Page 1 of 22

B.B.A.LL.B , (Integrated Law degree course)

Law Of Contract- I (II Semester)

PROJECT TOPIC
Project Submission as the Tender, Types; Offer and Acceptance

Submission To: Miss. Ayesha Mukherjee

Submitted By: Mohit Sharma

(Faculty of Taxation Law)

Roll no:-L/1552

Designation: Assistant/ Associate Professor

Session:2015-2016
Semester- II

Raffles University
School of Law

Page 2 of 22

TABLE OF CONTENTS

Page No.
1
2
3
4

Acknowledgment.........................................................................................
Research Methodology................................................................................
Case list........................................................................................................
Abstract........................................................................................................

5
6
7
8
9
10
11
12
13
14
15
16

Tender and its types......................................................................................

Format of an ideal tender notice...................................................................
Procedure for inviting tender.........................................................................
Difference between Tender and Contract.....................................................
Acceptance and withdrawl of tenders and bid..............................................
Offer and Acceptance (Introduction).............................................................
Difference b/w General and Specific Offer.....................................................
Difference Between Offer And Invitation To Treat...............................................
What is acceptance?..........................................................................................
Legal rules regarding acceptance.......................................................................
Conclusion...........................................................................................................
Bibliography...........................................................................................................

Page 3 of 22

ACKNOWLEDGEMENT

I take this opportunity to express our humble gratitude and personal regards to
Ms./Dr.Ayesha Mukherjeefor inspiring me and guiding me during the course of this project work
and also for his cooperation and guidance from time to time during the course of this project
work on the topic.

Neemrana
Date of Submission:

Name of Student:
Mohit Sharma

Page 4 of 22

RESEARCH METHODOLOGY
Aims and Objectives:
The aim of the project is to present a detailed study of the topic Tender, Types; Offer &
Acceptanceforming a concrete informative capsule of the same with an insight into its
relevance in the Indian market.
Research Plan
The researchers have followed Doctrinal method.
Scope and Limitations:
In this project the researcher has tried to include different aspects pertaining to the
concept of Tender, its types; offer and acceptance, special attention is also provided on section
2(a) and 2(b), basis of Offer & Acceptance, legal rules regarding offer & acceptance, and lastly
conclusion.
.
Sources of Data:
The following secondary sources of data have been used in the project

Case Study

Websites

Case Laws

Books
Method of Writing and Mode of Citation:
The method of writing followed in the course of this research project is primarily
analytical. The researcher has followed Uniform method of citation throughout the course of this
research project.

Page 5 of 22

CASE LIST

Bengal Coal Co. Ltd. V. Homee Wadia & Co.

Carlill v Carbolic Smoke Ball Co.
Lalman Shukla V. Gauri Dutt
Pharmaceutical Society of Great Britain v Boots
Harvey v Facey
Adams v Lindsell
Hyde v Wrench
Brogden v Metropolitan Railway Co.
Paul Felthouse v Bindley
Powell v Lee (1908)
Countess of Dunmore V. Alexander

Page 6 of 22

ABSTRACT
This project aims at studying the concept of Tender, its types; offer & acceptance and
critically analyzing it. It deals with the application of the provision of the Indian Contract
Act, 1872 regarding procedure of tender, offer and acceptance.The motion that contracts
require an offer and an acceptance is one of the last remaining bastions of classical contract
law. On reflection, it is striking how poorly the offer-and-acceptance paradigm fits large
areas of contracting practice; it is simply untrue that all or even most contracts are formed by
means of a salient or even recognizable offer followed by a similarly salient acceptance.
Instead, contracts are formed in different ways as suit the different circumstances of
contracting parties. For example, the parties might contemporaneously sign a common
document, shake hands, use a series of escalatingly certain verbal cues to indicate that they
believe themselves to be bound, or allow for a third party or computer technology to match
them firmly with one another. Moreover, even in cases that may fit factually into the classical
offer-and-acceptance paradigm, the model tends to obscure the substantive and interpretive
questions

that

underlie

contract

formation.

