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S. 2(b) When the person to whom the proposal is made signifies his assent thereto, the offer is said to be accepted. Thus the proposal when accepted becomes a promise.” An offer can be revoked before it is accepted. As specified in the definition, if the offer is accepted unconditionally by the offeree to whom the request is made, it will amount to acceptance.

Acceptance may be express or implied

Where acceptance is made with words spoken or written, it is an express acceptance, and if acceptance is made otherwise than in words, it is implied. What is necessary is that there should be some external manifestation of acceptance.

Who Can Accept?

Offers can either be made out to people in General or to a Specific counter-party If it is a General Offer it can be accepted by anybody. Who performs according to general offers is said to be accepted the offer and contract is created. If it is a Specific Offer it can ONLY be accepted by that Specific Counter-party to whom the offer is made.

Effect of Acceptance

A contract is created only after an offer is accepted. Before the acceptance is made neither party is bound thereby. At that stage offerror is free to revoke or withdraw his offer, and the offeree is free not to accept the offer or to reject the same. After the offer has been accepted it become a promise which, if other conditions of a valid contract are satisfied, bind both the parties to promise. After acceptance, each party becomes legally bound by the promise made by him through the medium of offer and acceptance of it.

Essential of valid acceptance

  1. Acceptance should be communicated by the offeree to the offeror.
  2. Acceptance should be absolute and unqualified.
  3. Acceptance should be made in some usual and reasonable manner, unless the proposal prescribes the manner of acceptance.
  4. Acceptance should be made while the offer is still subsisting.

Acceptance should be communicated

The offeree must communicate the acceptance. The communication may be express or implied. Sometimes the conduct of a person might indicate his assent. For eg. when a passenger boards a bus and travels thereby, he impliedly assents to pay the necessary fare. In order to create a contract, acceptance of the offer and intimation of acceptance by some external manifestation, which the law regards as sufficient is necessary. For a valid contract the acceptance must be communicated and moreover, such communication should be made to the offeror.

In Felthouse v. Bindley, Felthouse wrote a letter to his nephew offering to buy his horse for Rs. 10,000. In the letter containing the offer it was also mentioned “If I hear no more about the horse, I consider the horse mine at Rs. 10,000.” The nephew did not reply this letter. He, however, told his auctioneer, Bindely, that he wanted to reserve this horse for his uncle and, therefore, desired that the horse be not sold by the auctioneer. The auctioneer disposed of the horse by mistake. Felthouse sued Bindely for the tort of conversion on the plea that Felthouse had become the owner of the horse which Bindely had disposed of. HELD: It was clear that the nephew intended to sell the horse to his uncle but it was not communicated to his uncle, hence it was not a valid acceptance. Principles:

  1. Acceptance of the offer shall be communicated to the offeror himself.
  2. Communication to a stranger is no acceptance.
  3. Offeror cannot impose the burden of refusal.

Acceptance shall be communicated to the offeror himself

Powell v. Lee , Powell was one of the candidates for the post of headmaster of a school. The Board of Managers passed a resolution selecting him for the post. No communication about this decision was made to Powell by the Board. One of the member of the board who had not been authorized to communicate this decision, acting in his individual capacity, informed Powell about his selection for the post. The board of managers met again and decided to cancel the appointment of Powell and appoint another candidate. Powell sued for the breach of contract. It was held that communication of acceptance was not valid. It was almost like overhearing. Communication shall be made by offeree/acceptor himself.

Mode of Communication

S. 7. Acceptance must be absolute. In order to convert a proposal into a promise, the acceptance must-

  1. be absolute and unqualified;
  2. be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted.

If the proposal prescribes a manner in which it is to be accepted, and the acceptance should be made in such manner, otherwise it is not valid acceptance.

Completion of Communication

S.4 Communication when complete. – 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;
  • As against the acceptor, when it comes to the, knowledge, of the proposer.

Eg. When B accepts A’s proposal sent by post, acceptance is complete-

  • As against A, when the letter is posted
  • As against B, when the letter is received by A ( there is presumption that letter reaches).

Absolute and Unqualified Acceptance

Acceptance must be unconditional and absolute. There cannot be conditional acceptance that would amount to a counteroffer which nullifies the original offer. For eg. A offers to sell his cycle to B for 2000/-. B says he accepts if A will sell it for 1500/-. This does not amount to the offer being accepted, it will count as a counteroffer. Also, it must be expressed in a prescribed manner. If no such prescribed manner is described then it must be expressed in the normal and reasonable manner, i.e. as it would be in the normal course of business. Implied acceptance can also be given through some conduct, act, etc.

However, the law does not allow silence to be a form of acceptance. So the offeror cannot say if no answer is received the offer will be deemed as accepted. In Hyde v. Wrench, There was an offer made by A and B for the sale of a Farm for 1000 pounds. B rejected this offer and said that he will pay only 950 pounds to which A did not agree. Thereupon B said that he was willing to pay 1,000 pounds to which also A did not agree. B sued A and contended that there was a contract by which by which A was bound. It was held that B had once rejected A’s offer by his counter offer to pay 950 pounds and this made the original offer to lapse, and therefore, no contract had resulted in this case.

Acceptance should be expressed in usual/ prescribed manner

According to S.7 (2), the acceptance must be “expressed in some usual or reasonable manner, unless the proposal prescribed the manner in which it is to be accepted.” It means that if the manner of acceptance has been prescribed by the proposal, the acceptance has to be made in that prescribed manner; otherwise the same may be made in some usual or reasonable manner.

Usual or Reasonable manner

Usual or Reasonable manner of acceptance means the manner which is usually adopted in a particular kind of transaction according to the usage or custom of trade. Acceptance by post, telegram, telephone, or through personal messenger may be considered to be usual manner of acceptance.

Prescribed manner

If the proposal prescribes any particular manner of acceptance, the acceptance must be made in that manner. The manner of acceptance may include the requirement of fulfillment of certain conditions, such as the payment of an advance. If such conditions are not fulfilled, there does not arise a valid contract.

Acceptance should be made while the offer is still subsisting

Already it has been noted that the offeror is free to withdraw the offer, or the offer is revoked under various circumstances mentioned in S.6. After the offer has been withdrawn or has lapsed, there is nothing which can be accepted. It is, therefore, necessary that the acceptance should be made while the offer is still alive and subsisting. Acceptance after the lapse of the offer cannot give rise to a contract. Similarly, the offer is deemed to have ended by rejection of the original offer or a counter offer.

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