Acceptance Session5

8/6/2019 Acceptance Session5

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ACCEPTANCE

INDIAN CONTRACT ACT,1872


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DEFINITION

S.2(b) ICA-

When the person to whom the proposal oroffer is made;

Signifies his assent (acceptance) thereto;

The proposal (offer) is said to be accepted.


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Acceptance means, in general, the expression

ofassent or consent to the proposal (offer) by

the offeror.


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An offer or proposal will be converted into a

promise only when it is accepted by the

offeree.


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Offer and acceptance in a contract are like the

two sides of a coin and the absence of any

one will not create any contractual

relationship between the parties.


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HOW ACCEPTANCE IS MADE?

Express Acceptance: Acceptance made by

words spoken or written.

Implied Acceptance: Acceptance made byconduct.


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WHO CAN ACCEPT?

An offer can be accepted only by the person to

whom it is made.

Therefore, when A makes an offer to B, Ccannot accept it.


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ESSENTIALS OF A VALIDACCEPTANCE (S.7)


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ACCEPTANCE MUST BE ABSOLUTE

AND UNQUALIFIED

An acceptance must be unconditional.

It should correspond with all the terms of the

offer. The offeree either should accept the item of

offer in toto or should reject it in toto.


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There should not be any variation in terms

while accepting the offer.

If there is any variation in terms or addition ofcertain terms to the original offer, it is not a

valid acceptance. But, it will only amount to a

counter offer.


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Example: A says to B I offer to sell my

house for Rs.5 lakh. B replies, I will

purchase it only for Rs.2 lakh. This isnot an acceptance but only a counter

offer. In other words, it is only a partial

acceptance. Partial acceptance is noacceptance at all.


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Example: M offered to sell a piece ofland to N at 280. N accepted and

enclosed 80 with a promise to paythe balance by monthly installmentsof 50 each. Held, there was nocontract between M and N, as the

acceptance was not unqualified.[Neale v. Merret, (1930) W.N.189].


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Example: A made an offer to B to

purchase a house with possession from

25th

July. The offer was followed by anacceptance suggesting possession from

1st August. Held, there was no

concluded contract. [Routledge v. Grant,[(1828) 4 Bing. 653]


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ACCEPTANCE MUST BE

COMMUNICATED TO THE OFFEROR

If the offeree remains silent and does nothing

to show that he has accepted the offer, nocontract is formed.

The offeree must do something to signify hisintention to accept.


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Acceptance must be communicated to the

offeror himself. A communication to any other

person is as if no communication has been

made.

Examples: A tells B that he intends to

marry C, but tells C nothing of his

intention. There is no contract, even if

C is willing to marry A.


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ACCEPTANCE MUST BE MADE WITHIN

THE TIME ALLOWED

Acceptance must be made within the time

allowed by the offeror. Ifno time is specified, it must be made within

a reasonable time.

Acceptance made after the offer has beenwithdrawn is invalid.


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ACCEPTANCE MUST BE

COMMUNICATED

IN TH

E MOD

EPRESCRIBED

If the offeror prescribes a particular manner of

acceptance it shall be given in that form. If the offeror prescribes no particular manner

it shall be given in some usual and reasonable

manner.


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Example:A makes an offer to B and says: If

you accept the offer, reply by wire. B sends

the reply by post. It will be a valid acceptance

unless A informs B that the acceptance is no

according to the mode prescribed.


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ACCEPTANCE MAY BE EXPRESS OR

IMPLIED

When acceptance is made by word spoken or

written, it is an express acceptance.

When acceptance is made by conduct it is an

implied acceptance.

E

xample:

When a person goes to a hotel andeats some food, he impliedly accepts to pay

for it.


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ACCEPTANCE MUST BE MADE BY THE

OFFEREE

Acceptance must be made only by the person towhom the offer is made and not by others.

If it is accepted by another then there is no validacceptance.

Example: When the offer is made by A to B theacceptance of the offer by C would be inoperative.


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ACCEPTOR MUST BE AWARE OF THE

PROPOSAL AT THE TIME OF THE

OFFER

If the acceptor is not aware of existence of the

offer and conveys his acceptance, no contract

comes into existence.

An act done in ignorance of the offer of a

reward, cannot be the acceptance of thatoffer.


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ACCEPTANCE MUST BE MADE ONLY

AFTER THE OFFER IS MADE

There can be no acceptance at all before the

communication of an offer.

Example

:In a company, shares were allottedto a person who had not applied for them.

Subsequently, when he applied for shares, he

was unaware of the previous allotment. The

allotment of shares previous to theapplication is invalid.


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ACCEPTANCE CANNOT BE IMPLIED

FROM SILENCE

The acceptance of an offer cannot be impliedfrom the silence of the offeree or his failure toanswer, unless the offeree has by his previous

conduct indicated that his silence means thathe accepts.

Example: A wrote to B, I offer you my car forRs. 50,000. If I dont hear from you in sevendays, I shall assume that you accept. B didnot reply at all. There is no contract.


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ACCEPTANCE SUBJECT TO CONTRACT

Where an offeree accepts an offer subject to

contract or su

bject to formal contract to beapproved by solicitors (lawyer), the matter

remains in the negotiation stage and the

parties do not intend to be bound until a

format of contract is prepared and signed bythem.


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Example: C and D signed an agreement forthe purchase of a house by D subject to aproper contract to be prepared by Cs

solicitors. A document was prepared by Cssolicitors and approved by Ds solicitors, butD refused to sign the document.

Held, there was no contract as the agreementwas only conditional [Chillingworth v. Esche,(1924) 1 Ch. 97]


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Unless there is an agreement to the contrary,

a contract is made between two parties either

when a formal contract is signed by them, or

If each party is to sign a separate counterpart

of the contract, when the separate

counterparts so signed are exchanged.


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Example: E bought certain property from B

subject to a contract. The terms of formal

contract were agreed and each party signed

his counterpart. E posted his counterpart but

B in the meantime changed his mind and did

not post his counterpart. Held, there was no

binding contract between the parties. [Ecclesv. Bryant (1948) Ch. 93]


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AGREEMENT TO AGREE IN FUTURE IS

NO ACCEPTANCE

If the parties have not agreed upon the terms of

their contract but have made an agreement to

agree in future, there is no contract.

Example: An actress was engaged by a theatrical

company for a certain period. One of the terms

of the agreement was that if the play was shown

in London, she would be engaged at a salary tobe mutually agreed upon. Held, there was no

contract [Loftus v. Roberts, (1902) 18 T.L.R. 532]


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CASE ANALYSIS 1

X gave a tender to the Government for

printing and binding of certain government

publications for a period of 8 years. The

tender was accepted by the Government. But

owing to change in the Government, no order

was placed. So, X filed a case for damages

against the Government. Will X succeed?


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CASE ANALYSIS 2

X wrote to his nephew offering to purchase hishorse for a particular price and added that in theevent of his nephew not replying him, he (X)

would consider the proposal to have beenaccepted. The nephew really intended to acceptthe offer and told his auctioneer, P not to sell thesame. But, the nephew did not give any reply to

the letter. By mistake, P sold that horse. X filed acase for the breach of contract.

Will X succeed?


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CASE ANALYSIS 3

X sent a letter to Y, a driver, offering to buy

300 barrels of flour from Y and requesting that

the reply should be sent through the driver

who brought the offer. But, Y sent his letter of

acceptance by post instead of sending it

through the driver.

Is there a contract between X and Y?

Documents

Acceptance Session5