Acceptance of a valid contract

"When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted." 

INTRODUCTION

Acceptance is derived from the Latin word 'acceptare’ which means to accept, to assent; to assent to a promise made by another.

A contract emerges from the acceptance of an offer. Section 2(b) of the Contract Act states that “A proposal when accepted becomes a promise” and defines ‘acceptance’ as ‘When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted."

Acceptance converts the offer into a promise and then it is too late to remove it. Acceptance is to offer what a lighted match is to a train of gunpowder. It produces something which cannot be undone.

For example:A offers to sell his house to B for Rs. 60,000. B accepts the offer to purchase the house by paying Rs. 60,000/-. A’s offer said to be accepted & it becomes a ‘promise’.

Essentials of a Valid Acceptance

1. Acceptance must be absolute and unqualified {Sec.7(a)}

A conditional or a qualified acceptance is no acceptance at all. There should be 100% acceptance of the terms of the offer. The acceptance must match with the offer. It should be a mirror image of the offer. An acceptance with a variation is no acceptance but is a mere counter offer, which the original offeror may accept or not.

For ex. A offers to sell his house to B for Rs. 2 lac. B accepts the offer and promises to pay the price in 4 installments. This is not a proper acceptance as there is a variance in its terms.

2. Acceptance must be given only by the person to whom the offer is made

In the case of specific offer, it can be accepted only by that person to whom it is made.

Boulton vs Jones- 

The defendant sent a written order for goods to a shop owned by Brocklehurst and which was addressed to him by name. Unknown to the defendant, Brocklehurst had earlier that day sold and transferred his business to Boulton. Boulton fulfilled the order and delivered the goods to the defendant without notifying him that he had taken over the business. The defendant accepted the goods and consumed them in the belief that they had been supplied by Brocklehurst. When he received Boulton’s invoice he refused to pay it, claiming that he had intended to deal with Brocklehurst personally, since he had dealt with him previously.
Held: The defendant was not liable for the price. There was no contract.

In the case of a general offer, it can be accepted by anyone by complying with the terms of the offer. 

Carlill vs Carbolic Smoke Ball Co.
The Carbolic Smoke Ball Co., issued an advertisement in which the Company offered to pay Pound 100 to any person who contracts influenza, after having used their smoke balls three times daily for two weeks, according to the printed direction. Mrs. Carlill, on the faith of the advertisement, bought and used the balls according to the directions, but nevertheless suffered from influenza. She sued the company or the promised reward. The company was held liable.

3. Acceptance may be expressed in words, spoken or written or may be given by conduct

Mental acceptance is no acceptance. But the party entitled to get the communication of acceptance can waive that right expressly or impliedly. In the case of unilateral contracts such waiver can generally be assumed.

For example- The manager of a railway co. received a draft agreement relating to the supply of coal. The manager marked the draft with the word "approved" and put the same in the drawer of his table and forgot all about it.
Held that there was no contract between the parties as the acceptance was not communicated.

This clearly shows that acceptance should be expressed either by words spoken or written or by conduct.

4. Acceptance must be expressed in some usual and reasonable manner. (Sec. 7(b)}

1. Acceptance in a prescribed manner

If the offeror prescribes a particular method or type of acceptance, it should be given in that manner.

For example, it the offeror insists that acceptance should be given by telegram, then that method should be followed.

2. Acceptance in usual and reasonable manner

If the offeror does not prescribe any particular method of acceptance in that case according to Section 7(2), the acceptance must be expressed in some usual and reasonable manner.

3. Consequences of not following the prescribed manner

If the offeree fails to follow the prescribed mode of acceptance, the offeror may accept or reject such acceptance. If the offeror wants to reject it, he must inform the acceptor within a reasonable time that he is not bound by acceptance because it is not in the prescribed manner. If he does not inform the offeree, he is deemed to have accepted the acceptance although it is not in the desired manner.

For example - A offers B and indicates that the acceptance be given by telegram. B sends his acceptance by ordinary post. It is a valid acceptance unless A insists for acceptance in prescribed manner.

5. Acceptance must be communicated by the acceptor

Acceptance is not complete unless and until it is communicated to the offeror.

Pawell vs Lee- 

A applied for headmastership of a school. He was selected by the appointing authority but the offer was not communicated to him. However,one of the members in his individual capacity informed him about the selection. Subsequently, the appointing authority cancelled its decision. A sued the school for breach of contract.
Held that there was no notice of acceptance.


Communication of acceptance is not necessary in the following case:

1. By performance of conditions: 

If the offeree merely performs the conditions of an offer, he will be taken to have accepted it. 

[Carlill vs Carbolic Smoke Ball Co].

2. By acceptance of consideration: 

Sometimes offeror may send consideration with offer. If the offeree accepts the consideration, he accepts the offer.
For example: A sends a cheque of Rs.1,00,000/- to B and offers to purchase his car for the same. if B encashes the cheque, he accepts the offer of A.

3. By accepting a benefit or service: 

Where offeree enjoys or avails the benefits of goods or services.
For example: If some goods are send by A to B and B use the goods. It shows that B accept the offer of purchasing that good by using it. He is bound to pay for it.

4. By acceptance of an offer by conduct:
For example: A trader sends goods on receiving an order.Here, the offer is order for sending goods, and he accepts it by his conduct i.e., sending the goods ordered.

6. Acceptance must be given within a reasonable time and before the offer lapses and/or is revoked.

The acceptance must be made when the offer is in force. If any time limit is prescribed in the offer, it should be accepted within that prescribed time limit. However, if no time limit is prescribed, it must be accepted within a reasonable time. What is reasonable time depends upon the facts of each case.

For example- A applied for shares of a co. in early june. The allotment was made in late November. A refused to take the shares.
Held, A was entitled to do so as the reasonable time for acceptance had elapsed.

7. Acceptance must succeed the offer

There is an offer first, followed by its acceptance to create a contract. There can be no acceptance without offer. Acceptance in ignorance of the offer is no acceptance.

8. Rejected offers can be accepted only, if renewed

Once an offer is rejected, it is dead. Only when the offer is renewed, than it can be accepted.

Hyde vs Wrench
'A' offered to sell a farm to ‘B’ for £1000. ‘B’ offered £950. ‘A’ refused the offer. Subsequently, ‘B’ offered to purchase the farm for £1000.
Held, there was not contract by 'B' as the acceptance to buy it for £950 was a
counter offer, i.e. rejection of the offer of A. It means the first offer which is rejected is dead and not renewed by A. Subsequent acceptance to pay £1,000 is a fresh offer from B to A which A was not bound to give his acceptance.

9. Acceptance cannot be presumed from silence

The acceptance of an offer cannot be taken as implied from the silence of the offeree. A mere silence or inaction of the offeree not evidenced by words or conduct, is in the eyes of law no acceptance at all.

 Felthouse v. Bindley-

A offered to buy B's horse and added that if B did not reply within 2 weeks, A would be taken to have become the owner of the horse. The court held that no man can accept an offer by remaining silent.

Exception-

1. Where offeree agrees that non-refusal by him within specified time shall amount to acceptance of offer.
2. Where there is a custom or usage of trade which specified that silence shall amount to acceptance.

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