TABLE OF CONTENTS

1. INTRODUCTION

2. ACCEPTANCE

3. NECESSARY CONDITIONS FOR VALID ACCEPTANCE

4. COMMUNICATION OF ACCEPTANCE

5. REVOCATION OF ACCEPTANCE

6. REFERENCES

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 INTRODUCTION
Accepted is lighted match, while offer is a train of gun powder.

Acceptance is necessary for the formation of contract as only when an accpetance

is given to an offer then it becomes a promise, a promise with consideration
becomes an agreement and a legally enforceable agreement becomes a valid
contract. In simple words, when an offer is accepted it becomes promise.

Proper Acceptance with intention to create legal relationships is an essential to

make a valid contract.

The offeree, who is the person to whom the offer is made, can accept an offer and
make it a promise. If the offer specifies a manner of acceptance such as by post or
fax, then we must accept it using a manner that is no less effective than the manner
specified but it is an exception to the postal rule. Silent is not considered as an
acceptance. In the case of Felthouse v Bindley, A make an offer to sell his house
to B but B did not communicate to A to buy his house. Finally, B was bought the
house under the pressure that given. It was held that silent cannot be implied as
acceptance.

Mere silence can never amount to the offer being accepted. Acceptance is valid
only if it has been communicated to the offeror whether it is expressed, or implied.

Communication of acceptance is necessary in case of specific offer but it is not

necessary is case of general offer.

When the proposal is accepted and it becomes a promise it also becomes

irrevocable. An offer does not create any legal obligations, but after the offer is
accepted it becomes a promise. And a promise is irrevocable because it creates
legal obligations between parties. An offer can be revoked before it is accepted.
But once acceptance is communicated it cannot be revoked or withdrawn.

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 ACCEPTANCE
Acceptance is defined in Section 2(b) of the Indian Contract Act, 1872 as “When
the person to whom the proposal is made, signifies his assent there to , the proposal
is said to be accepted.”

So as the definition states, when the offeree to whom the proposal is made,
unconditionally accepts the offer it will amount to acceptance. After such an offer
is accepted the offer becomes a promise. Say for example A offers to buy B’s car
for Rs.2,00,000 and B accepts such an offer. Now, this has become a promise.

Offer + Acceptance = Promise

Thus “acceptance” is the assent given to a proposal.

When the proposal is accepted it becomes a promise and it also becomes

irrevocable.

NECESSARY CONDITIONS FOR VALID

ACCEPTANCE
Important legal rules regarding to a valid acceptance are as follows:

1. Acceptance must be absolute and unqualified

In order to be legally effective it must be an absolute and unqualified acceptance of
all the terms of the offer. Even the slightest deviation from the terms of the offer
makes the acceptance invalid. In effect a deviated acceptance is regarded as a counter
offer in law.
Illustration:
L offered to M his scooter for Rs 2,000. M accepted the offer and tendered Rs 1,900
cash down, promising to pay the balance of Rs 100 by the evening. There is no
contract, as the acceptance was not absolute and unqualified.

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2. It should be in a reasonable mode
Unless the proposal prescribes the manner in which it is to be accepted. If the offeror
prescribes no mode of acceptance the acceptances must be communicated according
to some usual and reasonable mode. The usual modes of communication are by
spoken or written or by conduct, it is called an implied acceptance. E.g. If the offeror
prescribes acceptance by telegram and the offered sends acceptance through a
messenger, there is no acceptance of the offer.
Mental acceptance or quiet assent not evidenced by words or conduct does not
amount to a valid acceptance; and this is so even where the offeror has said that such
a mode of acceptance will suffice. Acceptance must be communicated to the offeror,
otherwise it has no effect.

3. Acceptance must be given within a reasonable time and before the

offer lapses and or is revoked
To be legally effective acceptance must be given within the specified time limit, if
any, and if no time is stipulated, acceptance must be given within a reasonable time
because an offer cannot be kept open indefinitely. What is reasonable in each cases
depends upon circumstances.
Acceptance must be made before the offer lapses. An offer lapses in the
circumstances provided in Section 6 of Indian Contract Act, 1872.

