By Asok Nadhani
2.2 Acceptance
2.2 Acceptance
i.
Acceptance
is the act of assenting to the offer. Immediately on acceptance, the contract
emerges and becomes binding on the parties.
ii.
Acceptance
may be classified in 2 ways (s.9):
a.
Express Acceptance: When the offeree expressly communicates the
offer to the offerer.
Ex. A says to B, ‘I accept to buy your Maruti
800 car as per your terms of offer’. This is an Express Acceptance.
b.
Implied Acceptance: When the Acceptor does not expressly
communicate the acceptance, but the acceptance is implied by the act or conduct
of the offeree.
Ex. A picks up an Item (with the price tag
fixed on the Item) in a self service shop and pays the money to cashier.
Cashier takes the money. The act of cashier is an implied acceptance of the
buyer’s implied offer and he must deliver the Item to A.
Ex.
A launderer had given to
his customer a receipt for clothes received for washing. Special conditions for
this were printed on the reverse of receipt. Held that special conditions were
duly communicated to the customer who had impliedly accepted the same. (Lily While vs R. Muthuswami)
iii.
In
case of acceptance by multiple persons to a General Offer, it gives rise to
multiple contracts, one in respect of each acceptor.
iv.
Person competent to accept offer
a. Specific
Offer: A specific offer can be accepted only by such
person to whom it is made. So, an offer made to a particular person can be
accepted only by such person, and an offer made to a group of persons can be
accepted only by any person falling under such group.
b. General
Offer: In case of a
general offer, it is not required for offerer to first inform the offer. Mere
fulfilment of terms and condition of the offer is sufficient. As laid down in
Carlill v Carbolic Smoke Ball Co., a general offer may be accepted by any
person, who:
i.
has
knowledge of the offer ; and
ii.
fulfils
the terms and conditions of the offer.
v.
Condition of
Acceptance
a.
Acceptance must be absolute & unqualified to
the terms of offer. New conditions or qualifications must not be introduced to
the offer during acceptance (it amounts to counter offer and not acceptance).
(sec. 7)
Ex. A offers to B to sell his Maruti car at
Rs.1 Lac. B replies that he accepts the offer if A gets the Car painted Red.
B’s reply does not amount to Acceptance of A’s offer.
b.
Acceptance must be communicated to the offeror.
Ex. A offered to B, a company, to supply coal.
B’s purchase officer asked the clerk to send the order. B’s clerk just kept in
his own mind but did not send the purchase order. Meanwhile, the price of coal
increased considerably. B’s purchase officer demanded A to supply the coal as
per the offer. Held, A may avoid the offer because there was no acceptance on
B’s part.
c.
An acceptance must move from the offeree only when
he has the knowledge of offer.
d.
Normally the communication of acceptance is
express, but sometimes it may be implied from the acts or conducts.
e.
Acceptance must be communicated in the prescribed
way (or in the normal way).
Ex. A makes an offer to B. The offer states that
the acceptance must be communicated to A in writing within 7 days of receipt of
offer. B, on 7th day, just informs his acceptance over telephone. A
may refuse to accept the telephonic communication as valid acceptance.
f.
Acceptance must be given within specified time (or
within reasonable time, if no time is specified), otherwise, the offerer may
treat the offer as lapsed.
Ex. A makes an offer to B. The offer states
that the offer is valid for 7 days only. B accepts the offer after 15 days. A
may refuse to accept as valid acceptance as it was not received within
specified time treating the offer as lapsed.
g.
Future Agreement is not an acceptance. An agreement
to enter into an agreement upon terms to be fixed in a future date does not amount
to any contract.
Ex. A film producer offers to an actor to fix
his remuneration at a later date depending on fixing of the location of the
shooting. Hence there was no binding contract between the parties.
h.
Mere mental acceptance is not acceptance.
Ex. A offered to B, a company, to supply coal.
B’s purchase officer asked the clerk to send the order. B’s clerk just kept in
his own mind but did not send the purchase order. Meanwhile, the price of coal
increased considerably. B’s purchase officer demanded A to supply the coal as
per the offer. Held, A may avoid the offer because there was no acceptance on
B’s part.
