Acceptance

Sec. 2(b): When a person to whom the

proposal is made, signifies his assent
thereto, the proposal is said to be
accepted.
Both the parties become liable to each
other after a proposal has been accepted.
Like proposal, Acceptance may also be in
Express or Implied mode
The offeree is not bound to accept the
offer. Thus it is lawful for a offeree not to
accept any tender or highest bid in a
auction or other proposal made to him.
Effect of Acceptance
A contract is created between the parties
only after an offer is accepted. Before
acceptance both the parties are free and
not liable towards each other.
At this stage:
1. Offeror is free to withdraw his offer.
2. Offeree is free not to accept the offer.
In Anson’s words, “Acceptance is to an offer
what a lighted match is to a train of
gunpowder. It produces something which
cannot be recalled or undone”
Essentials of a valid
Acceptance
To constitute a contract, the acceptance
must fulfil following ingredients:
1. Acceptance should be communicated to
offeror by offeree.
2. Acceptance should be absolute and
unqualified.
3. Acceptance should be made in some
usual and reasonable manner, unless the
proposal prescribes the manner of
acceptance.
4. Acceptance should be made when the
offer is still subsisting.
1. Acceptance must be
communicated
 As under sec. 2(b) we have noted, “When a person to
whom the proposal is made, signifies his assent thereto,
the proposal is said to be accepted” it means offeree must
communicate the acceptance to offeror.
 If parties are face to face communication may be oral,
when they are at a distant place communication could be
made by post, telephone, through other modes of
communications.
 Sometimes conduct of a person may amount to
acceptance, like if anybody boards a bus, he impliedly
assents to pay the fare.
 Moreover acceptance must be communicated to the
offeror or any person authorised by him (agent).
 Like wise communication must be communicated by
offeree or his authorised agent only.
Felthouse v. Bindley (1863)
Felthouse wrote a letter to his nephew offering to
buy his horse for £30-15 sh.
He also mentioned, “ if I hear no more about the
horse I shall consider the same to be mine”
Nephew did not replied to Felthouse but told his
auctioneer Bindley that he wanted that horse to
be given to his uncle so he asked the auctioneer
not to sell the horse to anybody else.
But Bindley sold the horse by mistake.
Felthouse sued Bindley for the tort of conversion,
he contended that he was the owner of the horse.
Whether Bindley is liable towards Felthouse?
Decision
It was held that as acceptance of the offer
was not communicated to the offeror, there
arise no contract, so Bindley is not liable
towards Felthouse.
It was also held that mere silence does not
amount to acceptance, offeree may choose
not to reply and made the offer lapsed with
the passage of time.
Powell v. Lee (1908)
 Powell was one of the candidate for the post of Headmaster in a school.

 The Board of Management passed a resolution selecting him for the post.

 No communication about this resolution made by the Board to Powell.

 One of the member of the Board in his personal capacity informed Powell

about his selection.

 Meanwhile Board met again and decided to cancel the appointment of

Powell and to appoint another candidate Mr. Parker for the post.
 Powell sued Mr. Lee (Chairman of the Board) for the breach of contract.

 What will be the fate of this suit?

Court held:
As the member has not been authorised to
communicate the appointment, there is no
communication of acceptance from Board
or any authorised person, which results no
contract between the parties. So Mr.
Powells suit was dismissed.
Communication to wrong
person
If acceptance is made to wrong person, it does not
bound the offeror.
In Karan Singh v. The Collector Chhatarpur
(1980)
 Petitioners bid of Rs. 1800 was highest and he has
also deposited Rs. 540 as earnest money.
 Later on his bid was accepted and a letter of
acceptance was posted to him but wrongly the
same has been sent to some other person.
 After some time a notice was served by collector
demanding the remaining amount, and the
petitioner was demanding earnest money on other
side.
Court held that Petitioner is entitled for
earnest money and not liable to pay the
rest of amount as communication of
acceptance was not complete against him.
Acceptance by Conduct
Sec. 8: Acceptance by performing
conditions, or receiving consideration
Performance of the conditions of proposal, or
the acceptance of any consideration for a
reciprocal promise which may be offered
with a proposal, is an acceptance of the
proposal.

