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Offer and Acceptance

/ˈɒfər ænd əkˈsɛptəns/

Contract Law Term

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Definition

Two essential elements of a valid contract. An offer (proposal) is a definite expression of willingness to be bound on specific terms, made with intention it shall become binding upon acceptance. Acceptance is the absolute and unconditional agreement to all terms. Under Sections 2(a) and 2(b) of the Indian Contract Act, 1872, acceptance must be communicated. A counter-offer rejects the original offer.

Examples

X offers to sell his car for Rs. 5 lakh. Y says 'I accept at Rs. 4.5 lakh.' This is a counter-offer — X's original offer is rejected and extinguished.

A shop displaying priced goods is an invitation to treat, not an offer. The customer picking up goods and presenting them makes the offer; the cashier's acceptance forms the contract.

Case Study

In Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas (1966), the Supreme Court held that a contract is concluded where acceptance is communicated to the offeror — not where the letter of acceptance is posted.

Key Cases

Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas

1966

AIR 1966 SC 543

Contract is concluded where acceptance is received by the offeror. Decided territorial jurisdiction issues in contract formation. Foundational Indian contract law authority.

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Also Known As

offer and acceptanceproposal and acceptance

Synonyms

proposal and acceptanceagreement formationcontract offermeeting of minds

Antonyms / Opposites

counter-offerrejectioninvitation to treat

Related Terms

considerationcontractIndian Contract Act 1872revocation of offercommunication of acceptance

Dictionary Entry

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