Introduction:
In accordance with the 1872 Indian Contract Act the definition of acceptance is given in Section 2(b)[1] as, “when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. As a result, when a proposal is accepted, it becomes a promise.”
For example, suppose A offers to buy B’s house for Rs. 20 lakhs, and B accepts the offer. This has now turned into a promise.
As defined by the definition, acceptance occurs when the offeror’s proposition or offer is unconditionally accepted by the offeree. The person making the proposal does not bind themselves until its acceptance. The proposal or offer becomes a promise as soon as it is accepted. At this stage, both parties become bound. If the proposition or acceptance is made in words, the promise is supposed to be expressed. If the proposal or acceptance is made otherwise than in words, the promise is said to be implied[2].
The offeree is not bound to accept the proposal. An offeree is free to reject or make the offer lapse by non-acceptance. Similarly, an offeror inviting tenders is free not to accept a bid, even if the essential condition of tender is not complied with.[3]
An offeror who is inviting tenders may possess the power to reject all of the tenders. The person who is submitting the highest tender does not include a right to have his tender accepted[4]. In Gajendra Singh v. Nagarpalika Nigam, Gwalior,[5] it was held by the M.P. High Court that if a tendering authority opted not to accept a tender, the tenderers, including the highest tenderer, could not compel the authority to accept the tender and engage in a contract with him.
When a proposition or offer is accepted, it becomes a guarantee that is irreversible. An offer does not generate any legal duties on its own; it is only after it is accepted and becomes a promise that it does so. Because it generates legal duties between the two individuals involved, a promise is irrevocable. Before an offer is accepted, it might be revoked. However, once acceptance has been expressed, it cannot be retracted or cancelled.
Effects of Acceptance
According to Anson[6] the effect of acceptance of an offer has been explained in the following words:
“Acceptance to an offer is what a lighted match is to a train of gunpowder. It creates something that can’t be reversed or undone. But the powder may have lain till it becomes damp or the man who laid the train may remove it before, the match is applied. Just like that an offer may lapse for want of acceptance or lie revoked before acceptance. Acceptance converts the offer into a promise and then it is too late to revoke it.”
Thus, until the offer is accepted, it creates no legal rights, and it may be terminated at any time. Before the acceptance is made neither of the parties is bound by legal obligations thereby. At this stage, the offeror is free to revoke or withdraw their offer, and the offeree is free to reject or not accept the proposal provided. Acceptance results in the formation of a contract between the parties involved, which, assuming all other elements of a legal contract are met, binds both parties to the offer or promise. The promise made through the method of offer and acceptance now binds each party legally.
Essentials of a Valid Acceptance
- The offeree should inform the offeror of his or her acceptance.
In Boulton v. Jones[7], Boulton purchased Brocklehurst’s firm, but Brocklehurst failed to notify all of Brocklehurst’s creditors. Brocklehurst’s creditor Jones made an order with him. The goods were accepted and delivered by Boulton. Jones refused to pay because he still owed Brocklehurst money. Boulton could not accept the offer because it was never made to him, and hence there was no contract.
- Acceptance must be unconditional and unqualified.
For example, A offers B 1,000 for his bicycle. B says he’ll take it if A sells it for 500/-. This does not imply that the offer has been accepted; rather, it is a counteroffer.
- Acceptance must be done in a specific way.
For example, A offers B three lakhs for his car. He requests B to send him his response by mail. B accepts A’s offer by email. Now A can ask B to send the response in the specified format. If A fails to do so, he has accepted B’s acceptance and a promise has been made.
- Acceptance should be given while the offer is still valid, and if no time limit is specified, acceptance should be made as soon as possible.
For example, ‘X’ makes an Rs.1000.00 offer to ‘Y’ to sell his equipment. There is no deadline for acceptance. Two years after getting the offer, ‘Y’ responds. This in no way indicates that the offer has been accepted.
Communication of Acceptance
The proposal is accepted when the individual to whom the proposal is made indicates his assent to it, according to the concept of acceptance. Therefore, it indicates that the offeree must express his or her acceptance by signing or communicating his or her agreement. According to section 3[8], the communication of acceptance is to be made by any act or omission of the party accepting, by which he intends to communicate such acceptance, or which has the effect of communicating it.When both parties are in the same place with each other, oral communication is a possibility. When the parties are separated by a long distance, communication can take the form of any type of mail, a phone message, a telegraph, or any other means.
