In this article you will learn about the Difference Between Offer and Proposal.
Difference Between Offer and Proposal
The terms "offer" and "proposal" are fundamental concepts in contract law, playing pivotal roles in the formation of agreements. In the context of the Indian Contract Act and general legal principles, the distinction between offer and proposal is crucial. Let's delve into the differences between these two concepts in detail.
Definition :
An offer is a specific proposal made with the intention to create a legal relationship. It is a manifestation of willingness to enter into a contract on certain terms, and it invites the offeree to accept those terms. On the other hand, a proposal is a wider term that encompasses any statement or set of statements that are made with the aim of obtaining the assent of the other party, leading to an agreement.
Legal Recognition :
In legal terminology, the term "offer" is more commonly used and recognized than "proposal." The Indian Contract Act, 1872, specifically defines and discusses offers, and it is the term primarily employed in legal discussions globally. However, in everyday language and some legal systems, the term "proposal" may be used interchangeably with an offer.
Communication :
An offer is generally communicated to the offeree. Communication can be express or implied and must be made with the intention to be bound by the terms stated. A proposal, being a broader term, includes any communication made with the intention of eliciting a response. It may not always be binding, depending on the context.
Intention to Create Legal Relations :
An essential characteristic of an offer is that it reflects the intention of the offeror to be legally bound by the terms presented. The offeror must genuinely desire to enter into a legal relationship if the offeree accepts the offer. A proposal, while still indicating an intention to enter into an agreement, may not always carry the same level of commitment.
Specificity of Terms :
An offer typically contains specific and definite terms. It must be clear and leave no room for ambiguity regarding the essential elements of the proposed contract. A proposal, being a broader term, may include statements that are not as specific or may be preliminary in nature.
Revocation :
An offer can be revoked by the offeror before it is accepted, provided the revocation is communicated to the offeree. Once accepted, the offer becomes a binding contract. In contrast, a proposal may not always be revocable in the same manner. Some proposals, especially those forming part of ongoing negotiations, may not be easily withdrawn.
Acceptance :
Acceptance is a crucial element in the formation of a contract. It must be absolute and unqualified, conforming to the terms of the offer. If the offeree alters the terms or introduces new conditions, it is considered a counter-offer. In the case of a proposal, acceptance may lead to the formation of an agreement, but the process might be more flexible, depending on the circumstances.
This article on Difference Between Offer and Proposal is contributed by Dipshikha Anand. If you like LawStudyPoint.com do follow us on our Twitter handle.