The problem is not necessarily debilitating. Perhaps surprisingly, doing away with the
paradigm and terminology of offer and acceptance would not, on its own, amount to a
radical change to modern contract law. Nonetheless, there are several reasons to highlight the
weakness of the offer-and-acceptance paradigm. Most directly, highlighting the weakness of
the model may discourage courts and commentators from extending it beyond the cases to
which it is most directly applicable; stretching the paradigm in this way invites at best
awkwardness and at worst poor decisions. Similarly, brushing away the offer-and-acceptance
paradigm can highlight useful modes of contract formation that have not received sufficient
attention or study.

Page 7 of 22

Tender:
It is an invitation from the owner to the contractor to execute some work at specified cost or in
specified time. It is published in the form of tender notice in newspapers , notice boards, gussets,
etc. according to the cost of works.
an offer to contractor to do the work for a certain amount of money
incorporate time and other conditions required
to carry out the contract requirements
main reason is to complete a project
The tender which is submitted by the contractor is generally based on a bill of quantities
& specifications of the statement of work.

Classification of tenders:
1. Open tender: An oral talk or written document between the engineer and the contractor
for certain small jobs to be performed. Sometimes it is advertised.

It is an bidding process that is open to all qualified bidders.

Tender usually published in the newspaper and internet.
It is chosen on the basis of price and quality.
This is most effective way of obtaining many competitive rates.

Open tender Advantages

Any contractor can tender their work.

No favoritism occurred.
Maximum competition.
No commitment to tender, all tender received will be genuine.

Open tender - Disadvantages

Client must bear expensive cost of tendering.
The wrong contractor may be chosen because they are from unknown background.
Time consuming.

2. Sealed tender: Invited for important or huge projects; wide publicity s given; always
written documents are made.

3. Limited tender: Only a selected no. of contractors are invited to quote their rates.

Page 8 of 22

4. Single tender: Invitation is given to only one firm to render a service by quoting their
rates. If the quoted rates are high, it will be negotiated prior to the agrrement of the contract.

5. Rate contract: Usually adopted for supply of materials, machine, tools & plant etc. (items
to the store) . It specifies the supply at a fixed rate during the period of contract. The quantities
are not mentioned in type of contract and the contractor is bound to accept any order which
would be placed before him.

TENDER SYSTEM:
The process of finalization of contracts is achieved through the tender process.

Advantages of the Tender process

Most effective method of locking competitive rates.
New technologies and options are received through open tender process.

TENDER NOTICE:
The Tender Notice is a brief description of the job being tendered.
To be published in Newspapers and on the Internet.
The Internet is a very cost effective way of publishing the tenders.

Format of an ideal tender notice:

1. Name of the Project.
2. Name & Address of the Company offering the tender.
3. Name of work, materials or services.
4. Place of work location.
5. Approximate estimated cost of work.
6. Earnest Money.
7. Period of completion.
8. Date on which the Tender Document sale commences.
9. Date and time up to which tender documents can be obtained.
10. The cost of tender documents.
11. Due date of submission.

Page 9 of 22

12. Eligibility Criteria.

Procedure for inviting tender:

Preparation of tender documents

Issue of notice inviting tender or tender call notice
Submission and opening of tenders and their scrutiny
Acceptance of tender and award of contract

Information to be given in a tender notice:

Name of the department inviting tender

Name of work and location
Designation of officer inviting tender
Last date and time of receipt of tender
Period of availability of tender document
Cost of tender document
Time of completion and type of contract
Earnest money Deposit to be paid
Date, time and place of opening the tender
Designation of the officer opening the tender

Difference between Tender & Contract:

TENDER

The term tender

formally means an
invitation to trade under
the terms of offer.
The main reason of
tender is to complete a
project.

Acceptance and withdrawl of tenders and bids:

CONTRACT

A contract is the term

used as an exchange of
promises between two or
more parties to do, or
refrain from doing, an act
which is enforceable in a
court of law.

