ACCEPTANCE
The valid essentials of Acceptance are as follows:
According to Section 2(b) of Indian Contract Act, 1872
“When the person to whom the proposal is made signifies his assent, it is an acceptance of the proposal and accepted proposal is called a promise or an agreement”.
Thus, when the offeree to whom the proposal or offer is made unconditionally accepts the offer it becomes a promise.
It is an expression of assent to the term of an offer.
EXAMPLE
An offers to sell his horse for rupees 500 to B. B accepts the offer and purchase the horse for rupees 500. This is an acceptance.
WHO MAY ACCEPT?
The offer must be accepted by the one to whom it is made. It cannot be assigned to another or accepted by another without the consent of the person making it.
CASE: BOULTON VS. JONES (1857)
Boulton purchased the business from Brocklehurst about which Jones did not know anything. jones placed an order with Brocklehurst to whom it owed debt. Since the business was purchased by the Boulton it received the letter of offer and supplied the goods to the Jones even though this letter was not addressed to him. jones refused to make payment to the Boulton as he wanted to set off his debt against the Brocklehurst. it was held that jones was not liable since Boulton know the offer was not addressed to him and he had no power to accept it.
VALID ESSENTIALS OF ACCEPTANCE
1. ACCEPTANCE MUST BE ABSOLUTE AND UNCONDITIONAL
This is the first and foremost valid essentials of an acceptance.
Acceptance must be unconditional and absolute. There cannot be conditional acceptance that would amount to counter offer which nullifies the original offer. Even a minor or a material change in the terms of the offer vitiates the acceptance. An offer can be converted into promise if it is accepted unconditionally.
CASE: JORDAN V. NORTON
The Norton offered to buy Jordan’s mare if he guaranteed that the mare was ‘quite in harness.’ The Jordan wrote to the Norton that the mare was ‘quite in double harness.’ Held it was not acceptance.
CASE: HYDE V. WRENCH
The defendant (Wrench) offered to sell his farm to the plaintiff (Hyde) for $1,000. The plaintiff replied that he would pay you $950. This was refused by the defendant. After getting refusal, the plaintiff decided to purchase the farm for $1,000 and sent his assent to the defendant. The defendant refused to sell his farm for $1,000. The plaintiff sued him for specific performance of the contract. It was held that there was no contract between the parties as an offer to buy for $950 in response to the offer to sell for $ 1,000 was only to counter offer which amounted to the rejection of the original offer. The defendant is not bound to accept the contract.
2. ACCEPTANCE MUST BE COMMUNICATED TO THE OFFEROR
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.
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 uncommunicated assent does not result in a contract.
3. ACCEPTANCE MUST BE ACCORDING TO THE PRESCRIBED MODE
It is the legal rule of the acceptance that it must be accepted in the prescribed manner. If the offer is not accepted in the prescribed manner then the offeror has every right to reject the acceptance within reasonable time.
As per section 7 (2) of Indian Contract Act, 1872
“If the acceptance is not made in the manner describe the proposer may within a reasonable time, after the acceptance is communicated to him, insist that the acceptance must be made in the manner prescribed”.
EXAMPLE
X offers to sell 500 quintals of wheat for ₹ 400 per quintal to Y. He required Y to send his acceptance by post. Y telephones to X accepting the offer. X may insist that acceptance should be sent by post. In such a case telephone conversation would not create a contract.
4. ACCEPTANCE MUST FOLLOW THE CONTRACT OFFER
Acceptance follows offer. If the acceptor is not aware of the existence of the offer and conveys his acceptance, no contract come into being. There must be knowledge of the offer before anyone could consent to it. An act done in ignorance of the offer cannot be called an acceptance.
CASE: LALMAN VERSUS SHUKLA VS GAURI DUTT
The nephew of the defendant Gauri was missing. He sent his servant Lalman to find him out. After the servant had left, he announced a reward of ₹51 for anybody who would trace his nephew. The plaintiff traced the nephew before having knowledge of the reward announced by the defendant. Subsequently, the plaintiff claimed the reward when he came to know about it.
Held that plantiff could not recover the reward as the offer containing the reward was not communicated to him.