4. Acceptance must be communicated to the offeror

Acceptance must be communicated to offeror himself. A communication to any
other person is void and considered as if no communication has been made.
Illustration:

Eelt house Vs Bindley (1863) Case

In that case the plaintiff offered by means of a letter to purchase his nephew’s horse.
The letter said “If I hear no more about the horse, I consider the horse is mine.” To
this letter no reply was sent by the nephew but he told to his auctioneer, no to sell

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the horse, as he already sold it to his uncle. The auctioneer by mistake sold it. Now
plaintiff sued the auctioneer for his act.
But court said, “Nephew had not commuunicated his offer to plaintiff so this
acceptance was not done and contract is void.”

5. Acceptance must be communicated by the acceptor

For an acceptance to be valid, it must not only be made by the offeree but must also
be communicated by, or with the authority of, the offeree (or acceptor) to the offeror.
Illustration:

Powell vs Lee (1908) Case

In this case, P was a candidate for the post of headmaster in a school. The managing
committee of the school passed a resolution selecting him for the post. A member of
the managing committee, acting in his individual capacity, informed P that he had
been selected, but P received no other intimation.

Subsequently, the resolution was cancelled, and P was not appointed to the post. P
filed a suit against the Committee for breach of contract. The Court held that in the
absence of an authorised communication from the Committee there was no binding
contract.

6. Acceptance must succeed the offer

Acceptance must be given after receiving the offer. It should not precede the offer.
In a company shares were allotted to a person who had not applied for them.
Subsequently he applied for shares being unaware of the previous allotment. It was
held that the allotment of shares previous to the application was invalid.

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7. Acceptance must be given only by the person to whom the offer is
made
An offer can be accepted only by the person or persons to whom it is made and with
whom it imports an intention to contract; it cannot be accepted by another person
without the consent of the offeror.
The rule of law is clear that “if you propose to make a contract with A, then B can’t
substitute himself for A without your consent.” An offer made to a particular person
can be validly accepted by him alone.
Similarly an offer made to a class of persons (i.e., teachers) can be accepted by any
member of that class. An offer made to the world at large can be accepted by any
person who has knowledge of the existence of the offer.
Illustration:

Boulton vs Jones (1857) Case

A sold his business to his manager B without disclosing the fact to his customers. C,
a customer, who had a running account with A, sent an order for the supply of goods
to A by name. B received the order and executed the same. C refused to pay the
price.
It was held that there was no contract between B and C because C never made any
offer to B and as such C was not liable to pay the price to B.

8. Rejected offers can be accepted only, if renewed

Offer once rejected cannot be accepted again unless a fresh offer is made.

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 COMMUNICATION OF ACCEPTANCE
The general rules relating to communication of acceptance are the following:

1. In case of acceptance by post

Where the acceptance is given by post, the communication of acceptance is complete
as against the proposer when the letter of acceptance is posted. Thus, mere posting of
letter of acceptance is sufficient to conclude the contract with respect to offeror even
if the the letter is lost in transit. However, the letter must be properly addressed and
stamped. If the ltter of acceptance never reaches the offeror, or it is delayed in transit,
it will not affect the validity of acceptance. The offeror is bound by the acceptance.

This is commonly known as the ‘postal rule’. The postal rule states that an acceptance
by post takes effect when the acceptance is posted and not when the acceptance is
actually received. The effect of this rule is that the acceptance is valid before it is
actually communicated to the offeror. This is true even where the letter never reaches
its destination.
However, the postal rule cannot be applied in all cases where the acceptance is by
post. It can only apply where it is specified that acceptance may be by way of post or
where it is reasonable to post the acceptance, such as where the offer itself was sent
by post. Of course, where the terms of the offer itself exclude the postal rule, it will
not be applicable.

2. Acceptance by telephones telex or tax

If the communication of an acceptance is made by telephone, tele-printer, telex, fax
machines it is completed when the acceptance is received by the offeror. The contract
is concluded as soon as the offeror receives not hears the acceptance.

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3. The place of Contract
In case of acceptance by post, the place where the letter is posted is the place of
contract.

Where the acceptance is given by telephone, fax, tele-printer, telex, etc, the contract
is made at the place where the acceptance is received by the offeror.

