Offer, invitation to offer and tenders

1. Proposal: section 2(a)

When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. The Act uses “proposal”; the English cases say “offer”. The two elements are (i) an expression of willingness to do or abstain, and (ii) the purpose of obtaining the other’s assent. A mere statement of willingness without that purpose is not a proposal. Section 3 adds that a proposal may be communicated by any act or omission by which the proposer intends to communicate it, so an offer can be express or implied (s.9).

2. Rules of a valid offer

• It must intend legal relations. A social invitation is not an offer (Balfour v. Balfour, 1919).
• Its terms must be certain, or capable of being made certain (s.29). An offer to sell “some oil” is too vague.
• It must be communicated to the offeree. Under s.4 communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. A person who acts in ignorance of an offer cannot accept it: Lalman Shukla v. Gauri Dutt (Allahabad High Court, 1913).
• It must be distinguished from an invitation to offer and from a mere statement of intention or a supply of information.
• It may be specific or general. A specific offer is made to an ascertained person and only he can accept. A general offer is made to the world at large and anyone who performs the conditions accepts it (s.8).
• It may be conditional, but it cannot say that silence will amount to acceptance: Felthouse v. Bindley (1862).
• A statement of price is not by itself an offer: Harvey v. Facey.

3. General offer: Carlill v. Carbolic Smoke Ball Co. (1893)

The company advertised that it would pay £100 to anyone who caught influenza after using its smoke ball three times daily for two weeks, and that it had deposited £1,000 with the Alliance Bank to show its sincerity. Mrs Carlill used the ball as directed and caught influenza. The Court of Appeal held the company liable. The advertisement was an offer to the world, not mere puffery (the deposit showed serious intent); it was accepted by anyone who performed the conditions; and the offeror had, by the nature of the offer, dispensed with notice of acceptance. Section 8 of the Act states the same rule: performance of the conditions of a proposal is an acceptance. The Indian counterpart on reward offers is Lalman Shukla, which adds that the performer must know of the offer.

4. Invitation to offer (invitation to treat)

An invitation to offer is a statement made to induce others to make offers. The person who issues it keeps the final word.

• Goods displayed in a self-service shop. In Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953, Court of Appeal), the question was whether the sale of certain poisons took place at the shelf or at the cash desk, where a pharmacist supervised. The Court held that the display was an invitation to offer; the customer makes the offer by taking goods to the counter, and the cashier accepts. The sale was therefore under a pharmacist’s supervision. Goods in a shop window are the same: Fisher v. Bell (1961), where a flick knife displayed with a price tag was held not to be “offered for sale”.
• Price quotations. In Harvey v. Facey (1893, Privy Council) the plaintiffs telegraphed: “Will you sell us Bumper Hall Pen? Telegraph lowest cash price.” The reply was “Lowest price for Bumper Hall Pen £900.” The plaintiffs telegraphed that they agreed to buy at £900. Held, no contract: the reply answered only the question about price and was information, not an offer. The plaintiffs’ last telegram was itself an offer, never accepted.
• Advertisements, catalogues and price lists are ordinarily invitations, since a seller cannot be taken to promise to supply everyone who replies regardless of stock. Reward advertisements like Carlill are the exception, because they can be accepted only by performance.
• Auctions. The auctioneer’s call for bids is an invitation; each bid is an offer; the fall of the hammer is acceptance. Section 64 of the Sale of Goods Act, 1930 codifies this: the sale is complete when the auctioneer announces its completion by the fall of the hammer, and until then any bidder may retract his bid (Payne v. Cave, 1789). An advertisement that an auction will be held is not an offer to hold it: Harris v. Nickerson (1873).
• Prospectus, railway timetable, notice inviting tenders: all invitations.

5. Cross offers

Where two parties make identical offers to each other in ignorance of each other’s offer, the offers cross in the post. There is no contract, because neither offer has been accepted: an offer cannot be accepted by someone who does not know of it. Tinn v. Hoffman (1873). One of the parties must accept the other’s offer before a contract arises.

6. Tenders

A notice inviting tenders is an invitation to offer. Each tender submitted is an offer, and the inviting party may accept any of them or none. Two kinds must be distinguished:

• Specific (definite) tender: for a fixed quantity to be supplied at a fixed time. Acceptance of the tender concludes the contract for that quantity.
• Standing offer: to supply goods as and when ordered, up to an estimated quantity, over a period. Acceptance of the tender does not create a contract for the whole. Each order placed is a separate acceptance creating a separate contract. In Great Northern Railway v. Witham (1873), Witham tendered to supply stores as required for a year. He was held bound to supply the orders actually placed, but he could revoke the standing offer for the future, and the railway was not bound to order anything.

7. Problem

A walks into a supermarket, picks a packet of chips priced Rs 50 off the shelf and takes it to the billing counter. The cashier refuses to bill it. A claims the store is bound to sell. Is he right?

Issue. Whether the display of goods with a price on a supermarket shelf is an offer, so that A accepted by picking the packet up, or an invitation to offer.

Law. A proposal under s.2(a) requires willingness to be bound on assent. Goods displayed in a self-service shop are only an invitation to offer: Pharmaceutical Society v. Boots (1953); Fisher v. Bell (1961). The customer makes the offer at the counter; the contract arises only when the cashier accepts.

Application. By picking the packet off the shelf A did not accept anything; he was preparing to make an offer. When he presented it at the counter he made an offer to buy at Rs 50. The cashier, on behalf of the store, refused it. An offer that is refused creates no contract.

Conclusion. No contract was formed, and the store is not bound to sell. A has no claim in contract. (Whether a refusal on discriminatory grounds raises some other legal issue, such as under consumer protection law, is a different question from formation of contract.)

How this is examined

As an essay: “Define offer. State the rules regarding a valid offer” (set in January 2026), or “Distinguish between an offer and an invitation to offer.” Give s.2(a), the rules with a case each, and a short paragraph on Carlill. As short notes: general offer, cross offers, standing offer/tenders. The supermarket chips problem has been set and is answered as above; the auction variant (bid withdrawn before the hammer falls) is answered with s.64 of the Sale of Goods Act.