Indian Contract Act, 1872 - Nature, Offer, Acceptance and Consideration
What the exam tests
This domain tests how a promise becomes an enforceable contract under the Indian Contract Act, 1872. Expect fact patterns on invitation to offer, communication of offer and acceptance, revocation, and whether consideration exists.
Core rules
- Section 2(a): a proposal is made when one person signifies willingness to do or abstain from doing something with a view to obtaining assent. It must be communicated (s 4) and be definite.
- A catalogue, price list, tender notice or advertisement is generally an invitation to offer; the customer's order is the offer.
- Section 2(b): acceptance must be absolute and unqualified, communicated by the offeree, in the prescribed or reasonable mode. Silence is not acceptance unless the offeror dispenses with communication or conduct implies it.
- Consideration (s 2(d)) must be at the promisor's desire; it may be past, present or future and may move from a third party. It need not be adequate, but must be real and lawful. Privity has recognised exceptions such as trust, family arrangement and acknowledgment.
Worked example
A displays a car with a price tag. B says, “I accept; deliver it.” There is no contract. The display is an invitation to offer; B's statement is the offer, which A may accept or reject. If A had instead written to B, “I offer to sell my car for ₹5 lakh, acceptance by email by Friday,” B's email before Friday completes the contract.
Traps
- Treating a quotation or display as an offer.
- Accepting an offer after revocation or before knowledge of it.
- Saying consideration is invalid because it is inadequate.
- Ignoring the mode of acceptance and late acceptance.