4. The time of Contract

In case of acceptance by post, the time of posting the letter of acceptance to the time
of contract.
In case of acceptance by instantaneous means of communication, the time of contract
is the time when the offeror gets the communication, the time of contract is the time
when offeror gets the communication of acceptance.

5. Communication of acceptance in case of an agent

Where the offer has been made through an agent, the communication of acceptance
is completed when the acceptance is given either to the agent or to the principal. In
such a case, if the agent fails to convey the acceptance received from offeree, still the
principal is bound by the acceptance.

6. Timing of Acceptance
The communication of acceptance has two parts. Let us take a look.
 As against the Offeror: For the proposer, the communication of the acceptance
is complete when he puts such acceptance in the course of transmission. After
this it is out of his hand to revoke such acceptance, so his communication will
be completed then. So, for example, A accepts the offer of B via a letter. He
posts the letter on 10th July and the letter reaches B on 14th For B (the
proposer) the communication of the acceptance is completed on 10th July
itself.

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  As against the Acceptor: The communication in case of the acceptor is
complete when the proposer acquires knowledge of such acceptance. So in the
above example, A’s communication will be complete on 14th July, when B
learns of the acceptance.

REVOCATION OF ACCEPTANCE
The acceptor can revoke the acceptance until the communication of the acceptance is
complete against the said acceptor. Such a communication is complete when the
proposer receives the letter of acceptance. So in the time frame between posting the
letter and the letter being received by the proposer, the acceptor can revoke the
acceptance.

Acceptance may be revoked at any time before the communication of acceptor, but not
afterwards. Revocation of Acceptance too can be either oral or written.
Example: T sends to S by post, an offer to sell his cycle. S sends his acceptance via
post, S could revoke his acceptance, upto any time before or at the moment when he
posts his letter of acceptance, but not afterwards.
Example: A accepts the offer and posts the letter on 10th July. B gets the letter on 14th
July. But for B (the proposer) the acceptance has been communicated on 10th July
itself. So till that date, A can revoke his/her acceptance, but not after such a date. So
technically between 10th and 14th July, A can decide to revoke the acceptance.

Communication of revocation:
Revocation means withdrawal communication of revocation is complete
 As against the person who makes it when it is put into course of transmission to
the person to whom it is made, so as to be out of the power of the person who
makes it, and
 As against the person to whom it is made, when it comes to his knowleadge.

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Time of Revocation of Acceptance:

Section 5 of Indian Contract Act, 1872 provides that an acceptance may be revoked
at any time before the communication of acceptance is complete as against the acceptor
but not afterwards. No revocation of acceptance can happen after such a date. This
means that acceptance can be revoked at any time before the acceptance come to the
knowledge of the offeror.

In simple way revocation of acceptance happens as follows:

 Proposer makes an offer.
 Acceptor accepts the same and communicates the same to the proposer.
 Acceptor revokes/cancels this acceptance before the communication reaches the
proposer.

Illustration 1:

Mr. S wants to sell his furniture. He writes about the same and makes an offer to his
friend Mr. K to buy the same. Mr. K has just bought another house for which this
furniture would be useful. So after going through the details he likes the same, writes
to Mr. S stating that he has accepted the offer, and posts it to him. Mr. K’s family is
not OK with this second-hand furniture. Hence, they convince him to refuse Mr. S’s
offer. Mr. K then sends in a fax to Mr. S stating that he has revoked his acceptance. In
normal circumstances, a fax works faster than regular post. If Mr. S receives the fax
first then we say that this is considered as proper, legal Revocation of Acceptance.

Illustration 2:

Let us consider the same scenario stated above. Maybe the fax sent out for Revocation
of Acceptance was much later than the Acceptance post. Unfortunately, if the post
reaches Mr. S before the fax, the fax sent for ‘Revocation of Acceptance’ does not hold
good. This is because the Revocation of Acceptance reached after the actual
Acceptance.

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 REFERENCES

1) “Contract And Specific Relief” by Dr. Avatar Singh

2) “Indian Contract Act” by Pollock and Mulla

3) “Law of Contract” by Anson

4) “Indian Contract Act” BARE ACT

5) www.wikipedia.com

6) www.encyclopedia.com

7) www.britannica.com

8) www.jstor.com

9) www.lawteacher.net

10) www.shareyouressays.com

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