Proposals (Offers) in Contract Law: Essentials Types and Examples
Last updated:
Overview: What is a Proposal? (Offer)
What is a Proposal (Offer)? In contract law, a proposal—often called an offer—is a clear and definite manifestation of willingness to enter into a contract on specified terms, made with the intention that it shall become binding upon an unqualified acceptance by the other party.
For a proposal to be valid, it must be intentional (showing an intention to create legal relations), communicated to the offeree, and certain enough that a court can identify the essential elements—such as the subject-matter, price/consideration, quantity, and time or mode of performance. A proposal may be express (spoken or written) or implied from conduct, and it may be specific (to a named person/class) or general (to the public, as in unilateral offers where performance equals acceptance). Crucially, it is made to obtain assent, not merely to invite negotiations—price lists, quotations, and most advertisements are typically invitations to treat, not offers. When a proposal is properly communicated and accepted without variation (or performed in the case of a unilateral offer), it ripens into a promise and, with consideration and offer and acceptance aligned, forms the foundation of an enforceable agreement under contract law.
Formation of a Contract: Why Proposal (Offer) and Acceptance Are Essential
Keywords: proposal in contract law, offer and acceptance, consideration, bilateral contract, enforceable agreement
In contract law, a binding agreement does not arise from a bare promise—or even a set of promises—standing alone. A contract is, at its core, a bilateral transaction: it requires the deliberate participation and mutual consent of both parties. First, one party must put forward definite terms (a proposal or offer); then, the other party must accept those precise terms without variation. Only when proposal and acceptance align—expressly or by clear implication— does the law recognize an enforceable contract, ordinarily supported by consideration (something of value given or promised in return).
If you’re building your understanding of contract formation, you may also want to read: Essentials of a Valid Contract, Acceptance: Legal Definitions and Essentials, and Consideration in Contract Law. These explain how offer, acceptance, and consideration work together to create legal relations.
Contract Formation – Key Points
Illustrative Example
Alice offers to sell her car to Bob for Rs. 800,000, specifying the model and delivery date. Bob replies, “I accept,” on the same terms. Here, the proposal (Alice’s offer) is matched by an unqualified acceptance (Bob’s assent). With consideration (the price) present, the elements of contract formation are satisfied.
📖 Meanings and Definitions of Proposal (Offer)
Understanding the legal concept of a proposal—also referred to as an offer—is crucial in contract law. Below are authoritative definitions from leading legal and linguistic sources:
| Source | Definition |
|---|---|
| Black’s Law Dictionary | “A display of willingness to enter into a contract on specified terms, made in a way that a reasonable person would understand an acceptance will create a binding contract.” |
| Contract Act 1872 (Section 2(a)) | “When one person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of that other … he is said to make a proposal.” |
| Webster’s College Dictionary | “A proposal supported by adequate consideration, the full and complete acceptance of which constitutes a contract.” |
| Chitty’s Definition | “An expression of willingness to contract made with the intention (actual or apparent) that it shall become binding on the person making it as soon as it is accepted by the person to whom it is addressed.” |
Key Requirements of a Valid Proposal
- Serious intent: Not a mere statement of intention.
-
Definiteness: Terms are specific—vague promises won’t
do.
Example: “Buy another horse if the first is lucky.”—too vague to enforce (Taylor v Portington) - Clear communication: Must be conveyed to the offeree.
📜 Essential Conditions for a Legally Valid Proposal in Contract Law
In order for a proposal (offer) to create enforceable legal rights, it must satisfy certain core requirements laid down in contract law. If any of these conditions are missing, the proposal cannot ripen into a binding promise through acceptance. Below are the twelve essential conditions, each explained with practical illustrations and landmark cases.
Once a valid offer exists, the next steps are: Acceptance in Contract Law and Essentials of a Valid Contract. Together, these show how certainty, communication, and intention produce an enforceable agreement.
1️⃣ Intention to Create Legal Relations
A proposal must be made with the clear intention of producing legal consequences. Mere statements of hope, desire, or social invitations do not qualify. A proposal can fructify into a promise by acceptance only when it is such that it can be reasonably regarded as having been made with a view to produce legal consequences. Where there is no intention to enter into a binding contract, or no legal consequences are contemplated, an acceptance of the proposal does not create a promise.
