Definition of ‘Acceptance’
All contracts are made by the process of a lawful offer by one party and the lawful acceptance of the other by the other party. X says to Y, “Will you buy my house for Rs. 50,000?” This is an offer. If Y says, “Yes”, the offer is accepted and contract is formed.
An “offer “involves the making of a “proposal”. The term proposal is defined in the Contract Act as follows: “when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal”
A proposal is also called an offer. The promisor or the person making the offer is called the offeror. The person to whom the offer is made is called the offeree.
Promise and Acceptance
“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.”
Who can accept?
An offer can be accepted only by the person or persons for whom the offer is intended. An offer made to a particular person can only be accepted by him be cause his is the only person intended to accept. An offer made to a class of persons can be accepted by any member of that class. An offer made to the world at large can be accepted by ny person whatsoever. X sold his business to Y without disclosing the fact to his customers. Z sent an order for goods to X by name. Y received it and sent letter of acceptance. Held, there was no contract between Y and Z because Z never made any offer to Y. Boulton v. Jones.
Rules regarding acceptance (The essential of a valid acceptance)
The acceptance of an offer to be legally effective must satisfy the following requirements;
- It must be an absolute and unqualified acceptance of all the terms of the offer. If there is any variation, even on an unimportant point, between the terms of the offer and the terms of the acceptance, there is no contract.
- Conditional Acceptance: In accordance with English law as well as with the term of Contract Act, an acceptance with a variation is no acceptance; it is simply a counter-proposal, which must be accepted by the original promiser before a contract is made. For example x offered to sell his house for Rs. 12,000. Y said, “Accepted for Rs. 10,000.” This is not an acceptance but a counter offer or counter proposal. But an acceptance is not called ‘conditional’ if an immaterial term is added or if there occurs any misunderstanding between the parties for the interpretation of collateral terms.
- Contracts subject to condition: There are cases where an “immediate binding contract is formed although some of the parties’ rights and obligations may be dependent upon the happening of a particular event. For example, the agreement may contain such a term as ‘subject to the purchaser’s solicitors approving the title.”
- Clarification: The seeking clarification of offer neither amounts to the acceptance of the offer nor to the making of a counter offer.
- The acceptance must be expressed in some usual or reasonable manner: The offeree may express his acceptance by word of mouth, telephone, telegram or by post. These are the usual methods of communicating acceptance to the offeror. An offer may also be accepted by conduct. If the offeree does what the offeror wants him to do, there is acceptance of the offer by conduct. Section 8 of the Act states that, “Performance of the conditions of a proposal or the acceptance of any consideration for reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.
- Mental acceptance or excommunicated assent does not result in a contract: No contract is formed if the offeree remains silent and does nothing to show that he has accepted the offer. Acceptance must be communicated to the offeror to shown by conduct.
- The mode of acceptance: Where the promiser prescribes a particular mode of acceptance, the offeree must follow the particular mode of acceptance. For example, if the offeror says, “acceptance to be sent by telegram”, the offeree must send a telegram. If the offeree fails to follow the prescribed mode of acceptance, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that the proposl be accepted in the prescribed manner and not otherwise. But if the proposer does not insist upon it, he accepts the acceptance as actually communicated. Thus, under the Indian Law the proposer has the option of waiving compliance with the prescribed mode of acceptance.
- Time of Acceptance: It the offeror prescribed a time, the acceptance must be done within that time. If no time is prescribed the acceptance must be done within reasonable time. What is ‘reasonable’ depends on the facts of the case.
- When acceptance is complete: Section 4 of the Contract Act lays down that 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; and as against the acceptor, when it comes to the knowledge of the proposer.
- Before Offer: Acceptance must be given before the offer. This is the natural sequence. There cannot be acceptance before the offer is given from nay person.
- The acceptance must be made while the offer is in force: Before the offer has been revoked or the offer has lapsed.