Legal Rules of Valid Offers and Capacity to Contract

Legal Rules as to Valid Offer

Essential Elements

1. Communication: Offer must be communicated to the offeree.
2. Certainty: The offer must be certain, definite, unambiguous, and not vague.
3. Legal Relation: The offer must be capable of creating a legal relation.
4. Expression: Offer may be express or implied.
5. Completeness: Communication of the complete offer is necessary.
6. Counter Offer: A counter-offer amounts to a rejection of the original offer.
7. Cross Offer: Cross offers do not conclude a contract.
8. Acceptance Burden: An offer must not thrust the burden of acceptance on the offeree.
9. Invitation to Offer: Offer must be distinguished from an invitation to offer.
10. Intention: The offeror should have the intention to obtain the consent of the offeree.
11. Specificity: Offer may be specific (to a person or group) or general (to the public).

Types of Offer

Express Offer

When the offeror expressly communicates the offer, it is an express offer. This can be done through spoken or written words.

Implied Offer

When an offer is not communicated expressly but implied from the conduct of the parties or the circumstances of the case.

Specific Offer

An offer made to a particular person or a group of persons. It can be accepted only by that person to whom it is made. Communication of acceptance is necessary.

General Offer

An offer made to the public in general. It can be accepted by anyone who fulfills the terms and conditions. Communication of acceptance is not necessary.

Cross Offer

When two parties exchange identical offers simultaneously, unaware of each other's offer. Cross offers do not conclude a contract. They must be made by the same parties, in ignorance of each other's offer, and with the same terms and conditions.

Counter Offer

When the offeree gives a qualified acceptance with modifications to the original offer's terms. It amounts to rejecting the original offer, lapsing it, and creating a new offer.

Capacity to Contract

According to Section 11, every person is competent to contract who:

1. Has attained the age of majority.
2. Is of sound mind.
3. Is not disqualified from contracting by any law.

Minority

1. A contract with a minor is void.
2. A minor can be a beneficiary of a contract.
3. A minor is always given the benefit of being a minor.

Person of Unsound Mind

According to Section 12, a contract made by a person of unsound mind is void.

Disqualified Persons

Besides minors and persons of unsound mind, other individuals are disqualified from contracting due to political status, legal status, etc. Examples include foreign sovereigns, ambassadors, alien enemies, convicts, and insolvents.