- (a) A invites B to dinner and B accepts the invitation. It does not create any legal relations, so there is no agreement.
- (b) But if A offers to sell his watch to B for Rs. 200 and B agrees to buy it at the same price, there is an agreement because here the parties intend to create legal relations.
2️⃣ Communication of the Proposal
An offer is effective only when it is actually communicated to the offeree. Acceptance in ignorance of an offer is legally invalid. If an offer is not communicated to the offeree, it cannot be accepted. An acceptance of an offer in ignorance of it is not a valid acceptance according to the law and does not create any legal obligations.
3️⃣ Willingness to Obtain Assent
The proposer must show readiness to do or abstain from doing something with a view to obtain the other party’s consent. A unilateral announcement without scope for acceptance is not a valid proposal.
A proposal, to be valid, must signify to another person the willingness of the proposer to do, or abstain from doing, anything, with a view to obtain the assent of that other to such an act or abstinence. A unilateral decision to do, or to abstain from doing anything, when the other party has hardly any opportunity to accept or reject the proposal, does not amount to a proposal.
4️⃣ View to Obtain Assent
The offer must be made to secure acceptance, not merely to declare future intentions. The offer to do or not to do something must be made with a view to obtaining the assent of the other party to whom the offer has been addressed and not merely with a view to disclosing the intention of making an offer.
5️⃣ Containing a Promise
A valid proposal contains a promise — an assurance that, upon acceptance, a certain act will be done or omitted. By the proposal, the person making it expresses his agreement that something shall be done or shall not be done, or shall or shall not happen, if the proposal is accepted. In this sense, a proposal contains a promise. A signification of willingness to do or abstain from doing anything, which does not give, to the person to whom it is made, an assurance that, on some contingency at least, something will or will not be done, does not amount to a proposal.
6️⃣ Certainty and Definiteness
Terms must be specific enough for the courts to enforce. Vague or ambiguous terms cannot form a valid proposal.
To constitute a valid proposal, it must sufficiently define “the terms of the proposer’s undertaking, so that it can be ascertained just what it is that the proposer has promised. A promise, too vague in its terms to be understood, is too vague to be capable of enforcement. The proposal must define, with the same degree of certainty, the act or promise that the person to whom the proposal is made is to give to the proposer in exchange. A proposal must define the essential terms of performance on both sides with a reasonable degree of certainty, so as to be capable of enforcement.
- (a) Identification of the subject-matter
- (b) The consideration to be paid,
- (c) The time of performance
- (d) The work to be done.
Need a quick refresher on consideration and why it is the “price for the promise”? Read: Consideration in Contract Law.
- (a) In Taylor vs. Portington, X purchased a horse from Y and promised to buy another if the first one proved lucky. X refused to buy the second horse. Y could not enforce the agreement as it is vague. [(1855) 44 ER 128]
- (b) A has two motorcycles. He offers B to sell one motorcycle for Rs 27,000. B cannot enforce the agreement because it is not clear which one A wanted to sell.
7️⃣ Not a Mere Expression of Intention
Proposals differ from mere expressions of willingness. According to the definition, “proposal” is a signification to another of the willingness of the person making the proposal to do or to abstain from doing anything, with a view to obtain the assent of that other to such act or abstinence. A proposal involves a promise. Therefore, a mere expression of intention, or a general willingness to do something on the happening of a particular event, or in return for something to be received, does not amount to a proposal. Quotations or catalog prices are generally not offers.
Illustration:
Where a person, in reply to a letter inquiring whether the property is to be sold, communicates his willingness to sell for a certain sum of money, the communication amounts to a proposal. But, where a person sends his quotations, or terms of business, to others, he merely intimates his readiness to transact business on those.
8️⃣ Distinction from Preliminary Negotiations
Preliminary negotiations, such as those evidenced by advertisements, catalogs, and circular letters containing price quotations or requests for bids, or other general statements of intention, are normally invitations for proposals rather than proposals. The reason is that they do not manifest an apparent present contractual intent. A general statement from which no promise can be inferred cannot constitute a proposal.
9️⃣ No Negative Terms for Acceptance
An offer cannot impose that silence will be deemed acceptance. The law does not force an offeree to reply. Thus, the offer should not contain a term like “if the acceptance is not communicated by Sunday next, the offer would be considered as accepted.” An offeror cannot say that if acceptance is not communicated up to a certain date, the offer would be presumed to have been accepted. If the offeree does not reply, there is no contract, because no obligation to reply can be imposed on him.
