Difference Between Offer and Proposal
Difference Between Offer and Proposal
1. Definition
| Term | Meaning |
|---|---|
| Offer | A clear expression of willingness by one person to enter into a contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed. |
| Proposal | In legal terms (especially under Indian Contract Act), proposal is synonymous with offer. It is the first step in the formation of a contract where one party signifies willingness to contract. |
Note: In the Indian Contract Act, 1872, the term “proposal” is commonly used and is equivalent to the term “offer” in common law.
2. Legal Definitions
Proposal (Section 2(a) of Indian Contract Act):
“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.”
Acceptance (Section 2(b)):
“When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.”
In English law, the term offer is commonly used instead of proposal.
3. Difference Explained
| Aspect | Offer | Proposal |
|---|---|---|
| Terminology | Common term used in English law | Used in Indian Contract Act, synonymous with offer |
| Definition | Willingness to enter into a contract | Same as offer, expression of willingness to contract |
| Stage in Contract | Initial step to form a contract | Same, the initial communication of terms |
| Scope | Can be specific or general | Same as offer |
| Communication | Must be communicated to the offeree | Same |
| Withdrawal | Can be withdrawn before acceptance | Same |
4. Illustrative Case Law
🏛️ Carlill v Carbolic Smoke Ball Co. (1893) 1 QB 256 (English Case)
This case explains what constitutes an offer.
The company made a public promise (offer) to pay £100 if the smoke ball failed.
Held: The advertisement was a valid offer to the world, accepted by performing the conditions.
This illustrates how an offer can be made to a general public and not just a specific person.
🏛️ Harvey v Facey (1893) AC 552
Distinction between offer and mere statement of price.
The statement of price was held to be not an offer but an invitation to treat.
Helps clarify what amounts to an offer (proposal) versus preliminary communication.
5. Summary
| Aspect | Offer / Proposal |
|---|---|
| Meaning | Expression of willingness to contract on certain terms |
| Terminology | Offer (English law), Proposal (Indian Contract Act) |
| Communication | Must be communicated and intended to create legal relations |
| Objective | To create binding contract upon acceptance |
| Case Law Reference | Carlill v Carbolic Smoke Ball Co. (offer to public) |
6. Conclusion
In the Indian Contract Act, the terms offer and proposal are used interchangeably.
Both signify the willingness of one party to enter into a contract.
Understanding the distinction is important mainly when
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