Defining an offer before a business transaction is made
An offer, according to the Black’s Law Dictionary, is a proposal,
- to do a thing;
- to present for acceptance or rejection;
- to hold out or proffer; to make a proposal to, or
- to exhibit something that may be taken or received or not.
Under common law, an offer is an act whereby one person gives to another the legal power of creating the obligation called a contract.
The existing legal framework in Kenya governing the making of an offer is the Law of Contract, Cap 23, Laws of Kenya along with English common law.
Characteristics of an offer
An “offer” must be so definite in its terms, or require such definite terms in acceptance, that the promises and performances to be rendered by each party are reasonably certain.
- Parties to an offer
It must be made by the person who is to make the promise (the offeror), and it must be made to the person to whom the promise is made (the offeree). An offer will not be held valid in law until it comes to the knowledge of the person to whom it is made.
- The manner of an offer
An offer can either be made orally by words or in writing, or it can be implied by action or signs.
- The nature of an offer
Offers can either be bilateral or unilateral.
A bilateral offer has two sides involving two parties who are contractually obligated to perform according to the terms and are equally committed.
A unilateral offer, on the other hand, is made by one party in exchange for the performance of a specific act.
Types of an offer
The varied types of offer in a contract vary depending on a number of factors:
- The way the offer is made, and
- The party to whom the offer is made.
- Specific Offer: this is a kind of offer made to a particular individual or group of individuals and can only be accepted by those to whom it is directed.
- General Offer: this kind of offer is made to the general public
- Counter-offer: this is an offer made in response to a previous offer by the other party following negotiations for a final contract. In making a counter-offer, as evidenced in the famous case of Hyde v Wrench, the prior offer is held automatically rejected. An acceptance is therefore required under the terms of the counter-offer otherwise there is no contract.
- Cross Offer: these kinds of offers are those whereby two parties make the same offer with identical terms to one another without knowing that the other party has made an offer.
- Standing Offer: this kind of offer prescribes the duration with which the offer is to remain open for acceptance.
- Express and Implied Offers: express offers are those created by the express words of the parties declaratory of their intention to contract, while implied offers are those which are inferred by the law from certain words in an undertaking which imply intent to contract, even though not expressly.
Termination of an Offer
An offer may be terminated by:
- Revocation: An offer will be held to have been “revoked” if the offeror changes his/her mind and withdraws it (expressly or impliedly). To be valid, the revocation must have been: communicated expressly and revoked before an acceptance is made.
- Lapse of time: This is especially true for standing offers where an acceptance is not made within the stipulated timeframes and, for other kinds of offers, within reasonable timeframes.
- Counter-offer: As previously stated, a counter offer automatically cancels the original offer and becomes the fresh offer.
- Death: The death of either party before acceptance renders its performance impossible thus terminating any foreseeable contract.
- Rejection: refusal by an offeree to accept the offer either expressly or by implication would amount to termination. Common law has also precedented in the case of Felthous v Bindles that silence on the party of the offeree also amounts to rejection.
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