Page 10 of 22

A tender is in the same category as a quotation of prices. It is not an offer. When a tender is
approved, it is converted into a standing offer. A contract arises only when an order is placed on
the basis of tender. These principles were laid down by the Bombay High Court in the well
known case of :

Bengal Coal Co. Ltd. V. Homee Wadia & Co.

A agreed in writing to supply coal to B at certain prices and up to a stated quantity, or in any
quantity which may be required for a period of twelve months, is not a contract unless B binds
himself to take some certain quantity, but a mere continuing offer which may be accepted by B
from time to time by ordering goods upon the terms of the offer. In such a case, each order given
by B is an acceptance of the offer and A can withdraw the offer, or, to use the phraseology of the
Act revoke the proposal, at any time before its acceptance by an order from B. Such a transaction
may be reduced to a statement by the intending vendor in this form If you will send me orders
for coal, I shall supply it to you for a period of twelve months at a particular rate. This is merely
a proposal from A to B. If in reply to such a proposal, B says to A I agree, it does not constitute
an acceptance of the proposal. An acceptance can take place only by B sending an order to A.

Important note:
For a CONTRACT to be valid, there must be an offer from the owner in the form of tender
notice to get some specified work to be executed and there must be an acceptance from the
contractor to execute the work, both the offer and the acceptance must be definite and legal.

Offer and Acceptance:

Page 11 of 22

What is an offer?
An offer is a statement of the terms which the client (the offeror) is prepared to be contractually
bound. The offer must be complete, specific and capable of being accepted. It must include the
fundamental terms of the agreement with the intention that no further negotiations are to take
place. Client offer contractor the work and therefore the contractor must carry out the work under
the clients terms and conditions. It is possible to make a conditional offer. The effect of this is
that an offer cannot be accepted if the condition has not been satisfied.
For example, the client requires the contractor to have a specific tool or machine before an offer
can be made.

General offer and Specific offer

GENERAL OFFER

General offer made to

the whole world at large.

General offer can be

accepted by any person
having notice of the
offer by doing what is
required under the offer.

SPECIFIC OFFER

Specific offer made to

some specific person.

Specific offer can be

accepted only by person

Case Law:

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Court of Appeal

A Newspaper advert placed by the defendant stated:100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the
influenza after having used the ball three times daily for two weeks according to the printed
directions supplied with each ball...
1000 is deposited with the Alliance Bank, shewing our sincerity in the matter."
Mrs Carlill purchased some smoke balls and used them according to the directions and caught
flu. She sought to claim the stated 100 reward.

Page 12 of 22

The defendant raised the following arguments to demonstrate the advertisement was a mere
invitation to treat rather than an offer:
1. The advert was a sales puff and lacked intent to be an offer.
2. It is not possible to make an offer to the world.
3. There was no notification of acceptance.
4. The wording was too vague to constitute an offer since there was no stated time limit as to
catching the flu.
5. There was no consideration provided since the 'offer' did not specify that the user of the balls
must have purchased them.
Held:
The Court of Appeal held that Mrs Carlill was entitled to the reward as the advert constituted an
offer of a unilateral contract which she had accepted by performing the conditions stated in the
offer. The court rejected all the arguments put forward by the defendants for the following
reasons:
1. The statement referring to the deposit of 1,000 demonstrated intent and therefore it was not a
mere sales puff.
2. It is quite possible to make an offer to the world.
3. In unilateral contracts there is no requirement that the offeree communicates an intention to
accept, since acceptance is through full performance.
4. Whilst there may be some ambiguity in the wording this was capable of being resolved by
applying a reasonable time limit or confining it to only those who caught flu whilst still using the
balls.
5. The defendants would have value in people using the balls even if they had not been
purchased by them directly.

Proposal or Offer :
A proposal and its acceptance is the universally acknowledged process for the making of an
agreement. The proposal is the starting point. Section 2(a), defines proposal as follows:

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.

