Theoretical overview
When another party assents to the willingness to do, or abstain from doing something, it is acceptance. It is the assent of the person to whom the proposal is made. Section 2(e) defines that every promise and every set of promises forming the consideration for each other. Promise is defined as an accepted promise. Section 2(b) states that A proposal, when accepted, becomes a promise
Mode of Acceptance
Acceptance must be done in a usual manner unless specified way/mode is given in the proposal. Section 7 states that If an offeror says that a particular way of acceptance should be there in order to make it a promise but the offeree doesn’t follow that mode and uses some other mode then if the offeror again within reasonable time notifies the offeree to send the acceptance in the prescribed time then acceptance isn’t binding but if the offeror did not tell in reasonable time, the acceptance is binding.
Communication of Acceptance
Act or omission by party which has effect of signifying assent to other party is sufficient acceptance. Actions in terms of the contract also forms valid acceptance by conduct. Acceptance must be made by the offeree to the offeror only, not to a stranger or a third party. . Silence can never be implied acceptance. This is because an offer is made with the intention to get consent, not imply consent.
Communication must be Absolute and Unqualified
It should be in yes/no and there should be no condition. Any condition precedent to acceptance is not permissible. If acceptance is qualified/conditional then it is not an acceptance, but rather a counter proposal. Acceptance should be for the full offer; partial acceptance is no acceptance. Offeree cannot pick and choose from the terms of the offer.
Sometimes there are enquiries into the terms of the offer, the act of enquiry is not a counter-proposal. If a person has enquired and accepted after the enquiry, it is a valid acceptance. An acceptance with a condition subsequent is a valid acceptance. Condition subsequent is unconditional acceptance but clause of revoking the acceptance if a certain condition is not met. Though the acceptance is initially given, the final acceptance will be given only from approval from another person, like the master or boss. Initial acceptance usually given by an agent. Only rule is that in the time period between provisional and final acceptance, offeror has valid right to take back his offer
Contract When Concluded
In case of Postal Communication, Indian Law differs from English Law. In Indian Law, the communication is binding against the offeror when the acceptor posts the letter of acceptance and against the acceptor when it comes to the knowledge of the offeror. English law – both are bound when letter is posted.
In case of Instantaneous Communication, By phone, as soon as the other party comes to know of the acceptance, it becomes binding. No contract will arise until the offeror receives the notification of acceptance. Contract made at the place where the acceptance is received
Relevant sections
- Section 2(e) – Every promise and every set of promises forming the consideration for each other. Promise is defined as an accepted promise.
- Section 2(b) – A proposal, when accepted, becomes a promise
- Section 7 – If an offeror says that a particular way of acceptance should be there in order to make it a promise but the offeree doesn’t follow that mode and uses some other mode then if the offeror again within reasonable time notifies the offeree to send the acceptance in the prescribed time then acceptance isn’t binding but if the offeror did not tell in reasonable time, the acceptance is binding.
Important case laws
- Eliason v. Henshaw [(1819) 4 Wheaton 225]
Held:the offeror had stipulated a mode of acceptance but he offeree didn’t do so this acceptance is not binding, especially since it did not reach before the post, but reached after.
[what if the flour reached before the wagon did? if the post would’ve reached before the wagon, then it would’ve been a binding contract despite of the fact that he did not use the prescribed manner]
- Yates Building Co. Ltd v. RJ Pedley and Sons [1975] 237 EG 183
Held: The acceptance arrived in time despite being a different method, so the contract is binding. Though mode of communication must generally be made as stipulated by the offeror it is just a technicality. This technicality cannot supervene offer and acceptance duly made, and inconvenience shouldn’t be caused if all the other aspects of an offer are agreed upon.
- Brodgen v. Metropolitan Railway Co. [(1877) 2 AC 666(HL)]
Held: The written contract was valid despite no communication of the acceptance. The acceptance took place by performing the contract without any objection as to the terms.
- Felthouse v. Bindley [(1863) 7 LT 835]
Held: No liability as the nephew only communicated his intention to a 3rd party and not to his uncle. Acceptance must necessarily be made to the offeror.
Rules: (has to be made by the offeree himself)
- Acceptance communicated to a stranger to the contract cannot be acceptance
- An offeror cannot impose a burden of response on the offeree.
5. Powell v. Lee [(1908) 24 TLR 606]
Held: The person who communicated it to the plaintiff did so in his personal capacity and not as the representative of the council so even though he was a member, it would not be considered that the council has done so.
- Haji Mohd. Haji v. E. Spinner [ILR (1900) 24 Bom, 510]
Held:neither parties are bound because otherwise the initial acceptance has to be absolute and unqualified. So, afterwards even if you accept unqualified and absolutely, it will not stand. Acceptance with variation is no acceptance and just a counter proposal
- Uttar Pradesh State Electricity Board v. Goel Electricity Source (AIR 1977 All 494)
Held: Liable, since inquiry into the terms is not a counter offer/proposal. If a person accepts after the enquiry, then it is valid acceptance.
- Katherine Stifles v. MP Carr
Held: The acceptance was a valid in this particular case.
- Union of India v. S. Narain Singh [AIR 1953 Punj. 274]
Held: Because terms said that final acceptance will only be given after the approval of CC, the bang is only provisional acceptance.
- Adams. Lindsell [106 ER 250 Court of Kings Bench] – Postal Rule
Held: In case of postal communication, the contract becomes binding on the party when the acceptance is posted by the offeree. Otherwise, if we have to wait till the offeror gets the acceptance, then he has to send a receipt to the offeree, then the offeree has to send a receipt for the receipt, and so on. This will go on ad infinitum. To stop this at the first instance, the above principle was made.
- Household fire and Accident Insurance Company v. Grant [1879] 4 Ex D 216) – Postal Rule, acceptance didn’t reach
Held: Court said irrespective of the fact that he received it or not, the contract is said to be binding on both parties as per the rule. The logic here is that the parties are both parties have signified their willingness to enter into the contractual obligations. It should not be possible for a casualty in the post office unbind the parties.
- Entores v. Miles Far East Corpn. [(1955) 2 QB 327]
Held: Court said that in such cases the contract comes into being when the offeror gets to know about the acceptance, so it is created where the offeror comes to know about the acceptance.
- Bhagwandas Goverdhandas Kedia v. Giridharilal Purushottamdas and Co (1966 AIR 543)
Held: contract complete at Ahmedabad, when the offeror received/heard the acceptance.
- Henthorn v. Fraser [(1969) 2 All.ER 1593]
Held: Contract was valid, revocation was not. Revocation must reach the acceptor before he posts the letter of acceptance
Points to remember
- When another party assents to the willingness to do, or abstain from doing something, it is acceptance. It is the assent of the person to whom the proposal is made
- Acceptance must be done in a usual manner unless specified way/mode is given in the proposal.
- Act or omission by party which has effect of signifying assent to other party is sufficient acceptance. Actions in terms of the contract also forms valid acceptance by conduct
- Acceptance must be made by the offeree to the offeror only, not to a stranger or a third party. . Silence can never be implied acceptance. This is because an offer is made with the intention to get consent, not imply consent
- It should be in yes/no and there should be no condition. Any condition precedent to acceptance is not permissible. If acceptance is qualified/conditional then it is not an acceptance, but rather a counter proposal
- Revocation can be done by Communication through notice of revocation, lapse of time, death or unsoundness , failure to perform the term .
