OFFER AND ACCEPTANCE CONTRACT LAW NOTES

OFFER AND ACCEPTANCE CONTRACT LAW NOTES

Table of Contents

OFFER AND ACCEPTANCE CONTRACT LAW NOTES

QUESTION: “A mere mental assent not evidenced by the words or conduct does not constitute acceptance.” Comment.

It is true that mere mental assent evidenced by the words or conduct does not constitute the acceptance. Acceptance is the expression of the assent to the terms of an offer being offered by the offeror.

According to Section 2 (b) of the Indian Contract Act, 1872:

“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.”

A proposal becomes a contract when the acceptance of such proposal is communicated to the promisor. The communication of acceptance must occur in the prescribed form or any such form in the normal course of the business if no specific form has been prescribed. Additionally, the offeree must also be known about the offer before conveying his acceptance. It implies that the offeree cannot communicate acceptance without the knowledge of the offer.

An acceptance can be communicated in any of the following modes by:

  • Words Spoken
  • Words Written
  • Conduct
  • Performance Of Conditions
  • Acceptance Of Contribution

CASE: BRODGEN VS. METROPOLITAN RAILWAY COMPANY

The manager of the company received a draught agreement concerning the supply of the coal. The manager wrote the word ‘approved’ and put the agreement in his drawer and forget all about it. It was held that there was no contract as another party was not communicated about acceptance.

COMMUNICATION OF ACCEPTANCE

The communication of the acceptance must be completed by both the parties to the contract i.e. as against the offeror and offeree both.

According to Section 4 (2) of the Indian Contract Act, 1872:

“The communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor to withdraw the same and as against the acceptor, when it comes to the knowledge of the proposer.”

The rules of communication of acceptance are as follows:

AS AGAINST THE OFFEROR: The communication of acceptance as against the offeror is complete when the acceptance is put in a course of transmission to offeror by the offeree. It imply that the offeree lose the power to withdraw his acceptance. If the acceptance is posted by the letter, then the acceptance is completed as the letter is posted and offeree is not in the position to stop its transmission. If the acceptance is made by the telegram, then the acceptance is completed as the telegram is posted or booked.

CASE: HOUSEHOLD FIRE INSURANCE CO. VS. GRANT (1879)

Grant made an offer to purchase the shares of the plaintiff company by the letter sent through the post. The company accepted the application and letter of allotment of shares was posted to the Grant. The letter has not reached the Grant. But as it was sent by the company, the acceptance is said to be communicated as against at the offeree. Held, Grant is liable to pay the amount of allotment due for the shares.

AS AGAINST THE OFFEREE: The communication of acceptance is complete as against the offeree is complete when the acceptance of the proposal or offer comes into the knowledge of the offeror. The communication of the acceptance is binding on the offeree when the letter or telegram posted reaches the offeror. It means the offeree cannot revoke his acceptance then. In case he wants to revoke the acceptance, then the letter of revocation must be received earlier than letter of acceptance by the offeror.

Example: Mr. A offers to sell his car to Mr. B for $25000. Mr. B accepts the offer and sent his acceptance by post on January 20. The letter of acceptance is received by Mr. A on January 25. Mr. B is bound by his acceptance on January 25 when the letter of acceptance is received by the Mr. A.  

CASE: FELTHOUSE V. BINDLEY

F offered to buy his nephew’s horse for $30-15s, adding, “If I hear no more, I shall consider the horse is mine at $30-15s”. The nephew did not reply, but told his auctioneer not to sell the horse, as it was sold to his uncle. But the auctioneer sold it by mistake to the third party. F sued him for conversion of his property. It was held that there was no communication of acceptance. Mental Acceptance or non-communicated assent does not result in a contract.

EXCEPTIONS TO THIS RULE

There are also some exceptions to this rule where the silence or mere mental acceptance amounts to the final acceptance. The exceptions are as follows:

  1. Where the offeree has the sufficient opportunity to reject the offer but he makes or continues to make the use of the goods offered to him.

CASE: KASHI PRASAD V. SAJJADS BEGAM (1940)

The landlord served the notice on the tenant regarding the rise in the rent of the building or premises rented to him. The tenant without conveying any intention to stay more or not, continues to occupy the premises. Held, the silence of the tenant amounts to the acceptance of the rise in the rental charges. So, the tenant has to pay the rent in future at the increased prices.

  • Where on the basis of the previous dealings or conduct, the offeror has the sufficient grounds to make believe that when the offeree remains silent, it amounts to the acceptance.
  • If there is fiduciary relationship among the parties i.e. the relationship of utmost good faith and they are under the duty to speak, then mere silence on their part amounts equivalent to the speech. Fiduciary relations usually exist between the sisters, brothers, husband-wife, mother and father, son and daughter etc.

CONCLUSION

So, it is clear that the acceptance must be communicated by the words of mouth, in writing or by conduct. A mere mental acceptance is no acceptance. There must be some external mode or action that the law recognizes. So an agreement cannot result out of the mere mental assent, an intention to accept or mental resolve. 

Leave a Reply