Page 13 of 22

Termination of offer:
An offer may be terminated or revoked if:
The offer is withdrawn or revoked at any time prior to acceptance provided there has
been communication between the client and the contractor;
The client making the offer dies;
Failure of a condition;
A reasonable period of time has elapsed a time limit is specific on the offer made.

Legal rules regarding valid offer:

An offer may be express or implied
It should give rise to legal consequences and be capable of creating legal relations
The term of the offer must be certain
An offer can be made subject to any terms and conditions
It should be made with a intent to obtain the assent of the other party
An offer should not certain a term the non compliance of which would amount to
acceptance
Two identical cross offers do not make a contract
An invitation of offer is not an offer

Communication, acceptance and revocation of proposals:

It is defined in Section 3, of the Indian Contract Act,1872 that the communication of
proposal the acceptance of proposal and the revocation of proposals and acceptance
respectively, are deemed to be made by any act or omission of the party proposing, accepting
or revoking, by which he intends to communicated such proposals, acceptance or revocation,
or by which has the effect of communicating it.

For Example: It can be done by words of mouth, or by writing, or even by conduct.

Implied Proposals:
An offer which is expressed by conduct is called an implied offer.
For Example: A bid at an auction is an implied offer to buy. Similarly, steeping into an
omni bus and consuming eatables at a self-service restaurant, both creates implied promise to
pay for the benefits enjoyed.
An offer which is expressed by words, written or spoken is called an express offer.

Communication when complete:

It is defined in Section 4, of the Indian Contract Act, 1872 that the communication
of a proposal is complete when it comes to the knowledge of the person to whom
it is made.

Page 14 of 22

The communication of an acceptance is complete, as against the proposer, when

it is put in a course of transmission to him so as to be out of the power of the
acceptor, as against the acceptor, when it comes to the knowledge of the proposer.
Illustrations:
a) A proposes, by letter, to sell a house to B at a certain price.
The communication of the proposal is complete when B receives the letter.
b) B accepts As proposal by a letter sent by post.
The communication of the acceptance is complete, as against A when the letter is
posted, as against B, when the letter is received by A.
c) A revokes his proposal by telegram.
The revocation is complete as against A when the telegram is dispatched. Is is
complete as against B when B receives it.
B revokes his acceptance by telegram. Bs revocation is complete as against B
when the telegram is dispatched, and as against A when it reaches him.
Case Laws:
Lalman Shukla V. Gauri Dutt:
The facts of this case is like that the defendants nephew absconded from home. He
sent his servant in search of the boy. When the servant had left, the defendant by
hand bills offered to pay Rs 501 to anybody discovering the boy. The servant came
to know of this offer only when he had already traced the missing child. He,
however, brought an action to recover the reward. But his action failed. The court
said that Lalman Shukla was unaware of the announcement of the reward, Lalman
Shukla located the, the missing nephew and brought back. It was said that Lalman
Shukla has no right in the reward because he has no knowledge of the proposal.
Hence, an action without the knowledge of the proposal is no acceptance.
Invitation To Treat:
An invitation to treat is different to an offer as it only invites the party to make an offer and it is
not intended to be binding. The contractors are invited to bid on the job, by calculating the total
work cost and to have the tenders submitted in a specified time. The main difference between
this situation and an auction is that person submitted the tender, does so in ignorance of others
bids because the final decision is up to the client.

Page 15 of 22

For example, Display of goods by a shopkeeper in his window, with prices

marked on them, is not an offer but merely an invitation to the public to make an
offer to buy the goods at the marked prices.
Case Law:
Pharmaceutical Society of Great Britain v Boots:
Boots introduced the then new self- service system into their shops whereby customers would
pick up goods from the shelf put them in their basket and then take them to the cash till to pay.
The Pharmaceutical Society of Great Britain brought an action to determine the legality of the
system with regard to the sale of pharmaceutical products which were required by law to be sold
in the presence of a pharmacist. The court thus needed to determine where the contract came into
existence.

