1. Offer must intend to create legal relations:
An offer will not become a promise even after it has been accepted unless it is made with a view to create legal relationship. It is so because the purpose of entering into an agreement is to make it enforceable. Thus enforceability of a contract in court of law or inter parties primarily depends on its legal sanctity. Intention to create legal relationship is a question of fact. If A promises B to see movie and later denies, B cannot sue as intention was not to create legal relationship.
2. Terms of offer must be certain, definite and not vague:
No contract can be formed if the terms of the offer it is vague or uncertain; it will not be a valid contract if it is not clear as to what exactly the parties intend to do. Sometimes, the parties agree to enter into an agreement on some future date. Such agreement is not valid because the terms of the offer are uncertain and they are yet to be settled. The law does not allow making of an agreement to agree in future. Recently in Punit Bariwala Vs. Siva Sangal, AIR 1998 Cal 44 at P. 47, it has been held, a mere agreement to agree is not enforceable in court of law. Further it is definite law, that in order to enforce an agreement the same must constitute a ‘contract’, within the meaning of S. 2 (g) of the Indian Contract Act.
3. The offer must be distinguished from a mere declaration of intention:
Sometimes a person may make a statement without any intention of creating any binding obligation that he is willing to negotiate and an offer will be made or invited in future. An auctioneer advertised in a newspaper that a sale of electronic goods will be held on certain date. A person with the intention to buy such goods came from a distant place for the auction, but the auction was cancelled. He cannot file a suit against the auctioneer for his loss of time and expenses because the advertisement was merely a declaration of intention to hold auction.
4. Offer must be distinguished from invitation to offer:
In the case of invitation of offer there is no intention on the part of the person sending out the invitation to obtain the assent of the other party to such invitation but to obtain offer which is yet to get assent of the person furnishing invitation to offer, to bring about legal relationship i.e., contract. Pharmaceutical Society of Great Britain vs. Boots Cash Chemists Ltd. (1952), 2 B. 795. is a leading case on this point.
In this case, defendants had the shop of drugs etc. Each article had price tag on it and was displayed on the shelves, the customer had to carry the wire basket and was to put the drugs etc. of his requisite in the basket. Plaintiff selected drugs and when he brought the drugs in front of cash counter the man (pharmacist) at cash counter denied defendant to carry drugs and refused to sell the drugs. Now the question arose whether the displaying of goods with price tag on them is an offer to sell or is just an invitation to offer. The court held it was an invitation to offer only, the property in the thing would not pass in favour of buyer unless his offer is accepted by the seller.
5. Communication of offer must be made:
An offer must be communicated to the person to whom it is made. The first part of the definition of proposal emphasis this fact by saying that “when one person signifies to another his willingness to do or to abstain………..” An offer accepted without knowledge does not confer any legal rights on the acceptor. There can be no valid acceptance unless there is knowledge of the offer.
6. Offer should not contain a term the non-compliance of which would amount to acceptance:
The offer should not impose on the offered an obligation to reply. While making an offer, the offer or cannot say that if the offer is not accepted before a certain date it will be presumed to have been accepted.
7. Special terms and conditions in the offer must also be communicated:
The offered can lay down any terms and conditions in his offer and if the other party accepts the offer then he will be bound by those terms and conditions. If there are special terms and conditions in offer, the same should also be communicated.
8. Standing Offer:
Sometimes an offer may be of a continuous nature and is known as Standing Offer. A standing offer is in the nature of a tender. An advertisement inviting tenders is not an offer but a mere invitation to offer. When a particular tender is accepted or approved, it becomes a standing offer.
The acceptance or approval of a tender does not, however, amount to acceptance of the offer. It means that the offer will remain open during a specific period and that it will be accepted from time to time by replacing specific orders for the supply of goods. The offered can however withdraw his offer at any time before an order is placed with him. In same way, the party who has accepted the tender is also not bound to place any order unless there is an agreement to purchase a specific quantity.
9. Cross offer:
Two offers which are similar in all respects, made by two parties to each other, in ignorance of each other’s offers are known as ‘Cross Offers’. Cross offer does not amount to acceptance of one’s offer by the other and as such no contract is concluded.