National Management Programme

(NMP)
1

LEGAL ASPECTS OF BUSINESS

(LAB)

Prof. Parul Gupta

PhD (Faculty of Law-JMI, New Delhi), LL.M., PGDBM

Dr. Parul Gupta

 SESSION 2
2

 Legal Insights to valid Offer

 Legal Aspects of Acceptance
And
 Legal Aspects Capacity of
Parties

Dr. Parul Gupta

 Legal Insights to Valid Offer
3

Section 2(a) of the Indian Contract Act defines a 'proposal' 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".,

This definition reveals the following three essentials of a

'proposal':

(i) expression of the willingness to do or to abstain from doing

something.
(ii) must be to another person.
(iii) with a view to obtaining the assent of the other person to
such act or abstinence.

parulvishalgupta@yahoo.co.in
 Legal Insights to Valid Offer
Group Case Discussion
4

Specific and General offer

Carlill v. Carbolic Smoke Ball Co

Take Away points

Dr. Parul Gupta

 Legal Insights to Valid Offer
5

1. X proposes, by letter, to sell a house to Y at a

certain price/ X proposes, by making a call, to sell
a house to Y at a certain price.
2. A husband promises his wife to pay her a sum of
fixed amount for a definite period of time.
Subsequently he denies to pay the agreed amount.
3. A offers to sell his house to B at a certain price/ A
offers to sell his house by publishing an
advertisement in the local newspaper.
4. X offers to sell to Y one of his luxury cars.

Dr. Parul Gupta

 Legal Insights to Valid Offer
6

 Harris v Nickerson

 Lalman Shukla v. Gauri Dutt

 X tells Y ‘I offer to sell my dog to you for Rs.

45. If you do not send in your reply, I shall
assume that you have accepted my offer’.

 Parker v South Eastern Railway

Dr. Parul Gupta

 Legal Insights to Valid Offer
7

 W offered to sell his farm to H for £1200. H

declined this offer.
 On June 6, 1840 W wrote to H's agent offering to
sell the farm for £1000, stating that it was the final
offer and that he would not alter from it.
 H offered £950 in his letter by June 8. After
examining the offer W refused to accept, and
informed H of this on June 27.
 On the June 29, H agreed to buy the farm for
£1000 without any additional agreement from W.
 W refused to sell the farm to him.

Dr. Parul Gupta

 Legal rules for valid Offer
8

1. An offer may be Express or Implied

2. capable of creating legal relations
3. Terms must be certain
4. Invitation to offer is not an offer
5. May be specific or general
6. Must be communicated to the offeree
7. Should not contain a term the non
compliance of which would amount to
acceptance
8. Can be made subject to any terms and
conditions
9. To identical cross offers do not make a
contract

parulvishalgupta@yahoo.co.in
 Legal Insights to Valid
9
Acceptance
Section 2(b) states that

"A proposal when accepted becomes a

promise"

Acceptance
"when the person to whom the proposal is made
signifies his assent thereto, the proposal is said
to be accepted."

parulvishalgupta@yahoo.co.in
 Legal Insights to Valid
Acceptance
10

 A made an offer to sell his car to B at a price of Rs. 5000/-. B

did not agree with price asked by A for the car and gave his
acceptance conditionally saying that he wanted to purchase
that car at Rs. 4500.

 Mr. A has made an offer and adds that if any person wants
to give any acceptance he has to raise his hand.
 Mr. A obtained a coal mine on lease. He wanted to supply the
extracted coal to a railway company. Therefore he wrote a
letter to the manager of Metropolitan Railway Company,
Communicating his willingness to Supply Coal. That letter
constituted an offer. The Manager of Railway Company gave
his acceptance on the letter, but got failed in communicating
his acceptance.

Dr. Parul Gupta

 Legal Insights to Valid
Acceptance
11

 X offers to the Y that he would like to sale his car in 80,000/-

rupees to Y’. Later on X’ withdraws his offer, but after the
withdrawal of the offer Y’ gives the consent and sends letter
of acceptance to X that he would like to buy the car from X in
80,000/- rupees.
 X offers to Y to sell his house for Rs. 1,00,000. Y accepts the
offer and communicates the same to X. Subsequently Y
changes his mind and communicated the same to X.
 A and B were traders and C was A`s Customer. On one day C
wrote a letter to A requesting A to send goods. It Constituted
C`s offer to A. By the time of receiving that letter, A has no
such business as it had already been sold to B, his fellow
delivery. B gave the acceptance for the offer. Later on C
denied to trade with B.

Dr. Parul Gupta

 Legal Insights to Valid
12
Acceptance
 An investor applied for shares, in a company.
It is well known that share application
constituted offer. Therefore allotment
becomes acceptance. Here the company
made allotment after five months from the
date of share application.

Dr. Parul Gupta

Legal Rules Regarding a Valid Acceptance
13

1. Must be given only by the person to

whom the offer was made
2. Must be absolute and unconditional
3. Must be in some usual and reasonable
manner
4. Must be communicated by the acceptor
5. Must be given within reasonable time
6. Must succeed the offer
7. Rejected offers can be accepted only if
renewed
parulvishalgupta@yahoo.co.in
 Legal Aspects of Capacity of Parties
14

Section 11,
"Every person is competent to contract who
has attained the age of majority according
to the law to which he is subject, and who
is of sound mind, and is not disqualified
from contracting by any Saw to which he
is subject."

Dr. Parul Gupta

 Legal Aspects of Capacity of Parties
15

 Minor’s agreements under Indian Contract

Act
Case 3.2: Mohoribibee v. Dharmodas Ghose
 A minor made a promissory note in favour of
another person and on attaining majority, he
made out a fresh promissory note in lieu of
the old one.
 A minor had performed his part of the
agreement and delivered the goods. The
buyer denied the payment and minor sued
for the payment.
Dr. Parul Gupta
 Legal Aspects of Capacity of Parties
16

 Minor’s agreement inoperative against him

and is absolutely void

 Ratification of minor’s contract is not valid

 Minor a beneficiary

 Minor’s liability for necessaries

Dr. Parul Gupta

 Legal Aspects of Capacity of Parties
17

Disqualified Persons

1. Alien Enemies
2. Foreign sovereigns brand ambassadors
3. Convict
4. Married Women
5. Insolvent
6. Joint stock company

parulvishalgupta@yahoo.co.in
 NEXT SESSION
18

SESSION 3

 Legal Insights to Consideration And

 Legal Aspects of Free Consent

Dr. Parul Gupta

 19

Dr. Parul Gupta