Held:
Goods on the shelf constitute an invitation to treat not an offer. A customer takes the goods to the
till and makes an offer to purchase. The shop assistant then chooses whether to accept the offer.
The contract is therefore concluded at the till in the presence of a pharmacist.

Harvey v Facey:
Harvey sent a Telegram to Facey which stated: "Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid;"
Facey replied by telegram:"Lowest price for Bumper Hall Pen 900."
Harvey then replied:"We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please
send us your title deed in order that we may get early possession."

Held:
The Privy Council held that there was no contract concluded between the parties. Facey had not
directly answered the first question as to whether they would sell and the lowest price stated was
merely responding to a request for information not an offer. There was thus no evidence of
an intention that the telegram sent by Facey was to be an offer.

Page 16 of 22

Essential of offer:

It must be an expression of the willingness to do or to abstain from doing something

It must be made to another person
It should be done with a objective to obtain the assent of the other person
The objective of offer should be legal one

Lapses and Revocation of offer:

An offer lapses after stipulated or reasonable time

An offer lapses by not being accepted in the mode prescribed
An offer lapses by rejection
An offer lapses by the death or the insanity of the offeror or the offeree before acceptance
An offer lapses by revocation before acceptance
An offer lapses by subsequent illegality or destruction of subject matter

Time of revocation of offer and acceptance:

Revocation of offer (section 5)A proposal may be revoked at any time before the communication of its acceptance is
complete as against the proposer but not afterwards.

Revocation of acceptance (section 5)An acceptance may be revoked at any time before the communication of the acceptance
is complete as against the acceptor, but not afterwards.

Adams v Lindsell:
The defendant wrote to the claimant offering to sell them some wool and asking for a reply 'in
the course of post'. The letter was delayed in the post. On receiving the letter the claimant posted
a letter of acceptance the same day. However, due to the delay the defendant's had assumed the
claimant was not interested in the wool and sold it on to a third party. The claimant sued for
breach of contract.

Held:
There was a valid contract which came in to existence the moment the letter of acceptance was
placed in the post box.
This case established the postal rule. This applies where post is the agreed form of
communication between the parties and the letter of acceptance is correctly addressed and carries
the right postage stamp. The acceptance then becomes effective when the letter is posted.

Page 17 of 22

Counter offer:
A counter offer is where an offeree responds to an offer by making an offer on different terms.
This has the affect of destroying the original offer so that it is no longer open for the offeree to
accept.

Case Laws:
Hyde v Wrench:
The defendant offered to sell a farm to the claimant for 1,000. The claimant in reply offered
950 which the defendant refused. The claimant then sought to accept the original offer of
1,000. The defendant refused to sell to the claimant and the claimant brought an action for
specific performance.

Held:
There was no contract. Where a counter offer is made this destroys the original offer so that it is
no longer open to the offeree to accept.

Difference Between Offer And Invitation To Treat:

An invitation to treat is when a client invites contractors to make him/her an offer. For example,
when the client advertises a job on internet or newspaper, it is usually an invitation to treat rather than
an offer. The offer only comes into existence after the client reviews the tenders handed in by the
contractors and accept the offer.
An offer on the other hand is when the client offers the job to one contractor without advertising the
job or having contractors to submit in the tender.
Making an invitation to treat, rather than an offer, protects the client from finding him/her self agreed
into a contract he/she cannot fulfil. Instead the client can refuse the contractors offer for many
different reasons.
This can be a very important protection for the client making the offer if the advertisement for the job
offers at long distance: for example, through the internet or newspaper. Always ensure that any
website, advertisement etc make it clear that it is only an invitation to treat, not an offer.

Page 18 of 22

ACCEPTANCE
What is an Acceptance:
Once valid acceptance takes place a binding contract is formed. It is therefore important to know
what constitutes a valid acceptance in order to establish if the parties are bound by the
agreement. There are three main rules relating to acceptance:
1. The acceptance must be communicated to the offeree.
2. The terms of the acceptance must exactly match the terms of the offer.
3. The agreement must be certain.

Section 2(b), states that when the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A proposal, when accepted becomes a promise.

