Law and Tax

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  • Topic: Contract, Offer and acceptance, Invitation to treat
  • Pages : 8 (2723 words )
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  • Published : May 7, 2013
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Formation of Contracts

Introduction
An offer is the first step in the formation of a contract. It is something that creates a power of acceptance. It is a proposal made by one party to another to enter into a legally binding agreement with her. In Acme Grain Co. v. Wenaus, 1917, it was observed: ... To constitute a contract, there must be an offer by one person to another and an acceptance of that offer by the person to whom it is made. A mere statement of a person's intention, or a declaration of his willingness to enter into negotiations is not an offer and 

cannot be accepted so as to form a valid contract.

An offer is the manifestation of willingness to enter into a bargain, which justifies another person in understanding that her assent can conclude the bargain. It must be a clear, unequivocal and direct approach to another party to contract. A person is said to have made an offer, when she “signifies to another her willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence.” The person making the offer is known as the offeror, proposer, or promiser and the person to whom it is made is called the offeree or proposee. When the offeree accepts the offer, she is called the acceptor or promisee . The offeror or proposer expresses her willingness ‘to do’ or ‘abstain from doing’ something with a view to obtain acceptance of the other party to such act or abstinence. Thus, there may be ‘positive’ or ‘negative’ acts which the proposer is willing to do. 1.1 Mode of Making Offers

2 The offer must be intended to create, and be capable of creating, legal relations. 3 The terms of the offer must be definite, unambiguous and certain or capable of being made certain . 4 An offer must be distinguished from a mere declaration of intention or an invitation to offer or to treat. A mere statement of intention, made in the course of conversation, does not constitute a valid offer, even though acted upon by the party to whom it is made. 5 The offer must be communicated to the offeree. The communication of a offer is complete when it comes to the knowledge of the person to whom it is made. In Blair v. Western Mutual Benefit Association, 1972, it was held that a corporate resolution is not an offer unless efforts are made to communicate it. 6 The offer must not contain a term the non-compliance of which may be assumed to amount to acceptance. Thus, the offeror cannot say “if you don’t accept the offer within two days, the offer would be deemed to have been accepted”. 7 An offer may be made to a specific person or persons or it may be made to the public at large. In Carlill v Carbolic Smoke Ball Company, 1893, an advertisement was placed for 'smoke balls' to prevent influenza. The advertisement offered to pay £100 if anyone contracted influenza after using the ball. The company deposited £1,000 with the Alliance Bank to show their sincerity in the matter. The plaintiff bought one of the balls but contracted influenza. It was held that she was entitled to recover the £100. The Court of Appeal held that: (a) the deposit of money showed an intention to be bound, therefore the advertisement was an

An offer can be made by any act or omission of the party proposing by which she intends to communicate such proposal or which has the effect of communicating it to the other . Words, gestures, or actions can signal an offer to enter into a contract and an acceptance. If one is forced to make an offer it is not a valid offer. Offers remain open until: (i) accepted; (ii) rejected; (iii) retracted prior to acceptance; (iv) countered; or (v) expired by their own terms. An offer can be made by an act in the following ways: 1 WORDS (WHETHER WRITTEN OR ORAL)

The written offer can be made by letters, telegrams, telex messages, advertisements and e-mails. The oral offer can be made either in person or over telephone. 2 CONDUCT

The offer may be made by acts or signs so...
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