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Q. Distinguish between proposal and invitation to proposal. 

Section 2(a) says that when a person signifies to another, his willingness to do or to abstain from doing something with a view to obtaining the assent of that another to such act or abstinence, he is said to make a proposal. Thus, when an offer is made with such finality that the only thing remaining is the assent of the party to whom it is proposed, it is called a proposal.  If the offer does not reflect such finality, it is merely an invitation to proposals. Thus, when a person advertises that he has books to sell, it is only an invitation for proposals.

When a person, without expressing his final willingness, proposes certain terms on which he wishes to negotiate, he is merely making an invitation to proposals.
In the case of Harvy vs Facie 1893, plaintiff telegraphed, "Will you sell Bumper Hall pen? Send lowest price." Defendants responded with "Lowest price of Bumper Hall Pen, $900". Plaintiffs then sent, "we agree to buy bumper hall pen for $900". However, defendants refused to sell. It was held that defendants had not signified a final willingness to sell. They had only told the lowest price. This, it was only an invitation to proposal and not a proposal.

In the case of Pharmacutical Society of GB vs Boots Cash Chemists Ltd. 1952, it was held that display of goods is also an invitation to sell even if it is a self service shop.

MC Pherson vs Appanna 1951 - Proposal to buy property at 6000/- was replied with, " won't accept less than 10000". This was not considered a proposal but an invitation to proposal.

Auctions : Announcement to hold auction is not an offer. Highest bid is nothing more than an offer to buy.

Definiteness of proposal: "Cocks and Hens - 25s each" is not an offer to sell.

Q. Define contract. State essential elements of a valid contract.
Section 2(h) of Indian Contract Act 1972 - An agreement enforceable by law is a contract.
Def. by Anson - A contract consists in an actionable promise or promises.
Def. by  Sevigni - Contract is a combination of agreement and responsibility.
Def. by Pollock - An agreement or promise enforceable by law is contract.

Essential Elements
Section 10 - All agreements that are made by people competent to contract, with free consent, for a lawful object and lawful consideration and not expressly declared to be void are contracts.

Thus, we get the following elements -
  1. There must be two or more people involved.
  2. There must be an intention to contract. Balfour vs Balfour 1919 - Husband promised to send money to wife. Not a contract because there was no intention to contract.
  3. There must be an agreement to do or to abstain from doing something.
  4. The agreement must involve a lawful purpose, which means - agreement must not be against marriage, trade, legal proceedings, or it must not be a wagering agreement or must not be expressly prohibited by law.
  5. Agreement must not be uncertain
  6. Must not be impossible. Sec 56.
  7. Free consent - not vitiated by coercion, undue influence, fraud, or misrepresentation.
  8. Parties must be competent to contract.
  9. Lawful consideration.
  10. Lawful object.
  11. Legal formalities
  12. Must be enforceable by law, which means must not be immoral or against public policy.
Q. What is a general offer? How is a contract created through general offer? Refer to leading cases.
An offer may be made to the world at large. Such an offer is a general offer. However, a contract is not done with the whole world but only with the person who comes forward and accepts the offer. The acceptance might be express or implied.
As per Anson, "An offer need not be made to an asertained person, but no contract can arise until it is accepted by an ascertained person".

Case of Carllil vs Cabolic Smoke Ball Company.

Creation of the contract - If the person performs the conditions of the offer. Thus, a person who finds a lost dog fulfills the condition of the prize money and thus a contract with the owner of the dog is created.

General Offer of Continuing Nature - Some offers such as finding a lost object close when it is accepted by the first person. However, some offers, such as in the Carllil case, it can be accepted by any number of persons until the closing date of offer or until it is retracted.