Chapter 2: Offer, Acceptance and Revocation

Question 1

Contract Act Section 1

Answer 1

The law governing contracts between persons is the Contract Act, 1872. It extends to the whole of Pakistan and
it is applicable since the first day of September 1872.

Question 2

Contract Act Section 2 (a)

Answer 2

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”.

Question 3

Contract Act Section 2 (b)

Answer 3

When the person to whom the proposal is made signifies his assent to it, the proposal is said to be accepted. A
proposal, when accepted becomes a “promise”.

Question 4

Contract Act Section 2 (c)

Answer 4

The person making the proposal is called the “promisor” and the person accepting the proposal is called the
“promisee”.

Question 5

Contract Act Section 2 (e)

Answer 5

Every promise and every set of promises forming the consideration for each other is an “agreement”.

Question 6

Contract Act Section 2 (h)

Answer 6

An agreement enforceable by law is a “contract”.

Question 7

Contract Act Section 9

Answer 7

If the proposal or acceptance of any promise is made in words, the promise is said to be express.
If the proposal or acceptance is made otherwise than in words, the promise is said to be implied.

Question 8

Promise

Answer 8

Proposal + Acceptance

Question 9

Agreement

Answer 9

Promise + Consideration

Question 10

Contract

Answer 10

Agreement + Enforcability

Question 11

4 Additional Points for Proposal

Answer 11

1. A person cannot make offer to himself.
2. A valid offer is one which is certain and definite.
3. An offer may be subject to condition. When there are special terms and conditions in an offer, these must
   be specifically communicated to other party.
   4 An offer is different from an invitation of an offer. The intention in invitation of an offer is to circulate
   information of his readiness to do the transaction. Such intentions are not offers and do not tantamount
   to promise on acceptance.

Question 12

Contract Act Section 3

Answer 12

The communication of proposals, the acceptance of proposals, and the
revocation of proposals and acceptances, respectively, are deemed to be made
by any act or omission of the party proposing, accepting or revoking by which
he intends to communicate such proposal, acceptance or revocation, or which
has the effect of communicating it.

Question 13

Contract Act Section 4

Answer 13

Communication when complete

Question 14

Communication when complete (Proposal) Section 4

Answer 14

The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

Question 15

Communication when complete (Acceptance) Section 4 - as against the proposer

Answer 15

when it is put in a course of transmission to him, so as to be out of the power of the acceptor.

Question 16

Communication when complete (Acceptance) Section 4 - as against the acceptor

Answer 16

as against the acceptor, when it comes to the knowledge of the proposer.

Question 17

Communication when complete (Revocation) Section 4 - as against the person making it

Answer 17

when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it

Question 18

Communication when complete (Revocation) Section 4 - as against the person to whom it is made

Answer 18

when it comes to his knowledge.

Question 19

Contract Act Section 5

Answer 19

Revocation

Question 20

Revocation of Proposal Section 5

Answer 20

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

Question 21

Revocation of Acceptance Section 5

Answer 21

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

Question 22

Contract Act Section 6

Answer 22

Manner of Revocation of Proposal

Question 23

Manner of Revocation of Proposal Section 6

Answer 23

a) by the communication of notice of revocation by the proposer to the other party;
b) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by
the lapse of a reasonable time, without communication of the acceptance;
c) by the failure of the acceptor to fulfil a condition precedent to acceptance; or
d) by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the
acceptor before acceptance.

Question 24

3 Additional points of Manner of Revocation of Proposal

Answer 24

1. An offer is also terminated by non-acceptance or rejection by offeree.
2. An offer is also terminated by counter offer. A counter offer is an offer by offeree in response to the
   original offer.
3. An offer once accepted becomes a contract and cannot be revoked.

Question 25

Acceptance of proposal in case of silence

Answer 25

A proposal is not considered accepted if the offeree remains silent. It cannot be in the form of negative confirmation i.e. if it is not accepted within a specific time then it will be presumed to have been accepted.

Question 26

Contract Act Section 7

Answer 26

Conditions for Valid Acceptance

Question 27

Conditions for Valid Acceptance Section 7

Answer 27

A valid acceptance: a) must be absolute and unqualified (unconditional); and b) must be expressed in the manner prescribed in the proposal; or c) must be expressed in some usual and reasonable manner if the proposal did not prescribe any manner.

Question 28

What if the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner?

Answer 28

a) the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; b) but if he fails to do so, he is deemed to accept the acceptance.

Question 29

3 Additional points for Valid Acceptance

Answer 29

1. The offeree must be aware of the proposal, otherwise the acceptance is not valid. 2. An offer cannot be accepted after it has been rejected earlier. 3. An offer cannot be accepted if it has been terminated earlier.

Question 30

Contract Act Section 8

Answer 30

Acceptance by performing conditions or receiving consideration

Question 31

Acceptance by performing conditions or receiving consideration Section 8

Answer 31

Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.

Question 32

Revocation Meaning

Answer 32

Revocation means the act of taking back, withdrawing or cancelling.

Question 33

Time Limit for Revocation of Proposal

Answer 33

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

Question 34

Time Limit for Revocation of Acceptance

Answer 34

An acceptance may be revoked at any time before the communication of its acceptance is complete as against the acceptor, but not afterwards.

Question 35

Proposal is also called an

Answer 35

Offer

Question 36

Promisor is also called

Answer 36

Offeror

Question 37

Promisee is also called

Answer 37

Offeree

Question 38

Is every agreement a contract?

Answer 38

No.

Question 39

Is every contract an agreement?

Answer 39

Yes.