Contract Offer

Contract Offer

What is an Offer?

An offer is a definite undertaking or promise made by one party with the intention that it shall become binding on the party making it as soon as it is accepted by the party to whom it is addressed.

It is a statement by the party, called the offeror of the terms specified by him, which if accepted by the other party called the offeree will create a binding contract between them.

An offer must be precise and unequivocal, leaving no room for speculation or conjecture as to its real content in the mind of the offeree; a clear intention and desire to enter into a contract with the offeree on clearly defined terms. See ORIENT BANK PLC vs. BILANTE INTERNATIONAL (1997) 8 NWLR (PT 515) 37 at 76.

An offer or its acceptance cannot be made to a non-existing person.

What constitutes a valid offer

As to what will amount to a definite offering, the document of offer or the statement of offer must be clear as to the terms of the contract without making reference to another document except of course if both documents can complete the terms of the contract.-WAYMAKER PROPERTIES LTD v. JANYAU & ORS (2021) LPELR-54481(CA)

Offer must be clear as to the terms not leaving room for double interpretation as to what the offer is. Offer must be unequivocally accepted without leaving room for double interpretation.

In this respect, the apex Court case of Bilante Int’l Ltd vs NDIC (2011) 15 NWLR (pt 1270) is instructive. The Court held: “It is trite that before any contract or agreement can be said to have come into existence in law, there must be an unmistaken and precise offer and unconditional acceptance of the terms mutually agreed upon by the parties thereto.

An offer must be accepted in order to crystallize into a contract. See Nneji v. Zakhem Con. (Nig.) Ltd. (2006) 12 NWLR (Pt.994) Pg.297. An offer may be defined as a definite indication by one person to another that he is willing to conclude a contract on the terms proposed which when accepted will create a binding legal obligation. Such offer may be verbal, written or even implied from the conduct of the offeror. See Majekodunmi v. National Bank of Nigeria (1978) 3 SC 119 at Pg.129. Omega Bank (Nig.) Plc. v. O.B.C. Ltd. (2005) 8 NWLR (Pt.928) Pg.547.”

Similarly, in Neka B.B.B. Manufacturing Co Ltd vs ACB (2004) 1 S.C. (pt 1) 32, it was held: “It has been said that an offer, capable of being converted into an agreement by acceptance, must consist of a definite promise by the offeror to be bound provided that certain specified terms are accepted.

Essentials of a Valid Offer

There are two types of offer: general offer and specific offer. A general offer is made to a group of people, while a specific offer is specifically made to one person. In order for an offer to be considered valid, it must meet the following requirements:

  • It must be communicated
  • It must be made with the purpose of obtaining the assent of the other party
  • Must be capable of establishing legal relation, meaning that consideration must be a two-way process
  • Must contain language that is certain and no element of uncertainty

In addition, an offer may be express or implied. An express offer is made in the presence of conversation, while an implied offer is communicated in the absence of conversation.

Conditions for an offer to be considered as an offer of compromise

For correspondence to be considered as an offer of compromise, the following conditions must co-exist: i. Existence of dispute between the parties; and

ii. The mutual intention of the parties to enter into negotiation to settle the dispute.-SAMEK CONSTRUCTION CO. LTD v. EGEGE & ORS (2018) LPELR-45487(CA)

Distinction between offer and invitation to treat

An offer must be distinguished from an invitation to treat. For an offer to be capable of becoming binding on acceptance it must be definitely clear and final. If it is merely a preliminary move in negotiations which may lead or may not lead to a definite offer being made by one of the parties to the negotiation, then it is not an offer but an invitation to treat. An invitation to treat is not capable of an acceptance which will result in a contract. See Carlill v. Carbolic Smoke Ball Co. (1893) 1 Q.B. 256.

Effect of an offer that is subject to a condition

Where an offer is subject to condition the formation of the contract is postponed until the happening of the event on which the offer is conditioned. If the condition of the offer is that unless something is done within a stipulated time the offer is determined, such an offer cannot be accepted after the happening of the event.

However, it is not unsual for an offer to contain the terms of a prospective contract. Sometimes these terms are described as conditions. The acceptance of an offer which contains terms or conditions of the prospective contract brings into existence a binding contract on those terms, although the liability of a party may be suspended until the condition is fulfilled.

Principles guiding revocation of an offer

An offer may be revoked at any time before acceptance. When revocation of an offer is made before acceptance there is no liability on the part of the offeror notwithstanding that he promised to keep the offer open for a specific period of time but revoked it before the expiration of that period of time.

This is because such a promise, not being supported by any consideration from the offeree, is not binding on the offeror. However the offeror’s decision to revoke is ineffective until it has been communicated to the offeree.

It is not necessary that the offeror himself should make the communication, what is important is that the offeree is made aware of the revocation from a reliable source. When an offeree expressly rejects an offer made to him it becomes effective when notice or rejection actually reaches the offeror.

An offer is impliedly rejected if the offeree instead of accepting the original offer makes a counter offer which varies the term proposed by the offeror. See Major-General George Innih (rtd.) & Ors. v. Ferado Agro and Consortium Ltd. (1990) 5 NWLR Pt. 152 page 604.

Legal effect of a counter offer

An offer must be unconditionally and unqualifiedly accepted. An offer is impliedly rejected if the offeree instead of accepting the original offer makes a counter offer which varies the terms proposed by the offeror.

A counter offer is a statement by the offeree which has the legal effect of rejecting the offer and of proposing a new offer to the offeror. lt puts an end to the previous offer of the initial offeror.

A counter – offer by the offeree, operates as a rejection of the original offer, thus terminating it. Therefore, for the purpose of ascertaining the intention of the parties, regard must be had to the terms of the contract, the conduct of the parties and the circumstances of the case. This is why, it is now also settled, that where there is a counter-offer or qualified acceptance, it does not give rise to a binding contract between the parties. See Lawal v. Union Bank of Nigeria Plc. (1995) 2 NWLR (Pt.378) 407

The legal effect of a counter-offer is to terminate the original offer so that it cannot subsequently be accepted by the offeree.-BILANTE INTL LTD v. N.D.I.C (2011) LPELR-781(SC).

Termination of Offer

“According to CHITTY ON CONTRACTS (24th Edition) page 91, one of the ways in which an offer can be terminated is by rejection. A rejection terminates an offer.

 

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