- “If I don’t hear from you by Sunday, I’ll assume acceptance” — not enforceable.
- A writes to B, “I will sell you my horse for Rs 500. If I don’t receive a reply, I shall assume you have accepted the offer”. There will be no contract if B does not reply.
🔟 Truthfulness of Statements
False statements in a proposal, if forming the basis of acceptance, can void the contract.
If any of the statements in the proposal are the basis of its acceptance and form the basis of the contract between the parties, and are found to be untrue, they vitiate the contract, which becomes void and unenforceable in law irrespective of the question whether the statement in question which is found untrue is of a material in nature or not.
1️⃣1️⃣ Conditional Proposals
Offers can be conditional, but acceptance must comply with the stated condition to be valid.
A proposal can be made subject to a condition. In that case, it can be accepted only subject to that condition Where an offer is made subject to a condition and that other is accepted, the person accepting the offer is presumed to have accepted it with the condition so attached, and he cannot be heard to say that, although he accepted the offer, he is not bound by the condition.
If your offer or performance depends on a future uncertain event, see: Contingent and Conditional Contracts to understand how such conditions affect enforceability.
1️⃣2️⃣ Inclusion of All Contract Terms
The proposal must specify not only what the proposer will do, but also what is expected in return — covering both parties’ obligations.
In order to be legally operative and to create a power of acceptance, the proposal must contain all the terms of the contract to be made. It is not enough for the proposer to say merely what he himself will promise to do. It must also say what he will do it for, that is, what the other party must do in exchange, to make an agreement. The proposal must state the terms of both the promises to be made. By the proposal, the proposer offers to exchange his specified promise for a similarly specified promise by the person to whom the proposal is made.
By ensuring all these conditions are satisfied, a proposal stands a far better chance of maturing into a legally binding and enforceable contract.
Kinds or Modes of Making an Offer (Proposal)
In contract law, an offer (or proposal) can be made in different ways, each carrying its own legal implications. Understanding these modes helps in determining when an agreement can legally come into existence. Broadly, offers can be express, implied, specific, or general.
To avoid confusion between a general offer and an invitation to treat, see: Invitation to Offer (Invitation to Treat). It clarifies why many advertisements and price lists are invitations—not binding offers.
1️⃣ Express Proposal
An express proposal is made in clear words—either spoken or written. Here, the terms are explicitly stated, leaving no room for inference.
2️⃣ Implied Proposal
An implied proposal is not conveyed in words but inferred from conduct or circumstances. Actions can speak as clearly as words in showing an intention to enter into a contract.
3️⃣ Specific Proposal
A specific proposal is made to a definite person or a defined group. It can be accepted only by that person or within that group.
4️⃣ General Proposal
A general proposal is made to the public at large. Anyone who performs the conditions of the proposal is deemed to have accepted it. The contract, however, is formed only with the person who fulfills the conditions.
• Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256: The company promised £100 to anyone who contracted influenza after using its product as directed. Mrs. Carlill did so and was entitled to the reward.
• Lal v Charan Lal [AIR 1925 All 539]: A father offered a reward to anyone who found his missing son. The plaintiff fulfilled the condition and was entitled to the reward.
2. Acceptance & When It Happens
Acceptance must mirror the offer and be communicated—unless it's a unilateral offer, where performance can constitute acceptance.
- Mirror Image Rule: Acceptance must exactly match the offer. Any variation is a counteroffer.
- Silence ≠ Acceptance: Felthouse v Bindley underscores that silence cannot bind one party.
- Unilateral Contracts: Performing the required act equals acceptance (no need to communicate actively). Carlill v Carbolic Smoke Ball Co is a prime example.
3. Landmark Case Laws
• Carlill v Carbolic Smoke Ball Co (1893)
An advertisement promising £100 to anyone who used the product and still caught influenza was held to be a binding unilateral offer, accepted by performance. The Court upheld offer, acceptance, consideration, and intention to create legal relations.
• Hyde v Wrench (1840)
A counter-offer (Hyde offered £950 when Wrench offered £1,000) cancels the original offer—no later acceptance can revive it.