Legal rules regarding acceptance:

Acceptance must be given only by the person to whom the offer is made
Acceptance must be absolute and unqualified
It should be communicated by the acceptor
It should be given within reasonable time or time stipulated
Acceptance must succeed the offer

Case law:

Brogden v Metropolitan Railway Co.

The claimants were the suppliers of coal to the defendant railway company. They had been
dealing for some years on an informal basis with no written contract. The parties agreed that it
would be wise to have a formal contract written. The defendant drew up a draft contract and sent
it to the claimant. The claimant made some minor amendments and filled in some blanks and
sent it back to the defendant. The defendant then simply filed the document and never
communicated their acceptance to the contract. Throughout this period the claimants continued
to supply the coal. Subsequently a dispute arose and it was questioned whether in fact the written
agreement was valid.

Held:
The written contract was valid despite no communication of the acceptance. The acceptance took
place by performing the contract without any objection as to the terms.

Page 19 of 22

Communication to offeror himself:

Further, acceptance must be communicated to the offeror himself. A
communication to any other person is as ineffectual as if no communication has
been made. For Example,
Paul Felthouse v Bindley
A nephew discussed buying a horse from his uncle. He offered to purchase the horse and said if I
don't hear from you by the weekend I will consider him mine. The horse was then sold by
mistake at auction. The auctioneer had been asked not to sell the horse but had forgotten. The
uncle commenced proceedings against the auctioneer for conversion. The action depended upon
whether a valid contract existed between the nephew and the uncle.

Held:
There was no contract. You cannot have silence as acceptance.

Communication by acceptor himself:

This principle means that the communication of acceptance should be from a
person who has the authority to accept . Information received from an unauthorized
person is ineffective.
Case Law:
Powell v Lee (1908)
The facts of this case is like that the claimant applied for a job as a headmastership in a school.
The school managers decided to appoint the claimant whereupon one of the managers, without
authority, told the applicant that he had been appointed. The managers then reconsidered their
decision and appointed someone else. The claimant brought an action for breach of contract but
the court found that no contract existed as there had only been an unauthorised communication
of the school's intention to employ the claimant.

Held:
The court held that there must be notice of acceptance from the contracting party in some way.
Information by an unauthorized person is as insufficient as overhearing from behind the door.

Acceptance must be absolute:

In order to convert a proposal into a promise, the acceptance must(1) be absolute and unqualified,

Page 20 of 22

(2) be expressed in some usual and reasonable manner, unless the proposal
prescribes the manner in which it is to be accepted.

Revocation of acceptance:
An acceptance may be revoked at any time before the communication of the acceptance is
complete as against the acceptor, but not afterwards.

Case Law:
Countess of Dunmore V. Alexander:
The facts of this case is like that, a proposal of service made by a letter was sent through an
agent. The agent received the acceptance and forwarded it to the principal, but the principal was
away that day. The next day the agent received the revocation and forwarded it to the principal,
who received the two letters together.

Held:
The revocation was held to be effective, the court saying that the admission that the two letters
were received together puts an end to the case.

Conclusion:
Clients and contractors should have a clear understanding of the rules of offer and acceptance
and the invitation to treat in order to have a contract. Offer and acceptance are the essential of a
contract because without them there would not be a contract. The building contractor can
negotiate with the client through the use of quoting and tendering and the client can choose the
contractor based on the tender pricing, experiences, reputations, available of resources and so on.
The client can decline the contractor for any reason because of the invitation to treat. The
contractors are invited to bid for the work and the final decision is up to the client.

Page 21 of 22

BIBLIOGRAPHY

Books referred:
Singh Avtar, Contract and Specific Relief, 11th edition, Eastern Book
Company

Websites referred:

https://indiancontractlaw.wordpress.com/
www.legalserviceindia.com
http://www.e-lawresources.co.uk/
http://www.inbrief.co.uk/

www.emarketservices.com

Acts referred:
Indian Contract Act, 1872
IT ACT, 2000

Page 22 of 22