A proposal mainly entails what you pitch to the client: your ideas concerning the goods or services you are offering. A properly conceived proposal is the strategy a business person uses to win the approval of a prospective client. The proposal is an offer. It is the first step towards the making of a contract. The client's response determines whether a contract will result from the offer. No contract exists if the client response portrays his approval of your ideas but not his commitment to the project.
The proposal becomes a contract through the principle of oral agreements if the client approves the proposal, intimates his willingness to go ahead with the project and states the finances he intends to put on the table. Under the law of contracts an oral agreement is enforceable by law. Contracts under the Statute of Frauds have to be evidenced in writing. Examples of these contracts include contracts to sell interest in real property and contracts that cannot be performed within one year of their making. The Statute of Frauds falls under state law and its provisions vary with each state. It is advisable to put all your agreements in writing because it is difficult to prove the existence of an oral contract if one party decides to back down.
Two vital elements of a contract are the intention to create legal relations and the capacity to contract. Once a client shows his consent and willingness to be bound to the provisions of the proposal and enter into a contract with the seller, the proposal becomes a legal contract. A written agreement is the most suitable way to show an intention to create legal relation. As long as a client has the capacity to contract the agreement is legally enforceable. The capacity to contract is governed by the law of contracts; for example, those with impaired mental capacity and minors lack the capacity to contract. A bankrupt person's capacity to contract is limited to a certain extent as per the provisions of the Bankruptcy Act.
This is an important element of a contract. Even if the prospective customer accepts the terms of a proposal and intimates his intention to be bound to it, the contract will not be enforceable unless the client offers something of value as consideration to the promise. For example, you pitch your sale; the client approves and agrees to pay a certain amount of money as deposit. This is his consideration for your services. Unless this occurs no contract exists and the proposal remains an offer.