B.A. LL.B. (Five Years) Sem 4 Contract I 2015 Dec Question Paper with Solutions

For full marks, cover: the definition of offer (proposal) in section 2(a) and the words that matter in it; offer made by words or by conduct (sections 3 and 9); then the rules of a valid offer, each with a decided case: it must aim at legal relations; its terms must be certain (Scammell v. Ouston, section 29); it must be a real offer and not an invitation (Fisher v. Bell); it may be made to one person or to the world (Carlill v. Carbolic Smoke Ball Co.); it must be communicated, and is accepted only with knowledge of it (section 4, Lalman Shukla v. Gauri Dutt); it may lay down the manner of acceptance but cannot turn silence into acceptance (section 7, Felthouse v. Bindley); special terms must be brought to notice (Parker v. South Eastern Railway); it lives only until it lapses or is revoked (sections 5 and 6, Ramsgate Victoria Hotel v. Montefiore, Dickinson v. Dodds); a table; a conclusion.

Rule 1: the offer must aim at legal relations

An offer must be made with the intention that, once accepted, it will bind in law. Social invitations and family arrangements usually lack that intention. An invitation to dinner is not an offer whose acceptance creates a contract. In commercial dealings, the intention is presumed.

Rule 2: the terms must be certain

Section 29 says: "Agreements, the meaning of which is not certain, or capable of being made certain, are void". An offer must therefore state its terms clearly enough for the court to enforce them.

Scammell and Nephew Ltd. v. Ouston, [1941] AC 251. The parties agreed on the purchase of a new van, with the balance of the price to be paid "on hire-purchase terms" over two years. Nothing more was fixed. The House of Lords held that there was no contract. Hire-purchase agreements came in many forms, and the court could not choose one for the parties. The case shows that vague terms leave nothing for an acceptance to bind.

Carlill v. Carbolic Smoke Ball Co., [1893] 1 QB 256. A company advertised that it would pay 100 pounds to anyone who caught influenza after using its smoke ball as directed. It deposited 1,000 pounds in a bank to show it was serious. Mrs Carlill used the ball and caught influenza. The Court of Appeal held that the advertisement was an offer to the whole world. She accepted it by doing what it asked, and she recovered the money.

Rule 5: the offer must be communicated

Section 4 says the communication of a proposal "is complete when it comes to the knowledge of the person to whom it is made". An offer can be accepted only by someone who knows of it.

Lalman Shukla v. Gauri Dutt, Allahabad High Court, 1913. Gauri Dutt's nephew went missing, and he sent his clerk, Lalman Shukla, to search. Meanwhile he issued handbills offering Rs 501 to the finder. Lalman traced the boy without knowing of the reward. The court held that he could not claim it. An act done in ignorance of the offer is not an acceptance.

Parker v. South Eastern Railway Co., (1877) 2 CPD 416. Parker left a bag at a railway cloakroom and received a ticket with "see back" on its face. The back excluded liability for articles worth more than ten pounds. He did not read it, and the bag was lost. The Court of Appeal held that a person is not freed from a term merely because he did not read it. But the party relying on it must show that reasonable notice was given. A new trial was ordered.

Rule 8: an offer lives only until it lapses or is revoked

Section 6 lists the ways a proposal ends. They are notice of revocation, and the lapse of the time fixed or of a reasonable time. A proposal also ends on failure of a condition precedent to acceptance. Finally, it ends on the proposer's death or insanity, if the acceptor learns of it before accepting. Section 5 allows revocation "at any time before the communication of its acceptance is complete as against the proposer, but not afterwards".

Ramsgate Victoria Hotel Co. v. Montefiore, (1866) LR 1 Ex 109. The defendant applied for shares in June 1864, and the company allotted them only in November. The court held that his offer had lapsed after a reasonable time, so he was not bound to take the shares.

Conclusion. An offer under section 2(a) is a signified willingness to do or abstain, made to obtain the other's assent and to be bound by it. It may be express or implied, and specific or general, as Carlill shows. It must be certain in its terms, as Scammell requires, and it must be a real offer, not an invitation like the window display in Fisher v. Bell. It works only when communicated, and cannot turn silence into acceptance or bind by unnoticed terms. It lasts only until it lapses or is revoked, as Ramsgate and Dickinson v. Dodds show.