Proposal
Also called: Offer
Under Section 2(a) of the Contract Act, a person makes a proposal when he signifies to another his willingness to do or abstain from doing anything, to obtain that other's assent.
Explained
Section 2(a) of the Indian Contract Act, 1872 provides that when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. Proposal is the statutory word for what English law calls an offer. When the person to whom it is made signifies his assent, the proposal is accepted, and a proposal when accepted becomes a promise (Section 2(b)). The person making it is the promisor and the person accepting it the promisee (Section 2(c)).
Two elements must exist: a signification of willingness to do or abstain, and the object of obtaining the other's assent. A statement made only to invite others to make offers, such as a price list or an advertisement inviting tenders, is an invitation to make proposals and not a proposal. A proposal may be express or implied (Section 9).
The communication rules are tested constantly. Under Section 4, the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. Section 5 allows a proposal to be revoked at any time before the communication of its acceptance is complete as against the proposer, which happens when the acceptance is put in a course of transmission to him so as to be out of the acceptor's power. Section 6 lists the modes of revocation: notice by the proposer, lapse of the prescribed or a reasonable time, failure of a condition precedent to acceptance, and the death or insanity of the proposer if known to the acceptor before acceptance.
For contracts by telephone, the communication is treated as instantaneous, and the contract is made where the acceptance is heard by the proposer. Acceptance must be absolute and unqualified under Section 7; a conditional or varied acceptance is a counter proposal.
What the law says
(a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal;
(b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise;
(c) The person making the proposal is called the “promisor”, and the person accepting the proposal is called the “promisee”;
Clause (a) defines proposal; clauses (b) and (c) define acceptance and parties
The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
The communication of an acceptance is complete,—
as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor;
When communication of a proposal and acceptance is complete
A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
Illustration
Time within which a proposal may be revoked
A proposal is revoked—
(1) by the communication of notice of revocation by the proposer to the other party;
(2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;
Modes of revocation of a proposal
In order to convert a proposal into a promise, the acceptance must—
(1) be absolute and unqualified;
(2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but if he fails to do so, he accepts the acceptance.
Acceptance must be absolute and unqualified
Example
Illustration to Section 5: A proposes by post to sell his house to B, and B posts a letter of acceptance. A may revoke his proposal at any time before or at the moment B posts the letter, but not afterwards.
For the exam
- Section 2(a) ICA: willingness to do or abstain, with a view to obtaining assent.
- Proposal when accepted becomes a promise (Section 2(b)).
- Communication of a proposal is complete when it comes to the offeree's knowledge (Section 4).
- Revocable until acceptance is put in course of transmission to the proposer (Section 5).
- Telephone contracts are made where the proposer hears the acceptance.
449 questions in the Law Maker question bank use this term. Practise Contract Law questions
Judgments
Related terms
- PromiseA proposal that has been accepted. Under Section 2(b) of the Indian Contract Act, 1872, a proposal, when accepted, becomes a promise.
- AgreementUnder Section 2(e) of the Contract Act, every promise and every set of promises forming the consideration for each other. An agreement enforceable by law is a contract.
- ContractUnder Section 2(h) of the Contract Act, an agreement enforceable by law. Section 10 lists what makes an agreement a contract.
- ConsiderationAn act, abstinence or promise done or made at the desire of the promisor by the promisee or any other person, which is the price for the promise (Section 2(d) of the Contract Act).
- Consensus ad idemThe parties must agree upon the same thing in the same sense. Without such identity of minds there is no consent and no valid agreement (Section 13, Contract Act).
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.