All about the concept of acceptance in Law of Contracts | Legal Reasoning for CLAT PDF Download

Concept of Acceptance in Law of Contracts

• The Indian Contract Act, 1872 defines an acceptance as follows:
• ‘‘When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted”.
• Thus, acceptance is the act of giving consent to the proposal. A proposal when accepted becomes a contract.

Acceptance How Made?

As mentioned above, the offeree is deemed to have given his acceptance when he gives his assent to the proposal. The assent may be express or implied. It is express when the acceptance has been signified either in writing, or by word of mouth, or by performance of some required act. The first two kinds of acceptance are self-explanatory

Examples-

• A trader receives an order from a customer and executes the order by sending the goods. The customer’s order for goods constitutes the offer which was accepted by the trader by sending the goods. It is a case of acceptance by conduct. Here the trader is accepting the offer by the performance of the act.
• A loses his dog and announces a reward of Rs. 50 to anyone who brings his dog to him. B need not convey his acceptance of the general offer. If he finds the dog and gives it to A, he is entitled to the reward as he accepted the offer by doing the required act.

Acceptance is implied when it is to be gathered from the surrounding circumstances or the conduct of the parties.

Examples-

• A enters into a bus for going to his destination and takes a seat. From the very nature of the circumstance, the law will imply acceptance on the part of A.
• A’s scooter goes out of order and he was stranded on a lonely road. B, who was standing nearby, starts correcting the fault. A allows B to do the same. From the nature of the circumstances, A has given his acceptance to the offer by B.

Who can Accept?

In the case of a specific offer, it can be accepted only by that person to whom it is made. The rule of law is that if A wants to enter into a contract with B, then C cannot substitute himself for B without A’s consent.

Example-

• The facts of this case were as follows: B, who was a manager with X, purchased his business. J, to whom, X owed a debt, placed an order with X for the supply of certain goods. B supplied the goods even though the order was not addressed to him. J refused to pay B for the goods because he, by entering into contract with X, intended to set-off his debt against X.

Held: The offer was made to X and it was not in the power of B to have accepted the same.

• In the case of a general offer, it can be accepted by anyone by complying with the terms of the offer.

Essentials of a valid acceptance

There are some legal rules which make the acceptance effective so as to give rise to a valid contract. These are:

Acceptance must be absolute and unqualified.
An acceptance to be valid must be absolute and unqualified and according to the exact terms of the offer. An acceptance with a variation, however slight, is no acceptance, and may amount to a mere counter offer which the original offeror may or may not accept.

Examples-

• A offers to sell his house to B for Rs. 1,000. B replies, “I can pay Rs. 800 for it.” The offer of A is rejected by B as the acceptance is not unqualified. However, B subsequently changes his mind and is prepared to pay Rs. 1,000. This will also be treated as a counter offer and it is up to A whether to accept the same or not
  • M offered to sell land to N for £280. N replied purporting to accept and enclosed £80, promising to pay the balance of £200 by monthly instalments of £50 each.

Held: That N could not enforce acceptance because his acceptance was  not an unqualified one.

• A offers to sell his house to B for Rs. 10,000. B replies, “I am prepared to buy your house for Rs. 10,000 provided you purchase my 1980 model Ambassador Car for Rs. 60,000.” There is no acceptance on the part of B.

Example-

• A offers to sell his house to B, and B agrees to purchase it subject to the title being approved by B’s solicitor. The acceptance by B is absolute and unqualified as it is presumed that A has a title to the property and it was not necessary for A to mention anything about the title.

Acceptance must be communicated to the offeror
The communication of acceptance may be express or implied. A mere mental acceptance is no acceptance. A mere mental acceptance means that the offeree is assenting to an offer in his mind only and has not communicated it to the offeror.

Example-

• B, a supplier, sent a draft agreement relating to the supply of Coal and Coke to the manager of a railway company for his acceptance. The manager wrote the word “approved” on the same and put the draft in the drawer of his table intending to send it to the company’s solicitors for a formal contract to be drawn up. By an oversight, the draft agreement remained in the drawer.

Held: That there was no contract as the manager had not communicated his acceptance to the proposer.

• The acceptance of an offer cannot be implied from the silence of the offeree or his failure to answer.

Example-

• F offered by letter to buy his nephew’s horse for £30, saying: “If I hear no more about it, I shall consider the horse is mine at £30.” The nephew did not reply at all, but he told an auctioneer who was selling his horses not to sell that particular horse as he had sold it to his uncle. By mistake, the auctioneer sold the horse. F sued the auctioneer for conversion. Held, F could not succeed as his nephew had not communicated acceptance and there was no contract

Acceptance must be according to the mode prescribed.
Where the offerer prescribes a particular mode of acceptance, then the acceptor should follow that mode. In case no mode of acceptance is prescribed by the proposer, then the acceptance must be according to some usual and reasonable mode. If the proposer prescribed a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but if he fails to do so, he accepts the acceptance.

Examples-

• A sends an offer to B through post in the usual course. B should make the acceptance in the “usual and reasonable manner” as no mode of acceptance is prescribed. He may accept the offer by sending a letter, through post, in the ordinary course, within a reasonable time.
• A sends an offer to B through post in the usual course and asks for an acceptance by wire. B should accept the order by wire. However, if B accepts the offer by a letter, then A may insist that the acceptance should be in the prescribed mode. But if the proposer does not insist within a reasonable time then the proposer is bound by the acceptance, though not made in the prescribed mode.
• The acceptance must be given within the time specified, if any, otherwise it must be given within a reasonable time. What is a reasonable time is a question of fact and would depend upon the circumstances of each case.

Termination or Lapse of an Offer

An offer is made with a view to obtain assent thereto. As soon as the offer is accepted it becomes a contract. But before it is accepted, it may lapse, or may be revoked. Also, the offeree may reject the offer. In these cases, the offer will come to an end.

Agreement to Agree in Future

Law does not allow making of an agreement to agree in the future. The parties must agree on terms of the agreement. The terms of the agreement must be either definite or capable of being made definite without further agreement of the parties.

Examples-

• A, an actress was engaged for a provincial tour. The agreement provided that if the party went to London, A would be engaged at a ‘salary to be mutually arranged between us’.

Held: That there was no contract as the terms were not definite and were incapable of being made definite without further agreement of the parties.

• F sold part of his land to a motor company subject to a condition that the company should buy all their petrol from F ‘at a price to be agreed by the parties in writing and from time to time.’ The agreement also provided that dispute, if any, was to be submitted to arbitration. The price was never agreed and the company refused to buy the petrol.

Held: That there was a binding contract. The agreement provided the method by which the price could be ascertained. The terms of the agreement were definite and the parties did not agree to settle the terms in future by their mutual consent.