Ex. A wrote to B, ‘I offer to sell 100 Tons of
Coal at Rs 12000/Ton. If I do not hear from you within 7 days, I will treat
that you have accepted the offer’. B did not reply. A cannot assume B’s silence
as acceptance.
i.
Silence cannot be implied as acceptance.
j.
When acceptance is given to an offer, it results in
a binding contract.
k.
Performance of an act without the knowledge of
offer is not acceptance to the offer.
l.
Acceptance must be given by the person having the
authority to accept the offer before the offer lapses or revoked.
2.2.1 Communication of Acceptance
a.
Rules
of Communication of Acceptance (s.3)
i. Acceptance must be communicated to the offeror.
ii. Normally the communication of acceptance is
express, but sometimes it may be implied from the acts or conducts.
iii.
Acceptance
must be communicated in the prescribed way (or in the normal way).
iv.
Acceptance
must be given within specified time (or within reasonable time, if no time is
specified), otherwise, the offerer may treat the offer as lapsed.
v.
Future
Agreement is not an acceptance. An agreement to enter into an agreement upon terms
to be fixed in a future date does not amount to any contract.
vi. Mere mental acceptance is no acceptance.
vii. Silence cannot be implied as acceptance.
Ex. A makes an offer to B. The offer states
that the acceptance must be communicated to A in writing within 7 days of
receipt of offer. B, on 7th day, just informs his acceptance over
telephone. A may refuse to accept the telephonic communication as valid
acceptance.
Ex. A transport carrier accepted goods for
transport without any conditions. Subsequently, he issued a circular to owners
of goods limiting his liability for goods. Since the special conditions were
not communicated prior to the date of contract for transport, these were not
binding on the owners of goods. (Raipur
Transport Co. vs Ghanshyam)
Ex. T purchased a railway ticket, on the face
of which was written - For Conditions See Back. One condition excluded
liability for injury, however caused. T was illiterate and could not read. She
was injured and sued for damages. Held, the Railway Company had properly communicated
conditions to her who had constructive notice of conditions whether she read
them or not. The Company was not bound to pay any damages. (Thompson vs LM&L Rly. Co. )
Ex. A passenger deposited a bag in the
cloakroom at a Railway Station. Acknowledgement Receipt given to him carried,
on the face of it, the words "See back". One condition limited the
liability of Railways for any package to £10. The bag was lost, and passenger
claimed £24 being its value, pleading that he had not read conditions. Held,
passenger was bound by conditions printed on the back as the Company gave
reasonable notice. (Parker vs South Eastern Rly . Co. )
Ex. A passenger was travelling with luggage
from Dublin Henderson
b.
Completion of Communication of Acceptance
Communication of acceptance is
complete:
i)
As
against offerer – When the communication of acceptance is put in course of
transmission.
Ex. A offers his car for sell. B, in response
to A’s offer sends a letter of acceptance post. As regards B’s communication is
complete when the letter is posted.
ii)
As
against acceptor – When the communication of acceptance comes to the knowledge
of offerer.
Ex. B accepts A’s offer by a letter posted on
1st which reaches A on 3rd. On the part of B, the
acceptance is complete on 1st, the day when he drops the letter. On
part of A, the acceptance is complete on 3rd, when he receives the
letter.
2.2.1.1 Silent Acceptance
i. As a general rule, the offer cannot thrust
the burden on the offeree. So, an offer containing a term that silence on the
part of offeree shall amount to acceptance of the offer, is not valid. For
example, if the Offerer says, if I do not hear from you within 7 days, I shall
treat the offer is accepted. Such a condition is not valid and the offer does
not become binding if the offeree does not reply within 7 days. [Felthous vs Bindley]
ii. However, silence may amount to acceptance
in certain cases as follows:
a. Where the offeree voluntarily agrees with
the Offerer that non-refusal by offeree within a specified time shall amount to
acceptance, such a clause is valid. Therefore, in such a case, silence of
offeree may amount to acceptance. For example, the offeree says to Offerer,
"If you do not hear anything from me in the next 7 days, consider your
offer as accepted." If the offeree fails to reject the offer within 7
days, his silence shall amount to acceptance.
b. Where an implied offer is made, but the
offeree remains silent, thereby resulting in performance by the Offerer, the
silence of offeree shall amount to implied acceptance.
c. Where there is a custom or usage of trade
which specifies that silence shall amount to acceptance, such a custom or usage
of trade shall be binding on the parties.
