This article is written by Abhishek Ramanuj of 6th Semester of New Law College, Bharati Vidyapeeth Deemed to be University, Pune, an intern under Legal Vidhiya
Abstract
Contracts form the backbone of our daily lives, and acceptance is the key ingredient that binds them together. In India, the doctrine of absolute acceptance, enshrined in Section 7 of the Contract Act, dictates that for an offer to morph into a binding promise, the acceptance must be unequivocal, devoid of conditions, and communicated clearly. Think of it as a perfect mirror image of the offer, with no room for ambiguity or hidden agendas. This ensures clarity, certainty, and fairness in agreements, minimizing disputes and misunderstandings. However, the world of contracts is rarely black and white. Exceptions like battle of forms, implied acceptance, and counter-offers can add complexity. The key lies in navigating these nuances with prudence, ensuring each acceptance rings true – a clear, confident “yes” paving the way for a smooth and enforceable contract.
Keywords
Contract, Offer, Acceptance, Absolute and Unqualified, Communicated, Revoked
Introduction
People make agreements among themselves all the time. Contracts play a very important role in the life of everyone. We knowingly or unknowingly keep on making contract with one another. For an agreement to become contract there are various elements involved like there should be a valid offer and the offer should also be accepted by the other party willingly. If the offer is not accepted the agreement is not said to be completed. Once the offer is accepted by the other party the agreement is said to be made. For example, A offers B that he can buy his house for 50 lakhs, no agreement is said to be existing between A and B unless the offer made by A has been voluntarily accepted by B.
What is Acceptance?
Acceptance has been defined under Section 2 (b) of the Indian Contract Act[1] for all purposes. This section states that an offer is said to be accepted only when the person to whom the offer has been made accepts the offer without any conditions. Till the person puts some condition on the existing offer the offer is not said to be accepted. Once the offer gets acceptance it converts from offer to promise and becomes enforceable and the parties get into legal obligation to fulfill their part of the promise. A proposal has no enforceability but as soon as the offer receives assent from the party it creates a legal obligation on the parties and it can’t be revoked.
A offers B to buy his house for 50 lakhs, as soon as B accepts the offer of A it becomes a promise and it is the duty of B to fulfill his promise and pay sum of 50 lakhs for the house and it becomes the duty of A to fulfill his duty and give his house to B.
What is a Valid Acceptance?
The Indian Contract Act, 1872 specifies a few requirements that must be met in order for an offer to be accepted legally. According to Sections 7 and 8 of the Indian Contract Act[2], an acceptance must meet a number of requirements in order to be considered legitimate.
The concept of absolute acceptance is discussed in Section 7[3]. This Section makes it clear that, unless otherwise indicated in the proposal, an acceptance must be unconditional, explicit, and conveyed expressly or implicitly. The offeree shall express his assent in the manner specified in the proposal, if such manner is already specified.
When an offer can be accepted without being communicated as such is covered in Section 8. According to the Section, an offer is deemed accepted when the offeree complies with the terms specified in the offer and agrees to pay in exchange for a reciprocal promise.
Types of Acceptance
- Expressed Acceptance
An oral or written acceptance is considered an expressed acceptance.
Example: In an email, “A” offers to sell “B” his phone. In response to that email, “B” said he would accept the offer to purchase.
- Inferred Acceptance
It so becomes an implicit acceptance if the acceptance is demonstrated by behavior.
For Example: – The Arts Museum sells a historical book at auction to raise money for charitable causes. They market the same thing in the media. This states that the Indian Contract Act of 1872 applies to a Mere Invitation to an Offer.
The guests make the same offer. The offer to purchase is an express offer because it is made orally, but the auctioneer has the last say when he hits the hammer three times. We refer to this as implicit acceptance.
- Conditional Acceptance
When someone receives an offer and informs the offeror that they are willing to accept it as long as specific conditions are met, this is known as a conditional acceptance, also known as an eligible acceptance. This acknowledgement functions as a counterproposal. Before a contract between the parties may be made, the initial offeror must take the counter-offer into consideration.
Essentials of a valid acceptance
- Acceptance should be absolute and unqualified
Acceptance is discussed in Section 7 as being unconditional and absolute. The acceptance of the offer cannot be subject to any conditions or require any modifications. A counter-offer may be made in response to any such modification or condition in the offer.
As an illustration, Mr. X offers Y 10 lakh rupees for the sale of his residence. Y says yes to the deal and agrees to pay the sum over time in installments. Because Y made changes to the offer, Mr. X’s offer is no longer valid in this instance. It so turns into a counter-offer.
In the 1963 case Trollope & Colls Ltd. v. Atomic Power Constructions Ltd[4]., the parties chose to create a contract on the issues they had agreed upon and proceeded to negotiate the issues they could not agree upon. In this instance, the validity of such a contract was questioned. The Court concluded that the agreement cannot be considered a contract because the parties have not mutually agreed upon every clause and because this could lead to issues down the road.
- Acceptor has an intention to fulfill the promise
The offeree must be able and willing to keep their end of the bargain in order for the acceptance to be considered legitimate. The acceptance is void if the offeree has no intention of keeping their end of the bargain.
Example: Mr. X consents to sell Mr. Y 2 lakh rupees for his horse. It was discovered later that Mr. X is not a horse owner. Since Mr. X had no intention of keeping the commitment, it was invalid to accept it.
