Offer to the World at Large and the Lapse of an Offer: Contracting with an Unascertained Offeree, and Section 6(2) of the Indian Contract Act, 1872

Two questions about the reach of an offer are dealt with here. The first concerns its reach in space: can a proposal be addressed to nobody in particular and still be capable of acceptance? The Act's language appears to require a person to whom the proposal is made, and the answer courts have given resolves an apparent difficulty rather than ignoring it. The second concerns its reach in time: for how long does an offer remain open, and what happens when the period expires? Section 6(2) supplies the rule, and the content of a reasonable time is a question of fact that has produced a consistent body of authority.

1. Offer to the World at Large

1.1 The apparent difficulty

Section 2(a) speaks of a person signifying to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of that other. Read literally, this seems to require an identified offeree. Section 2(b) compounds the difficulty by requiring the person to whom the proposal is made to signify assent. On that reading a notice addressed to the public could never be a proposal, because there is no 'other' at the moment it is issued.

Three objections were historically raised against the general offer, and each has been answered.

1. There is no identified offeree. The answer is that the offer is made to the world, but the contract is made only with that limited portion of the public who come forward and perform the condition. The offeree is ascertained by performance, and at the moment the contract is concluded there is no uncertainty about who the parties are.
2. Acceptance is not communicated. The answer lies in Section 8. An offer that invites an act rather than a promise dispenses by implication with prior notification, and performance of the condition is itself the acceptance.
3. The offeror is exposed to indefinite liability. The answer is that the exposure is of the offeror's own making. He chose the terms, and if he wished to limit the number of claims, the period, or the class of persons who might qualify, he could have said so.

1.2 The Indian position

The English authority to the same effect is Carlill v. Carbolic Smoke Ball Co., [1893] 1 QB 256, where the Court of Appeal rejected the argument that an offer cannot be made to the world and held that the company's advertisement ripened into a contract with anyone who performed the stipulated conditions. Bowen LJ's answer to the objection remains the standard one: the offer is to all the world, but the contract is made with that limited portion of the public who come forward and perform the condition.

1.3 Two things a general offer is not

• It is not an invitation to offer. The distinction turns on whether the notice shows an intention to be bound on performance or merely to receive proposals. An advertisement offering goods for sale invites offers; an advertisement promising money to anyone who does a specified act is itself an offer. Evidence of seriousness, such as the deposit of a sum with a bank in the Carlill advertisement, supports the second reading.
• It is not an offer to everyone in the world simultaneously in the sense of creating obligations to all of them. No obligation arises to anyone until the condition is performed. Until then the general offer costs the offeror nothing, which is precisely why it is so widely used in advertising and in the recovery of lost property.

2. Lapse of an Offer

An offer does not last indefinitely. It may be brought to an end by the offeror's own act of revocation, by rejection, by the failure of a condition, or by the death or insanity of the offeror, all of which are dealt with in the topic on revocation. It may also come to an end without anyone doing anything at all, simply through the passage of time. That is lapse.

2.1 Where a time is prescribed

Where the offer fixes a period, it ceases to be capable of acceptance when the period expires, and an acceptance communicated afterwards is a fresh proposal which the original offeror may accept or reject. Two points follow. The offeror is not bound to keep the offer open for the stated period; a promise to hold an offer open is itself unsupported by consideration and may be withdrawn at any time before acceptance, unless the promise was itself bought. And the prescribed period runs by reference to the communication of acceptance, so the question whether an acceptance is in time is answered by applying Section 4.

2.2 Where no time is prescribed

2.3 What makes a time reasonable

Reasonableness is a question of fact, and the cases turn on a small number of recurring considerations.

• The nature of the subject matter. An offer to sell a commodity whose price moves daily, or shares in a fluctuating market, lapses in days. An offer to sell land may remain open for weeks or months.
• The medium used. An offer made by telegram or instant message suggests that a prompt reply was expected; one made by letter allows correspondingly longer.
• Whether the subject matter is perishable. An offer to sell goods liable to deteriorate lapses within the period during which they remain merchantable.
• The conduct and communications of the parties. Continuing negotiations may extend the period; a long silence on both sides shortens it.
• Trade usage and any course of dealing between the parties, which is preserved by the saving in Section 1.

2.4 Lapse is automatic

Lapse under Section 6(2) requires no act by the offeror. He need not communicate anything, and the offer dies of itself. This distinguishes lapse from revocation under Section 6(1), which takes effect only when notice reaches the offeree. An offeror relying on lapse is therefore in a stronger position than one relying on revocation, because he need prove only the passage of time, whereas revocation requires proof of communication.

3. The Position Stated Shortly

1. An offer may be addressed to the world at large; the contract is made only with those who come forward and perform the condition.
2. The objections based on the absence of an identified offeree and the absence of communicated acceptance are answered by Section 8 and by the fact that the offeree is ascertained by performance.
3. Har Bhajan Lal is the Indian authority; Carlill v. Carbolic Smoke Ball Co. is the English one.
4. Knowledge of the offer remains essential, per Lalman Shukla, however general the offer.
5. Section 6(2) provides that an offer is revoked by the lapse of the time prescribed, or of a reasonable time where none is prescribed.
6. An offeror is not bound to keep an offer open for a stated period unless the promise to do so was itself supported by consideration.
7. Ramsgate Victoria Hotel: an application for shares lapses within a reasonable time, which is short where values fluctuate.
8. Reasonableness turns on the subject matter, the medium, perishability, the parties' conduct and trade usage.
9. Lapse operates automatically and needs no communication, unlike revocation under Section 6(1).

4. Related Topics and Provisions