August 06, 2016

As it is known under the English Law, formation of a contract is initiated, as and when an offer or proposal is made.While going through the definition of the term offer OR proposal, it could be read that, following are the essential elements of an offer or a proposal;

Intention to create legal relationship:Free volition or intention to create a legal relationship is an essential element in the formation of a contract. Without such an intention, no binding obligations can come into being. In other words, we can say that, an offer must be capable of creating legal relations.

Formation of a contract is initiated as and when a proposal is made. All such proposals must be certain, define and not vague. Thus it is very clear that, no contract will be formed, if the terms and conditions of the offer is vague, and uncertain.

Communication of the offer: In order to constitute a valid contract, there shall be a valid offer and such an offer shall be properly communicated to the other party, from whom the promisor seeking any favour. By virtue of Section 4 of the Indian Contract Act, 1872 the communication of an offer is completed, as and when it comes to the knowledge of the person to whom it is made.

An offer must be made with an intention of obtaining the assent of the other party to whom the offer is made. Though an offer may be conditional, the same has to be accepted subjected to the said conditions, only then such an acceptance will constitute a valid contract.

However, it may be noted that, an invitation to offer or an invitation to treat is not an offer. For e.g. Notice for tenders, Notice inviting to participate in an auction etc.


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