• Lefkowitz v Great Minneapolis Surplus Store (1957)
A clear, specific advertisement (“first come, first served”) was treated as an offer—not an invitation to treat—binding upon acceptance.
• Butler Machine Tool Co v Ex-Cell-O Corp (1977)
In the “battle of forms,” the last set of terms exchanged forms the contract, not earlier conflicting terms.
4. Checklist: Is Your Proposal Legally Effective?
| Checklist Item | Why It Matters | Example |
|---|---|---|
| Serious intention? | Without intent, there's no binding offer. | “Can I sell my car for Rs.50 k?”—flippant offers may not bind. |
| Clear terms? | Vagueness leads to unenforceability. | “Selling one motorcycle for Rs.27,000” when two exist—unclear which one. |
| Proper acceptance? | Must match and be communicated—or performed, if unilateral. | Submitting payment as instructed after reading terms constitutes acceptance. |
| Consideration present? | Something of value must be exchanged. | Using the smoke ball, which boosts sales, counted as consideration. |
| Intention to be bound? | Only then is the offer legally enforceable. | £1,000 deposit in bank signaled seriousness in Carlill case. |
5. Practical Scenarios (Everyday Examples)
- Buying a bike: “I’ll buy your bike for Rs.25,000 today. Let me know by 3 p.m.” → Valid offer. If accepted as is, forms a contract.
- Online Sale: “First-come offer, in-store only.” → Treated as an offer (Lefkowitz case).
- Purchase Ad (joke): “Get a fighter jet for 10m points!” → Not serious, thus not enforceable (Leonard v Pepsico commentary on Carlill).
Conclusion: The Three Pillars of a Valid Contract—Agreement, Intention & Consideration
A legally enforceable contract stands on three essentials: a genuine agreement (offer and acceptance), a clear intention to create legal relations, and consideration—something of value exchanged. When assessing a valid offer, ask whether it is certain, unambiguous, and definite; whether it is made to obtain the offeree’s assent (and not a mere expression of intention); and whether it has been properly communicated. If these requirements are satisfied, the offer can form the foundation of an enforceable agreement under contract law.
Meeting of minds through clear offer and acceptance.
Real intent to be legally bound—not social or preliminary talk.
Price for the promise—an act, forbearance, or return promise.
Quick checklist for a valid offer: clarity of terms ✓ intention to be bound ✓ made to obtain assent ✓ proper communication ✓
In contract law, clarity, intention, and communication are not formalities—they are the lifeblood of every enforceable agreement.
Continue reading:
- Essentials of a Valid Contract
- Acceptance: Legal Definitions and Essentials
- Consideration in Contract Law
- Contingent and Conditional Contracts
- Invitation to Offer (Invitation to Treat)
FAQ: Proposal (Offer) in Contract Law
What is proposal?
In contract law, a proposal (or offer) is a definite expression of willingness to do or abstain from doing something, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.
Definitions and meanings of proposal
A proposal is a clear statement of terms showing an intention to be legally bound on acceptance. Key features include clarity of terms, communication to the offeree, and an aim to obtain assent, not merely to announce intentions.
How proposal becomes valid?
A proposal becomes legally valid when it: (i) is made with intention to create legal relations, (ii) is communicated to the offeree, (iii) is certain and definite (no vagueness), (iv) is made to obtain assent (not just a statement of intention), and (v) contains a promise capable of enforcement. Once accepted and supported by consideration, it can form a binding contract.
Kinds of proposal
Common types are: Express (spoken/written), Implied (inferred from conduct), Specific (addressed to a particular person/class), and General (addressed to the world at large; acceptance by performance).
Explain the essential conditions of a valid proposal
Essential conditions include: intention to create legal relations; communication to the offeree; willingness to obtain assent; presence of a promise; certainty and definiteness of terms; not being a mere expression of intention or preliminary negotiation; no silence-as-acceptance clauses; truthful statements; compliance with any conditions attached; and inclusion of all essential terms of the contract.
Does silence amount to acceptance of an offer?
Generally, no. An offer cannot impose that silence will be treated as acceptance. The offeree must communicate assent, unless performance is contemplated in a unilateral offer.
What happens if offer terms are vague?
Vague or uncertain terms are unenforceable. The subject-matter, consideration, and essential performance details should be clearly defined.