2.2.1.2 Mental Acceptance
i.
Mere
mental acceptance is no acceptance. If the acceptance is not
communicated, it is meaningless. Where the offeree is mentally prepared to
accept the offer, but fails to communicate his acceptance, it is not regarded
as a valid acceptance. So, a
mere mental (i.e., unilateral) act of assent in one’s own mind does not
tantamount to communication, since it is not signified to the other.
ii.
For
example, no valid
acceptance takes place in the following cases:
a.
Where
the offeree prepares his mind to accept the offer but forgets to give his
consent.
b.
Where
the offeree prepares a letter of his consent, but fails to dispatch the letter
of consent.
2.2.1.3 Special terms and conditions of
offer/acceptance
i. Special Terms that form part of the
Contract, are binding on the parties. Hence, a person is deemed to have
accepted the Special Conditions or Terms in a Contract, if they are
communicated to him in some responsible manner, e.g. conditions on the reverse
of a train ticket, air ticket, bill issued by service providers, etc. In such
case, persons entering into contracts on special terms are deemed to have
impliedly accepted those terms. (Mukal Datta Vs. Indian Airlines)
ii. Rules
of Acceptance of Special Terms:
a.
Tacit
Acceptance: Acceptance of
document (e.g. ticket or receipt) without protest tantamount to a tacit
acceptance of conditions.
b.
Notice
of conditions:
i.
The
party delivering the document should have given reasonable notice of the
special terms/conditions. Words like See Back for Conditions, Please Turn Over,
subject to Terms and Conditions contained in Annexure, are indicative of a
reasonable notice to the Acceptor. It shall be binding even though the Acceptor
did not read the same or could not understand it.
ii.
However,
in following cases, the notice is not properly communicated and hence the offer
is not binding:
a.
If
the document is printed and delivered to him in such condition that it does not
give reasonable notice on its face that it contains certain special conditions.
b.
When
the conditions are contained in a document that is delivered after the contract
is complete.
c.
If
conditions limiting or defining his rights are not brought to his notice.
2.2.2 Revocation of Acceptance
Acceptance produces something which cannot
be recalled. Offer is like a lighted match while acceptance is train of
gunpowder. The man who led the train may remove it before the match is ignited.
An offer by itself does not create legal relationship, but as soon as it is
accepted, legal relationship is established and it cannot be revoked.
i.
An
acceptance given may be revoked (taken back) by the acceptor at any time before
the communication of acceptance is complete, but not after that. This means
that revocation of acceptance is binding on the offerer only if the
communication of revocation is received by the offerer earlier than the receipt
of communication of acceptance (s.5).
ii.
If
the acceptance and revocation is communicated by letter (correctly addressed
& adequately stamped) sent through post, following rules will apply:
a.
If
the acceptance is received by the offerer before the revocation of acceptance,
the contract will be binding between the parties.
b.
If
the revocation is received by the offerer before the acceptance, no contract
will be binding between the parties.
c.
If
both the acceptance & revocation reaches the offerer at the same time, the
respective rule among the above two will apply depending on which letter he
reads first.
d.
As
soon as the Acceptance letter is despatched by the acceptor, the offeror is
bound by the acceptance and cannot revoke the contract.
i.
Even
if the letter is lost in transit, acceptance is still valid if the Acceptor has
properly addressed it to the Offeror, affixed adequate postage stamps, and
posted at letter box of Post Office.
ii.
Acceptor
is deemed to have done everything when he posts his acceptance to the Offeror.
He cannot be held responsible for events over which he has no control (e.g. for
loss of the letter of communication in transit).
iii. Completion of Communication of Revocation
Communication of revocation
is complete:
a. As against the
person who makes it – When revocation is put in a course of transmission so as
to be out of the power of the person who makes it.
b. As against the
person to whom it is made – When revocation comes to the knowledge of the person
to whom it is made.
For more details, refer to Mercantile Law, by Asok K Nahani, BPB Publications, www.bpbonline.com bpbpublications@gmail.com
For more details, refer to Mercantile Law, by Asok K Nahani, BPB Publications, www.bpbonline.com bpbpublications@gmail.com
