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Fundamental Of Contract: Offeror/ Proposer/ Promisor - Offeree/ Proposee/ Promisee And Consideration

A contract comes into existence when the offer by the offeror/ proposer is accepted by offeree/ proposee. Such offer and acceptance must meet the criteria set forth by Indian Contract Act,1872 (hereinafter referred to as ICA,1872). One of such provisions being S.10 of the ICA, 1872 which provides requisite such as agreement should be made by free consent of parties and so on.

Note: Offeror and proposer is used interchangeably depending upon the legal terminology used in the country. Same is the case with offeree and proposee

Why A Concept Such As Offer Came Into Existence?

In this world, no one is self sufficient, therefore, everyone has to rely on others to meet their requirement. It is also true that a system of quid pro quo exist in this world i.e. A system of give and take. example: A person receives money for selling oranges i.e. he gives oranges and takes money.

Note: there exist exceptions to everything, and so is the case with Give and take system. example : gift etc )

Taking the above example of oranges for further reference:

For the seller of oranges it is impossible to identify the buyer unless he presents his situation to the public. Therefore a person who has set up his mind to sell oranges in return of money will have to communicate to others about his intention to sell oranges. Otherwise, other person interested in buying oranges might not buy it from him. And thus came the concept of "Offer"

Answer To The Question What Is An "Offer" Or "Proposal"

Offer is communication by one person to another his intention to do something (sell oranges) in return of something (money). The provision related to offer/ proposal is ICA, 1872 is provided under section 2(a) which states offer is made when one person signifies his willingness to do or abstain from doing something with a view to obtaining assent of other to such act or abstinence.

The example related to oranges falls within that part of the definition where one person signifies his willingness to do something to obtain assent from other. Seller is signifying his willingness to sell oranges in order to obtain assent from the buyer that he will buy the orange. (we will talk about consideration element later) for the part willingness to abstain from doing something to obtain assent from other, let us consider the example: where a Food chain company's owner is willing to sell his company and he offers that he will not carry business related to Food Chain company.

In the above example the offer involves abstaining from doing something and this is done to obtain assent of the buyer, so that goodwill of the company is retained by the buyer.

An offer can be to public at large which is called "general offer" or to a specific individual. The essential thing is it should be communicated to other person.

Who Is An Offeror/ Proposer And Who Is Offeree/ Proposee?

In simple words the person who makes the offer is offeror or the proposer.

The trick to identify offeror/ proposer in a given suit is to find out the party who has communicated the intention first. With two examples in the identical situation it will be clear.

Example 1. The vendor in the fruit market shouts, "take my oranges for Rs. 100 a kilo"
In the given situation, the vendor communicates his intention first, therefore, he is the offeror who is signifying his willingness/ communicating his intention to sell oranges Rs. 100 a kilo. if the buyer agrees to buy at the same price.

Example 2. The vendor in the fruit market is standing with his cart full of oranges. The buyer says "I will buy oranges @ Rs. 70" or "will you sell this oranges for Rs. 70" If the seller agrees then the seller becomes the offeree and the buyer becomes the offeror. As in this case it is the buyer who is communicating his willingness to buy oranges which is accepted by the seller.

(concept of counter proposal : let us say, the buyer tries to negotiate the price and asked the seller to sell for Rs. 80 a kilo. In this case whoever wins "the bargaining" becomes the offeror and whoever gives in becomes the offeree. Let us say, the seller agreed to sell at Rs. 80 that means he has accepted the offer of buyer. Thus, the buyer becomes the offeror and the seller becomes the offeree)

There are few exceptions to the given rule to identify offeror. One of them being "Invitation to Offer" here the person communicating his intention isn't offeror, in fact he is asking other person to become offeror. Example in case of tender, Auction, Medicine displayed in the self help shop

Who Is A Promisor And Who Is A Promisee?

The change in terminology from offeror to promisor and from offeree to promisee occurs when the offer is accepted by the offeree. refer ICA, 1872 S.2(b) and (c)

An offer or proposal when accepted becomes Promise, therefore, the person making the (orignially) offer/ (now) proposal becomes the Promisor and the person accepting the (originally) offer/ (now) proposal becomes promisee.

What is Consideration?

Now. as we know, a system of "Give and Take" exist and the same applies in the case of Contract. The offeror/ Proposer / Promisor (when offer or proposal is accepted) is not doing anything out of charity, he is doing something because he wants something in return from the offeree/ Proposee/ Promisee (when the offer or proposal is accepted). This want of something in return from the promisee is called consideration.

In our first example of oranges, the proposer is the seller of orange, the buyer is offeree or the proposee. The proposer is not giving his oranges free of cost rather he wants something from the person who takes oranges from him. This something is money which is called consideration.

Consideration is not limited to money. It can be anything that as value in the eyes of Offeror or the proposer.

Example: A person offers to give free lunch to any person who helps him study for the exam. If all the essential condition of Contract as required by ICA, 1872 is met, then it is a contract. Where the offeror is the person who is giving free lunch in exchange of help in studies. Proposer is the person who proposes to give lunch or in other words signifies his willingness to give free lunch. Proposee is the person who accepts lunch offer. Consideration is "help in studies".

The most essential requirement for consideration is that it must be at the desire of promisor.

An agreement enforceable by law/ contract will only come into existence when there is consideration and the consideration is at the desire of the promisor. The provision related to Consideration is provided under S.2(d).

Award Winning Article Is Written By: Mr.Ashish Kumar Verma
Awarded certificate of Excellence
Authentication No: JN402942283502-29-0124

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