- Acceptance must be communicated
The offeree must notify the offerer of his acceptance in order for it to be considered a legitimate acceptance. Acceptance that is only mental is invalid. Either explicit or implicit communication is possible. On the other hand, an offer is considered accepted if it requires the offeree to do more than just accept it.
The question of whether the contract between Brogden and Metropolitan Rly Co. was legitimate was brought up in Brogden v. Metropolitan Rly Co., 1877[5]. According to the case’s facts, Brogden, the complainant, once supplied coal to Metropolitan Rly Co., the defendant. In the past, there was no written contract and all transactions were done informally between the parties. The defendant later made the decision to draft an official contract. Thus, the plaintiff received a contract that the defendant had prepared. After making certain modifications to the agreement, the complainant sent the document to the defendant, who filed it but never acknowledged receipt of it. As a result, the coal supply and purchase continued. When a disagreement emerged between the parties regarding the legality of the agreement. The Court determined that there was a legitimate contract between the parties because, despite the defendant’s actions in accepting the counteroffer without communicating it, the coal was delivered, and the payment was made in accordance with the agreement. It was, therefore, a legitimate contract.
- Acceptance must be in the mode prescribed
The offer’s specified method must be followed for communicating acceptance. The acceptance can be conveyed in a customary and reasonable way if the mode of acceptance is not specified. The proposer may accept, reject, or intimate the offer if the mode of acceptance is indicated and the offeree communicates approval in a manner other than that described in the offer. If the offeree does not communicate, the offer is presumed to be accepted.
- Silence cannot be a mode of acceptance
Silence alone does not imply acceptance. Silence cannot be used by the offeror to indicate acceptance.
Example: Mr. Y offers Mr. X one lakh rupees in exchange for Mr. X’s horse. Mr. Y further states that it will be assumed that Mr. X has accepted the offer if Mr. X does not reply to the offer within a month. Silence is not a means of communication of acceptance, so if Mr. X does not respond to the offer within a month, it will not be deemed accepted.
- Acceptance of the offer and its communication must be made by the offeree or his authorized agent:
The offeree or his authorized agent alone may communicate the acceptance. If an offer is accepted by anybody other than the offeree or his authorized representative, no contract will be formed.
Lee v. Powell[6], 1908: In this instance, Powell applied to be the headmaster of a school, and the School Board approved his application. One of the School Board members informed him that his application had been accepted. Later on, his application was withdrawn by the School Board. Powell brought a breach of contract lawsuit. The Court held that there was no legitimate acceptance and no valid consent since the communication was not made by someone with the School Board’s authorization.
- Communication must be communicated within the time prescribed or within a reasonable time if a time limit is not prescribed
In the event that a time limit is not specified in the offer, the offeree must reply to the offer within a reasonable amount of time or before the offer expires or the offeror withdraws the offer.
Example: In July, Mr. X makes an offer to purchase Mr. Y’s home. In December, Mr. X accepts the offer. Because it is past a suitable time, Mr. X declined to purchase the residence.
Doctrine of Absolute Acceptance
Section 7 of the Indian Contract Act establishes this notion by stating that an acceptance must be unconditional and absolute in order for a proposition to become a legally binding commitment. Furthermore, unless the proposal stipulates otherwise, the acceptance must be notified in a way that is customary and acceptable. If there is a stated method of communication and it is not followed, the promisor may, within a reasonable amount of time following notification of the acceptance, require that the proposal be made in the specified manner. If this isn’t accomplished, though, the acceptance is deemed to be accepted.
For Example: A person offers other to buy his house for 1 crore, if A wants his proposal to get accepted and become a promise it must be accepted by other person unconditionally, if the other party puts any condition to the existing offer, the proposal is not said to be accepted and no obligation would arise on any party.
Revocation of Acceptance
Unlike other laws, Indian law allows revocation of acceptance in some cases. The Indian Contract Act’s Section 5 [7]addresses offer and acceptance revocation. This Section states that an acceptance may be withdrawn at any point prior to the completion of the acceptance communication. If the offeror receives the revocation prior to acceptance, acceptance may be revoked.
Conclusion
In the intricate world of contracts, acceptance plays a pivotal role. Simply put, for a binding agreement to arise, the offer must be met with an unequivocal “yes.” Section 7 of the Indian Contract Act lays down the golden rule: acceptance must be absolute, free of conditions, and communicated clearly. No wiggle room, no hidden intentions, just a clean mirror image of the offer. This doctrine of absolute acceptance ensures clarity, certainty, and fairness in agreements, minimizing disputes and misunderstandings. However, exceptions exist. Battle of forms, implied acceptance through conduct, and counter-offers may complicate the picture. The key is to navigate these nuances with care, ensuring every acceptance rings true – a clear, confident “yes” paving the way for a smooth and enforceable contract.
[1] Indian Contract Act 1872, No. 2(b)
[2] Indian Contract Act 1872
[3] Indian Contract Act 1872, No. 7
[4] Trollope & Colls Ltd. v. Atomic Power Constructions Ltd, 1 WLR 333
[5] Brogden v. Metropolitan Rly Co. 2 App Cas 666
[6] Lee v. Powell (1908) 99 LT 284
[7] Indian Contract Act 1872, No. 5
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