Proposal - Indian Contract Act, 1872
Proposal under Indian Contract Act, 1872
1. Definition of Proposal
Section 2(a) of the Indian Contract Act, 1872 defines Proposal (or Offer) as:
“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.”
In simple terms, a proposal is an expression of willingness by one party to enter into a contract on certain terms, inviting acceptance by another party.
2. Essentials of a Valid Proposal
To constitute a valid proposal, the following essentials must be satisfied:
| Essential | Explanation |
|---|---|
| Intention | The proposer must intend to create a legal obligation. |
| Definiteness | Terms of the proposal must be clear, certain, and definite. |
| Communication | The proposal must be communicated to the offeree. |
| Made to Specific Person(s) | A proposal can be general (to the world) or specific to an individual/group. |
| Willingness | There should be willingness to act or abstain on the terms. |
3. Types of Proposal
| Type | Explanation |
|---|---|
| Express Proposal | Clearly stated in words, written or oral. |
| Implied Proposal | Inferred from conduct or circumstances. |
| General Proposal | Made to the public or an indefinite group (e.g., reward cases). |
| Specific Proposal | Made to a particular person or group. |
4. Distinction Between Proposal and Invitation to Offer
An invitation to offer (or invitation to treat) is merely a preliminary communication inviting others to make offers.
Examples include advertisements, catalogs, price lists.
Proposal (Offer) is a definite promise and creates power of acceptance.
Case: Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953) 1 QB 401 (illustrates difference between offer and invitation to treat).
5. Communication of Proposal
Proposal must be communicated to the offeree to take effect.
A person cannot accept a proposal of which they are unaware.
Communication can be oral, written, or implied by conduct.
6. Revocation of Proposal
A proposal may be revoked any time before acceptance.
Revocation must be communicated to the offeree.
Once accepted, proposal becomes a binding contract.
7. Legal Effects
Once a proposal is accepted, it becomes a promise.
Both parties are legally bound to perform their obligations.
If acceptance is not communicated, no contract arises.
8. Case Law Illustrations
a) Carlill v. Carbolic Smoke Ball Co. (1893) 1 QB 256
A famous English case often cited in Indian courts.
The company made a general proposal offering a reward for anyone who used the product and still contracted influenza.
Court held it was a valid offer, and Mrs. Carlill’s acceptance created a contract.
b) Harvey v. Facey, AIR 1893 PC 1
Case illustrating the difference between a proposal and a mere statement of price.
The Privy Council held that a statement of minimum price was not an offer but an invitation to treat.
c) Lalman Shukla v. Gauri Dutt (1913) 40 ILR 371
The plaintiff acted on a general proposal (reward for information), but the court held there was no contract as he was unaware of the proposal at the time.
9. Summary Table
| Aspect | Description |
|---|---|
| Proposal | Expression of willingness to contract on specific terms. |
| Communication | Must be communicated to the offeree. |
| Revocation | Can be revoked before acceptance. |
| Result of Acceptance | Becomes a promise and forms a contract. |
| Types | Express, Implied, General, Specific. |
| Key Cases | Carlill v. Carbolic Smoke Ball, Harvey v. Facey, Lalman Shukla v. Gauri Dutt |
10. Conclusion
The proposal is the foundation of contract formation under the Indian Contract Act, 1872. It must be clear, communicated, and intended to create legal relations. The offeree’s acceptance converts the proposal into a binding contract. Understanding the nature and rules around proposals helps prevent disputes and ensures enforceable agreements.
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