5. ACCEPTANCE MUST BE MADE WITHIN A REASONABLE TIME
Sometimes the time limit is fixed within which the acceptance is to be given. In such a case the acceptance must be given within the fixed time limit. In case no time limit is prescribed the acceptance should be given within a reasonable time.
CASE: RAMSGATE VICTORIA HOTEL COMPANY LIMITED VS. MONTEFLORE
M applied for shares in RV hotel company limited on 8 June. The company did not write to him allotting the shares until 3rd November. When he was informed that shares were allotted to him, he refused to accept the shares which led to dispute. It was held that day he was not bound to accept the shares as the acceptance to the offer has not been made within a reasonable time.
6. ACCEPTANCE MAY BE EXPRESSED OR IMPLIED
An acceptance which is expressed by written or spoken words is called expressed acceptance.
EXAMPLE
If Ravi residing at Jaipur offers to sell his car to Suri residing at Delhi by writing a letter and Suri accepts the offer by writing a letter, the acceptance is said to be expressed.
The acceptance which is expressed by the conduct of the offeree is known as implied acceptance.
EXAMPLE
At an auction sale of car, Mahesh is the highest bidder. The auctioneer accepts the bid by striking the hammer on the table. It is an implied acceptance. Here the auctioneer conduct of striking the hammer on the table shows that the auctioneer has accepted the highest bid.
7. SILENCE CANNOT AMOUNT TO ACCEPTANCE
No contract is formed if the offeree remain silent and does nothing to show that he has accepted the offer.
Generally speaking the person to whom the proposal is made need not reply. His silence cannot be regarded as an acceptance of the proposal. Proposal made to another cannot ripen into an agreement merely because the offeree makes no reply even though the proposal states that silence will be taken to amount to acceptance. So, mental acceptance is no acceptance.
CASE: BROGDON VS. METROPOLITAN RAILWAY COMPANY
A draft agreement relating to the supply of coal was sent to the manager of a railway company for his acceptance. The manager wrote the word ‘approved’ on the agreement but by an oversight the document remained in his drawer. Held there was no contract as it was only mentally accepted and there was no expression of his mental determination.
8.ACCEPTANCE MUST BE GIVEN BEFORE LAPSE OF AN OFFER
A valid contract can arise only when the acceptance is made before the offer has lapsed or being withdrawn. An acceptance which is made after the withdrawal of the offer is invalid and does not create any legal relationship.
EXAMPLE
Amar offered by a letter to sell his horse to Akbar for rupees 2500. Subsequently, Amar withdraw his offer by a telegram which was also received by the Akbar. After reciept of this telegram, Akbar accepted the offer by a letter and posted the same. In this case, the acceptance is invalid as it was made after the effective withdrawal of the offer.
9. IT MAY BE GIVEN BY PERFORMING CONDITIONS OR RECEIVING CONSIDERATION
An offer may be accepted by performing an act which is a condition in the proposal or it may be that the consideration is received for a reciprocal promise which may be offered with the proposal.
CASE: V RAO VS. A RAO
The lady invited her niece to stay with her in the same house and promised her to settle on her an immovable property. The niece stayed with her till the time of her death. It was held that niece had performed the condition of staying with the lady so she was entitled to the property.
10. ACCEPTANCE MUST BE MADE BY THE PERSON TO WHOM THE PROPOSAL IS MADE
Acceptance can only be given by the person to whom the offer is made. In case of specific offer, the acceptance must be made by the person to whom the offer is made. While in case of general offer, it may be accepted by anyone.
CASE: POWELL V. LEE
The plaintiff (Powell) applied for the post of headmaster of school. The board of managers of a school passed a resolution appointing him. they did not communicate their resolution to him, but one of the managers in his individual capacity informed the plaintiff about his appointment as headmaster. later the matter was reopened, and Parker, another candidate, who had originally been rejected, was appointed in plaintiff’s place. Powell, the plaintiff thereupon sued the defendant Lee, the chairman of the board of manager for breach of contract. it was held that there was no contract between the parties because acceptance was not communicated to the plaintiff by an authorised person.
Thus, acceptance is the manifestations of the assent of the person to whom the offer is made to the terms of offer, and a binding promise comes into existence only when the terms of an offer are accepted.
“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:
- 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.
JOIN THE CHANNEL ON TELEGRAM
