What Is Proposal in Business Law?
To make a business deal, first a proposal, or written document outlining a project, will be sent to a party in the hope that they will agree to it. 3 min read
2. Business Proposal Elements
3. Types of Business Proposals
4. Differences Between Proposals and Contracts
Proposal in Business Law Overview
The question of what is proposal in business law pertains to how business deals are made. To make a business deal, first a proposal, or written document outlining a project, will be sent to a party in the hope that they will agree to it. Such proposals may be solicited or unsolicited. Solicited proposals are ones that were asked for beforehand; unsolicited proposals were not. If the party to whom the proposal is made finds it agreeable, then a contract may be drawn up and a deal will be made.
Business Proposal Elements
Business proposals will usually conform to specific expectations exclusive to their field. For instance, architectural proposals will usually include a model or other visual representation of the project at hand, while advertising proposals will usually require a meeting to present a bidder’s vision for the potential ad campaign, and visual elements may also be necessary. That said, if the proposal is made in written form and requiring greater length and detail than can be expressed in a letter proposal, most business proposals will contain several standard elements regardless of the industry. Such elements are:
- The Title Page. This will include the names of the parties involved in the potential deal, both those proposing and those being proposed to, and the date on which the proposal is submitted.
- The Table of Contents. This may not be needed for simpler proposals, but for more complex ones, a table of contents may be helpful to let readers quickly find subsections within the proposal.
- The Executive Summary. This is a summary of the contents of the proposal.
- The Statement of the Issue/Problem/Job. This section will state the problem the proposal aims to solve in order to show that the bidder has a firm understanding of the issue at hand.
- The Approach. This will summarize how the bidder intends to solve the problem at hand. This section is often key to securing the job, as the end result is often the biggest concern of the party being proposed to.
- The Methodology. This section goes into greater detail how the solution proposed in the approach section will be achieved.
- The Bidder’s Qualifications. This will present reasons why the bidder should get the job, such as a history of successfully completing similar jobs.
- The Benchmarks and Schedule. If the job is to be completed over a period of time, a schedule for benchmarks to be met may be helpful or necessary.
- The Payment Schedule, Cost Proposal, and Legal Matters. The bidder will conclude their proposal by offering the price for their work, how and when they should be paid, and any legal matters that are necessary to state.
If in doubt about a business proposal’s ideal form, a bidder’s best course of action is to obtain samples of proposals typical to their field and not stray too far from them. They should also keep in mind that a successful business proposal should aim to establish a legal relationship (a contract) and that it should be written in clear, concise language. Overly complex or convoluted proposals are not likely to succeed against proposals that state the problem and the solution clearly.
Types of Business Proposals
There are four main types of business proposals, and they are:
- General Proposals. These are proposals that are open for anyone to accept.
- Specified Proposals. These are proposals made to a specific party or class of parties.
- Express Proposals. These are proposals made in writing, orally, or in some manner that specific details are set down.
- Implied Proposals. These are proposals where the terms are inferred from actions or industry standards, rather than by express terms.
Differences Between Proposals and Contracts
Proposals should not be confused with contracts. Contracts are the final agreement made between two or more parties, and as such, they should include the essential elements of a contract, they being the offer, consideration, acceptance, and agreement. A proposal, on the other hand, must only contain one element of the four–the offer–and as such is merely a tool for establishing a contract. Because of this, proposals are not legally enforceable in the way that contracts are. However, a proposal can become a contract if a party accepts the proposal in its entirety without any alterations.
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