Acceptance under Indian Contract Act
Acceptance under Indian Contract Act, 1872
1. Definition of Acceptance
Acceptance is a final and unqualified expression of assent to the terms of an offer.
Under the Indian Contract Act, 1872, acceptance is not explicitly defined in one section, but it is understood as the consent given by the offeree to the offeror in the manner prescribed or implied by the offer.
It is a necessary element for the formation of a valid contract, together with an offer and consideration (Section 2(a) and (b)).
2. Essentials of a Valid Acceptance
For acceptance to be valid, it must:
a) Be absolute and unqualified
Acceptance must be unequivocal and unconditional.
Any variation or modification of terms amounts to a counter-offer and not acceptance.
b) Be communicated to the offeror
Acceptance must be brought to the knowledge of the offeror.
Silence or inaction generally does not amount to acceptance unless the circumstances imply otherwise.
c) Be made in the prescribed manner
If the offer prescribes a mode of acceptance, it must be followed.
If no mode is prescribed, acceptance may be given by any reasonable means.
d) Be made within the timeframe
Acceptance must be made within the time prescribed or within a reasonable time.
Delay can lead to the lapse of the offer.
3. Modes of Acceptance
i. Express Acceptance
Acceptance communicated through words, either spoken or written.
Example: Saying “I accept your offer” or writing a letter/email of acceptance.
ii. Implied Acceptance
Acceptance inferred from conduct or circumstances.
Example: Using or retaining goods after an offer to sell is accepted by conduct.
4. Communication of Acceptance
The communication of acceptance is crucial; mere mental acceptance is not enough.
Acceptance is complete when it is communicated to the offeror.
5. Rule of Postal Acceptance
Under the postal rule, acceptance is complete when the letter of acceptance is posted, not when it is received.
This applies only when postal communication is an authorized or reasonable means of acceptance.
6. Counter-Offer vs Acceptance
Any response that changes the terms of the original offer is a counter-offer, not an acceptance.
A counter-offer rejects the original offer and puts a new offer on the table.
7. Revocation of Acceptance
Acceptance, once communicated, cannot generally be revoked.
But if acceptance has not yet been communicated, it can be revoked.
8. Legal Provisions
Section 2(a): Defines offer as “when one person signifies to another his willingness to do or to abstain from doing anything.”
Section 2(b): Defines acceptance as “when the person to whom the proposal is made signifies his assent thereto.”
Section 4: Communication, acceptance, and revocation of proposals.
Section 5: When acceptance is complete.
9. Important Case Laws on Acceptance
a) Felthouse v. Bindley (1862)
The court held that silence cannot amount to acceptance.
A nephew’s silence on a horse sale was not deemed acceptance by the uncle’s offer.
b) Carlill v. Carbolic Smoke Ball Co. (1893)
Established that acceptance can be by conduct in unilateral contracts.
Mrs. Carlill’s use of the smoke ball as prescribed constituted acceptance.
c) Brogden v. Metropolitan Railway Co. (1877)
Acceptance can be implied by conduct.
An agreement was held binding even though the contract was not formally signed but executed through conduct.
d) Gurmail Singh v. Raminder Singh (1984)
Acceptance must be communicated; mental assent or private acceptance is insufficient.
e) Balfour v. Balfour (1919)
Established the need for intention to create legal relations alongside acceptance (important for distinguishing social agreements from legal contracts).
10. Summary Table
| Aspect | Explanation |
|---|---|
| Definition | Final unqualified assent to an offer |
| Essentials | Absolute, communicated, proper mode, timely |
| Modes | Express and implied acceptance |
| Communication | Must be communicated to offeror |
| Postal Rule | Acceptance complete when posted if postal mode allowed |
| Counter-Offer | Not acceptance; rejects original offer |
| Revocation | Acceptance cannot generally be revoked once communicated |
Conclusion
Acceptance is a crucial step in contract formation, marking the point where the offeree agrees to the offer on its terms. The Indian Contract Act, through interpretation and judicial decisions, has established clear principles on how acceptance must be given to form a valid contract. The rules ensure fairness, certainty, and clarity in contractual relationships.
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