Difference between Offer Letter and Appointment Letter: Legal Analysis

Difference between Offer Letter and Appointment Letter: Legal Analysis

A contract is an agreement creating and defining obligation between two or more persons by which rights are acquired by one or more to acts or forbearance on the part of others. It is a legally binding agreement between two or more persons by which rights are acquired by one or more to acts or forbearance on the parts of others. Employment is contract between employer and employee. An agreement enforceable by law is a contract. Every promise and every set of promises, forming the consideration for each other, is an agreement. 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. 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. Thus agreement has two parts 1) Offer and 2) Acceptance. From the above discussion it is apparent that in an Employment Contract both offer and a valid acceptance is necessary.

Offer letter contains an offer (proposal) from the employer (Offeror) prescribing important details such as work role, salary, benefits, etc. If the concerned employee (Offeree) accepts the offer unambiguously and unconditionally then the contract comes into effect and an appointment letter is issued.

Essentials of a Valid Offer:

1.       The offer must be communicated to the other party.

2.       The offer must be made with a view to obtain the consent of the offeree.

3.       The offer must have its terms definite and clear.

4.       The offer must be capable of creating legal relationship.

5.       The offer must express the final willingness of the offeror.

Essentials of a Valid Acceptance:

1.       The acceptance must be communicated to the other party.

2.       Acceptor must have knowledge of the offer.

3.       The acceptance must be absolute and unconditional.

4.       The acceptance must be given within the time prescribed or within a reasonable time.

5.       The acceptance must be given before the lapse of offer.

Case Laws on Offer and Acceptance:

1) Harvey v Facey

Harvey, who wanted the property to be sold to him, sent a telegram to Facey. It said, "Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid". Facey replied on the same day: "Lowest price for Bumper Hall Pen £900." Harvey then replied in the following words. "We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession."

The Privy Council held that there was no contract concluded between the parties. Facey had not directly answered the first question as to whether they would sell and the lowest price stated was merely responding to a request for information not an offer. There was thus no evidence of an intention that the telegram sent by Facey was to be an offer.

2) Calill v Carbolic Smoke Ball Co

The case concerned a flu remedy called the "carbolic smoke ball". The manufacturer advertised that buyers who found it did not work would be awarded £100, a considerable amount of money at the time. The company was found to have been bound by its advertisement, which was construed as an offer which the buyer, by using the smoke ball, accepted, creating a contract.

3) Lalman V Gauri Dutt

The High Court dismissed the revision application upholding the Judgment & Order of the Judge of the Court of Small Causes at Cawnpore in favour of the Defendant-Respondent.

1.       An offer must be made with an intention to create legal relation.

2.       An offer may be expressed or implied.

3.       The terms of the offer must be certain and not vague.

4.       An offer cannot prescribe silence as mode of acceptance.

5.       An offer must be an expression of willingness to do or abstain from doing something.

6.       An offer must be made to obtain the assent of the other.

7.       An offer must be communicated.

8.       Two identical cross offers do not result in a contract.

9.       An offer is different from invitation to offer.

10.   An offer may be general or specific.