Principle A proposal offer should be made with an intention that after its valid acceptance a legall...........

Indian Contract Act (ICA)1872 Valid and Void Contracts

Principle: A proposal (offer) should be made with an intention that after its valid acceptance. a legally binding promise or agreement will be created. The test for the determination of such intention is not subjective. rather it is objective. The intention of the parties is to be ascertained from the terms of the agreement and the surrounding circumstances under which such an agreement is entered into. As a general rule. in the case of arrangements regulating social relations, it follows as a matter of course that the parties do not intend legal consequences to follow. On the contrary, as a general rule. in the case of arrangements regulating business affairs. it follows as a matter of course that the parties intend legal consequences to follow. However the above rules are just presumptive in nature, and hence, can be rebutted.

Facts: One morning while having breakfast. ‘X’ the father says to ‘Y’ (X’s son) in a casual manner, “I shall buy a motorbike for you if you get through the CLAT.” Which of the following derivations is CORRECT?

‘X’ made a statement that resulted in an enforceable promise.

‘X’ made a statement that resulted in a valid proposal.

‘X’ made a statement that resulted in an enforceable agreement

‘X’ made a statement that did not result in any enforceable agreement

Explanation:

The facts themselves indicate the setting to be a filial one rather than a business arrangement. Moreover the relationship is that of a son and father which would indicate a social relationship. Lastly, the setting, a lazy breakfast, and the father making the utterance, “casually” does not indicate any intention to create a legally binding relationship.