What Is a Proposal Under Section 2(a)?
Section 2(a) of the Indian Contract Act, 1872 defines a proposal as a situation where one person signifies to another their willingness to do or abstain from doing something, with the intention of obtaining that person’s assent.
The person making the proposal is called the proposer or promisor, while the person accepting it is called the proposee or promisee.
For example, if A tells B, “I will sell you my laptop for ₹40,000,” A has expressed willingness to sell the laptop with the intention of obtaining B’s assent. This constitutes a proposal.
Essentials of a Valid Proposal
1. There Must Be Two Parties
A proposal requires a proposer and a proposee. It may be addressed to a particular person, a group of persons, or even the public at large. A person cannot make a proposal to themselves.
2. There Must Be a Willingness to Do or Abstain from Doing Something
The proposal must communicate a willingness to perform an act or refrain from performing one. For example, an offer to sell property is a positive proposal, while a promise not to construct on particular land in return for consideration may constitute a negative proposal.
3. It Must Be Made to Obtain Assent
A statement merely providing information, expressing an intention, or beginning negotiations is not necessarily a proposal. The person making the statement must intend to obtain the other party’s assent.
In Harvey v. Facey, [1893] AC 552, the defendant’s statement of the lowest price for property was held to be information rather than an offer to sell. The principle was followed by the Supreme Court of India in Mac Pherson v. Appanna, AIR 1951 SC 184.
4. It Must Show an Intention to Create Legal Relations
The proposal must indicate an intention to enter into a legally binding arrangement upon acceptance. Social and domestic statements generally do not carry the same presumption of legal enforceability.
The source notes Balfour v. Balfour, [1919] 2 KB 571, as an illustration of this principle. The Indian Contract Act does not expressly use the phrase “intention to create legal relations”; it is principally a persuasive English-law principle.
5. The Terms Must Be Certain
A proposal must be sufficiently clear for the other party to understand what is being offered. Section 29 provides that agreements whose meaning is uncertain, or incapable of being made certain, are void.
For example, an agreement to sell “a hundred tons of oil” without identifying the kind of oil may be void for uncertainty.
6. The Proposal Must Be Communicated
A proposal cannot be accepted unless it has been communicated to the person expected to accept it. Under Sections 3 and 4, communication of a proposal is connected with the act intended to communicate it and is complete when it comes to the knowledge of the person to whom it is made.
In Lalman Shukla v. Gauri Dutt, (1913) 11 ALJ 489, the claimant performed the act for which a reward had been announced without knowing about the reward. The court held that he could not claim the reward because he had no knowledge of the proposal when he performed the act.
7. Silence Cannot Generally Be Imposed as Acceptance
A proposer cannot unilaterally declare that the other person’s silence will amount to acceptance. In Felthouse v. Bindley, (1862) 11 CBNS 869, silence was not treated as acceptance merely because the proposer attempted to impose that condition.
8. Special Terms Must Be Communicated
Where a proposal contains special conditions, the other party must receive reasonable notice of those terms. In Parker v. South Eastern Railway, (1877) 2 CPD 416, the court considered whether reasonable notice had been given of conditions printed on a cloakroom ticket.
Proposal vs Invitation to Treat
One of the most important distinctions in contract law is between a proposal and an invitation to treat.
A proposal is made with the intention that acceptance will result in a binding contract. An invitation to treat, on the other hand, merely invites another person to make a proposal.
| Basis | Proposal | Invitation to Treat |
|---|---|---|
| Meaning | Definite willingness to be bound upon acceptance | Invitation to others to make offers |
| Intention | Intention to be legally bound upon acceptance | No immediate intention to be bound |
| Effect | Acceptance may create a contract | The response generally constitutes the offer |
| Common examples | Certain offers and general offers | Price lists, catalogues, shop displays and auction notices |
Common Examples of Invitation to Treat
Shop Displays
Goods displayed on self-service shelves are generally treated as an invitation to treat rather than an offer. In Pharmaceutical Society of Great Britain v. Boots Cash Chemists, [1953] 1 QB 401, the customer made the offer at the cash desk, while the shopkeeper accepted the transaction.
The same principle appears in cases such as Fisher v. Bell and Partridge v. Crittenden.
Auctions
An auction announcement generally constitutes an invitation to treat, while each bid constitutes an offer. The contract is formed when the auctioneer accepts the bid in the prescribed manner. Section 64 of the Sale of Goods Act, 1930 is relevant to auction sales.
Payne v. Cave and Harris v. Nickerson are commonly cited authorities on this subject.
Tenders
A call for tenders is generally an invitation to treat. The tender submitted in response constitutes the offer, which the party inviting tenders may accept or reject.
Advertisements
Advertisements are generally treated as invitations to treat. However, an advertisement can amount to a general offer where its language demonstrates a clear intention to be bound.
In Carlill v. Carbolic Smoke Ball Co., [1893] 1 QB 256, the court treated the advertised reward as a general offer that could be accepted by anyone who performed its stated conditions.
Types of Proposals
The Indian Contract Act recognises different forms of proposals depending on how they are made and to whom they are directed.
An express proposal is made through spoken or written words, while an implied proposal arises from conduct or circumstances under Section 9. A specific proposal is addressed to a particular person, whereas a general proposal is made to the public and may be accepted by anyone who performs its conditions.
A cross offer occurs when two parties independently make identical offers without knowledge of the other’s offer; this does not amount to acceptance. A counter-offer introduces different or additional terms and operates as a new proposal. A standing or continuing offer remains open for transactions over a specified period, such as a continuing supply tender.
How Does a Proposal Come to an End?
Under Sections 5 and 6, a proposal may come to an end through revocation, lapse of the prescribed or reasonable period, failure to fulfil a condition precedent to acceptance, or the death or insanity of the proposer where the relevant fact becomes known to the proposee before acceptance.
A proposal may also end when it is rejected or when the proposee makes a counter-offer.
Conclusion
A proposal under Section 2(a) of the Indian Contract Act, 1872 is a communicated expression of willingness to do or abstain from doing something with the intention of obtaining the other party’s assent. Its terms must be sufficiently certain, and the proposal must be communicated to the person expected to accept it.
The distinction between a genuine proposal and an invitation to treat is particularly important because it determines whether acceptance can immediately create contractual obligations. This distinction is frequently applied to advertisements, shop displays, auctions, tenders and online transactions.
References
- The Indian Contract Act, 1872, Sections 2(a)–(e), 3, 4, 5, 6, 8, 9, 10 and 29.
- Sale of Goods Act, 1930, Section 64.
- Mac Pherson v. Appanna, AIR 1951 SC 184.
- Lalman Shukla v. Gauri Dutt, (1913) 11 ALJ 489.
- Harvey v. Facey, [1893] AC 552 (PC).
- Carlill v. Carbolic Smoke Ball Co., [1893] 1 QB 256.
- Pharmaceutical Society of Great Britain v. Boots Cash Chemists, [1953] 1 QB 401.
- Balfour v. Balfour, [1919] 2 KB 571.
- Felthouse v. Bindley, (1862) 11 CBNS 869.
- Hyde v. Wrench, (1840) 3 Beav 334.
English authorities are persuasive rather than binding in Indian courts. Case citations should be verified against a primary legal database before being relied upon in formal academic or professional work.
