What is an offer? The first and most important essential element of the contract is an offer and acceptance. In this blog post, we will discuss what is an offer letter? and its rules for making a valid offer.

Definition of a Proposal/Offer What is the offer in contract law? The definition of an offer is given under section 2 (a) of the Indian Contract Act, the proposal means 'When one person signifies to another person his willingness to do or to abstain from doing anything, to obtain the assent of that other person to such act or abstinence, he is said to make a proposal.'

Legal Rules of a Valid Offer Here, we will discuss the essential rules which are required to be performed by the parties to the contract for making a valid offer. 1. There must be two parties 2. Offer must be communicated with the offeree 3. Offer must be clear and not indefinite or ambiguous 4. There must an intention of the parties to create a legal relationship 5. Offer can be made subject to any Terms and Conditions

1. There must be two parties For making a valid agreement there must be at least two parties. One who makes an offer i.e. offeror and who accepts the offer i.e. offeree. Here, the parties can be legal persons (individual persons) or artificial persons (legal entities like companies, corporations etc).

2. Offer must be communicated with the offeree For the formation of an agreement, there must be an offer and acceptance. However, if one person makes the offer but there should be another person to whom the offer is to be communicated with him for his acceptance to that offer. Example: A wants to sell his house. But it is in his mind, he does communicate with any other. So, it is not an offer.

3. Offer must be clear and not indefinite or ambiguous Mere communication is not valid communication. This means the offer to whom it is made must be clear and should come to the knowledge of that person. Any offer made to the offeree which is not clear and ambiguous then it can not be understandable by the offeree. If the terms of the offer are not clearly communicated with the offeree and the offeree accepts it, then it is not a valid offer.

4. There must an intention of the parties to create a legal relationship An offer should be made to create a legal relationship between the parties to the agreement, if the parties failed to create a legal relationship then there is no valid offer. This rule is nowhere provided in the Indian Contract Act, 1872. But, as looking at English Common Laws, the word willingness is found in the definition of an offer under section 2 (a) of the Act.

5. Offer can be made subject to any Terms and Conditions The offeror can make an offer by imposing certain terms and conditions. And, also can prescribe the mode of acceptance. Then the acceptance of the offer should be made with the prescribed mode of acceptance.