer is no longer valid.

Conclusion

An offer is a fundamental part of contract law. It sets the foundation for forming a legally binding agreement. Understanding different types of offers and how they can be terminated helps individuals and businesses create valid contracts and avoid disputes.

By distinguishing an offer from an invitation to treat and knowing when an offer ends, people can make better legal decisions when entering agreements. Whether making a general offer to the public, negotiating business deals, or buying goods from a store, understanding offers is key to navigating contract law effectively.

Contract law is an evolving field, influenced by judicial interpretations and new business practices. Therefore, staying informed about contract principles and court decisions can help individuals and organizations protect their rights and ensure fair transactions.