A person’s actions can sometimes indicate his acceptance. When a passenger, for example, boards a public transportation vehicle and travels, he implicitly agrees to pay the required fare. Hence, acceptance of a proposal and when acceptance is imitated by some external action, which the law regards as sufficient, is necessary. Acceptance must be expressed in order for a contract to be valid, and it should be communicated solely to the offeror. As such an example, if someone decides to accept an offer but does not communicate their acceptance, or tells their maid about their intentions that cannot result in a contract.
Communication Should Only be Made by the Offeree or his Authorised Agent
In order for the acceptance to be considered valid, it must be notified to the offeror either by the offeree himself or by someone authorised to act on his behalf. However, if the communication is made by an unauthorised party, no contract is formed.
In the case of Powell vs. Lee[9], Powell, who seemed to be the headmaster of a school, was actually one of the candidates. The manager at the time referred his candidacy to the appointing authority, who in turn issued a resolution appointing him to the job. There was no formal acceptance directly to him at this time, and these were merely internal dealings. From afar, one board member overheard the other board members discussing whether or not they would eventually appoint him as the school’s headmaster. He then proceeded to tell Powell about it. Powell was overjoyed when he received the notification that he was being appointed as the headmaster, but the members of the board then revoked his appointment, and as a result of this decision, Powell sued Lee, the chairman of the board of management, for breach of contract. The court ruled that because the board’s resolution was not communicated to Powell by the board or any authorized person acting on its behalf, it could not give birth to a contract.
Communication of Acceptance is Not Needed in Acceptance by Conduct
The terms of some unusual offers may be such that no communication of acceptance is required. In such instances, a specified type of behaviour on the part of the offeree may be sufficient to form a legally binding contract. As a result, a valid contract can be constructed without the necessity for acceptance communication. According to section8[10] “performance of the conditions of a proposal is an acceptance of the proposal.”
Communication of Acceptance to a Wrong Person
The offeror is committed to the contract as soon as the letter of acceptance is mailed to him, as previously stated. However, if the letter of acceptance is sent to the wrong person or to the wrong address, the offeror is not bound.
In the case of Karan Singh vs. the Collector, Chhatarpur[11], The petitioner’s bid of 1800 rupees was the highest in a quarry lease auction. The petitioner placed 540 in security money in accordance with the auction’s terms. However, the bid was not accepted at the time, but it was later accepted by the collector, who instead of notifying the petitioner sent it to someone else. After the leasing period had expired, the responsible official realised his error. The petitioner was then served with a demand notice demanding payment of the lease money. The petitioner, on the other side, wanted reimbursement of his 540 in deposited security money. It was held that the petitioner’s bid, which was an offer, accepted on file, did not result in a contract because no imitation of the same was provided to him and he did not receive it. The respondents were ordered to refund the petitioner’s security deposit after the demand for the leasing money was dismissed.
Conclusion
Under Section 2(b) of the Indian Contract Act of 1872, the term “acceptance” is extensively defined as “A proposition is said to be accepted when the individual to whom it is made indicates his assent to it.” Therefore, for the goal of making a contract, there are two sorts of forms of communication: instantaneous and non-instantaneous modes of communication. Telephone and fax are instantaneous ways of communication in which the two parties are regarded to be in direct contact with each other. The acceptance must be conveyed to the offeror in order to form a contract in these modes of communication. In the non-instantaneous mode, the acceptance does not have to be notified to the offeror, for example, a post, a telegraph, a letter.
Therefore before getting legally obliged to a contract, the offeror and the offeree must understand the terms and conditions of the offer whether orally, written or through action so that it would lead towards a valid acceptance and a valid contract.
References:
[1] https://indiankanoon.org/doc/1845680/
[2] https://indiankanoon.org/doc/1589358/#:~:text=9.,is%20said%20to%20be%20implied.
[3] https://indiankanoon.org/doc/1041884/
[4] https://indiankanoon.org/doc/298443/
[5] https://indiankanoon.org/doc/269473/
[6] Anson’s law of contract, 23rd Ed., 55.
[7] https://kajalkukreja1111.blogspot.com/2018/12/case-study-on-boulton-vs-jones-1857-2h.html
[8] https://indiankanoon.org/doc/494623/
[9] https://en.wikipedia.org/wiki/Powell_v_Lee
[10]https://indiankanoon.org/doc/1911494/#:~:text=Section%208%20in%20The%20Indian%20Contract%20Act%2C%201872&text=8.,an%20acceptance%20of%20the%20proposal.
[11] https://indiankanoon.org/doc/1223602/
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