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CHARACTERISTICS OF PROPOSAL IN CONTRACT

Proposal in a Contract - Priyal Jain

WILL YOU MARRY ME?

Is this a valid proposal? So the first question that comes to anyone’s mind is what makes a proposal valid, right? There are some of the essentials or characteristics of the proposal which make your proposal valid in a contract. Now, what is a contract? A contract is not merely a set of promises or agreements you make in daily life but it consists of mainly three components which encompass it as a valid contract. For constructing a valid contract we need two or more persons who are willing to enter into an agreement and for an agreement to become a contract there must be an offer by one person (offeror) and acceptance by the other (offeree). Thus, the first and foremost requirement for a valid contract is the proposal that is an expression of willingness to contract made with the intention that it shall be binding on the person as soon as the offer gets accepted and pay or promise to pay the consideration of the proposal.

There are some of the following characteristics of the proposal which it has to follow to become a valid offer in a contract:

1) PROPOSAL MUST BE CERTAIN AND DEFINITE, AND NOT VAGUE
  • To constitute a valid proposal, it should contain all the terms and conditions which can’t be easily inferred by the other party and all the essentials related to the offer, so that it can be ascertained to the extent what the proposer is proposing or promising. A proposal, too vague can’t be a valid offer if the other party whom the proposer is proposing can’t able to infer the specific terms and conditions and the subject matter relating to the offer. It should specifically convey the subject matter and specific terms and conditions in a reasonable degree of certainty.

Illustration – Suppose X telegram Y and offered him to buy the horse at Rs. 50000. Y replied that he accepts his offer and ready to buy the black horse at Rs. 50000. The colour of the car is not mentioned by X but Y interpreted it in a different sense and inferred that X is selling his black horse. Thus, this is not a valid proposal because the essential element of the colour of the horse is missing and it should be mentioned in the offer to constitute the valid offer.

  • A proposal can also be called certain when certain terms if not mentioned specifically but are implied and it could be interpreted by both parties in the same sense and that specific term could be easily inferred by the other party.

Illustration– X merchant deals in supplying iron (household appliance used for ironing the clothes) and everyone knows of it. X offers Y to buy the iron at Rs.500 and Y accepts it. In an instant case, though X didn’t mention the nature of iron he is dealing with, it implies that Y ordered the same iron that X is dealing which could be easily inferred by the situations as X only deals with iron, the household appliance, and not a mineral.

2) PROPOSAL MUST BE DIRECTED TO SOMEONE TO WHOM THE PROPOSAL IS PROPOSING?

Any offer to be a valid offer must be directed towards someone. It could be a specific proposal or a general proposal. The Specific proposal referred to the proposal directed towards a specific person (in personam) and General Proposal refers to the proposal directed towards the world or general public at large (in rem).

Illustration – A give advertisement in the newspaper that anybody who finds my dog will get Rs 10000 as prize money. It is the general proposal because it is offered to the general public at large.

X offers to sell a red car to Y for Rs. 1 lakh. It is a specific proposal because X is specifically offered to Y.

3) PROPOSAL MUST BE COMMUNICATED

A proposal is made complete only when it has been communicated to the person to whom it was made to. It could be expressed or implied. Expressed offers are offers where the offeror is explicitly saying or in writing told you all the things related to the offer while implied offers are by the conduct of the offeror.

Illustration – A offers to sell his bike to B for Rs 70000. This is expressed offer because it is offered by words. Now implied offer could be in this form- A get into the rickshaw to travel, then he is bound to pay him the fare at the end of his trip. In the instant case, A by his actions of getting into the rickshaw shows implied acceptance.

4) PROPOSAL MUST BE MADE WITH AN INTENTION TO CREATE A LEGALLY BINDING CONTRACT OR RELATIONSHIP

To constitute a valid proposal, it must be made with an intention to create a legally binding contract that could be enforced by law. Thus, all arrangements and agreements between parties though appearing to be in the mould of an agreement do not become contracts merely by performance but it has to be made with a legal intention.

Illustration– i) This is the case by name Balfour v. Balfour[1]. In this case, the husband and wife went to England but later husband returned alone and the wife stays in England because of some health issues. The husband promised to send 30 pounds every month to the wife as maintenance but failed to keep up with the promise when the marriage broke out. The wife sued the husband for breach of contract. It was held that the agreement made between husband and wife is not a contract because here parties didn’t intend to enter into a legally binding relationship.

  1. ii) This is the case by the name Merritt v. Merritt[2]. In this case, the husband left his wife and they met to make arrangements for the future. The husband agreed to pay 40 pounds per month maintenance out of which the wife would able to pay the mortgage. When the mortgage was paid off totally, he would transfer the house from joint names to his wife’s name. They signed the paper but the husband later refused to transfer the house. The wife sued the husband. The question is whether there is a legally binding contract?

It was held that when the agreement was made the husband and wife get separated, therefore they must have intended to create a legally binding contract which could be evidenced through writing. Thus, the contract is valid and the husband is liable to transfer the house to his wife’s name.

5) OFFER SHOULD NOT CONTAIN A NEGATIVE TERM

The offer should contain a term, the non-compliance of which does not constitute an offer. Thus it cannot be said that if you didn’t reply to my offer for a particular period, it would amount to acceptance.

 Illustration – A offers to sell his book to Y for 700/- and mentions that if the offer is not accepted by Friday, it will automatically amount to acceptance on Y’s behalf. This is not a valid offer as the offer contains a negative term.

6) THE SPECIAL TERMS AND CONDITIONS OF THE PROPOSAL MUST BE COMMUNICATED SPECIFICALLY

If the offer contains the terms and conditions which are not usually expected by anyone then that specific terms and conditions must be specifically communicated to the offeree. If it did not bring to the notice of the offeree then the offeree is not binding to that contract.

Illustration – i) This is the case of Henderson V. Peterson[3]. In this case, the plaintiff bought a steamer ticket on the front it is written Dublin to White heaven and on the back condition excluding the liability of the company for any loss or injury. The plaintiff didn’t see the terms and his luggage got lost by the fault of the company’s servants. He sued the company. It was held that mere notice without passenger’s assent will not discharge the very essence of duty of the company and it should be specifically communicated to the plaintiff. Also, a ticket, in reality, is nothing more than a receipt of payment, thus the company is liable.

Coming back to the question from where we start “Will you marry me?” Is it a valid proposal? No, because any offer to be valid, has to be made with the intention to create a legally binding contract. In the instant case, the offer is not made with an intention to create a legally binding contract but merely a promise that can’t be enforced by law.

Author(s) Name: Priyal Jain (Institute of Law, Nirma University)

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[1] Balfour v Balfour [1919] 2 KB 571

[2] Merritt v Merritt [1970] 2 All ER 760

[3] Henderson v. Peterson, C 07-2838 SBA (N.D. Cal. Feb. 28, 2012)

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