Eg: if an offeror send cheques with offer and

the same has been encashed by the
offeree, it amounts to acceptance by
conduct.
Agreement sub silentio
The general rule is mere silence does not
amount to acceptance but in certain cases
silence coupled with conduct amounts to
acceptance. This phenomenon of
acceptance is called “ Agreement Sub
Silentio”
When is communication of
acceptance completes
As soon as the communication of
acceptance completed, a contract comes
into being, whereby both the parties
become bound.
When parties are face to face, contract
completed as soon as the acceptance is
communicated to the offeror by offeree, but
problem persists when parties are at
different places and the communication is
made by post or telephone etc.
Acceptance by Post
Sec 4: The communication of an
acceptance is complete -as against the
proposer, when it is put in a course of
transmission to him so as to be out of the
power of the acceptor; as against the
acceptor, when it comes to the knowledge
of the proposer.
 Against Proposer: When it is put in the
course of transmission.
 Against Acceptor: When it comes to the
knowledge of Proposer.
Illustration
B accepts A’s offer
 A is bound when the letter of acceptance is
put in the red post box..
 B is bound when letter reaches to A.
J.K. Enterprises v. State of
M.P.
The petitioner submitted a tender for
purchase of Tendu leaves on 11.01.93.
The respondents send a communication
letter dated 12.02.93 on the address given
by the petitioner.
The said letter was however returned to
respondent.
Respondent demanded tender money and
petitioner contended that he is not bound
as he has got no confirmation from the
defendant.
Whether petitioner is responsible to
Decision
Contract came to force as soon as the
letter of acceptance was mailed to offeror.
Dunlop v. Higgins (1848)
Dunlop & co. offered to sell 200 tons of iron
pigs at 65 sh/ton to Higgins & co. through
letters dated 22nd january 1945.
Higgins accepted the offer and replied
same day, but because of frosty weather
train services were disrupted which causes
delay and letter reached to Dunlop & co.
With some delay.
Dunlop refused to supply iron pigs and
subsequently sued by Higgins & co.
What will be the fate of this case?
Decision
It was held that Dunlop & co. had become
bound by the contract as soon as letter of
acceptance was posted to them.
Acceptance by Telephone
Specifically Indian Contract Act does not
provide any provision which directly deals
with acceptance by telephone.
But court settled this issue in Bhagwandas
v. Girdhari Lal & Co. In 1966.
Court held that cases involved acceptance
by telephone are different and
communication completes against offeror
when it is received by the offeror only.
Position in these cases is same as in the
case in which parties are in presence to
each other.
Bhagwandas v. Girdhari Lal & Co.
(1966)
Plaintiff made an offer from Ahmadabad for the
purchase of cotton seed cakes.
Defendant accepted this offer on telephone at
Khamgaon.
The defendants have failed to supply the cakes and
sued by plaintiff for an amount of Rs. 31,150 at
Ahmadabad.
Defendant contended that Ahmadabad court has no
jurisdiction as the contract was completed at
Khamgaon from where the communication was given.
Plaintiff pleaded that contract has been completed at
Ahmadabad where he heard the acceptance.
Whose point is sound?
Decision
Court observed that in the case of
telephonic conversation, in a sense the
parties are in the presence of each other.
Each party is able to hear each other. There
are instantaneous communication of
speech intimating offer and acceptance.

Accordingly it was held that it is the

jurisdiction of Ahmadabad only to entertain
this case. As the contract was completed in
Ahmadabad.
2. Acceptance should be Absolute
and Unqualified
Sec 7(1) provides that In order to
convert a proposal into a promise the
acceptance must be absolute and
unqualified.
Conditional or qualified acceptance is
not a proper acceptance for the creation
of a valid contract.
With conditional or qualified acceptance,
original offer got lapsed.
Hyde v. wrench (1840)
A made an offer to B to sell his farm for £
1000.
B said he will pay only £ 950 for the farm
house.
Thereupon B agreed to pay £ 1000 to which
A did not agreed and was sued by B for
enforcement of the contract.
It was held by the court that when B
offered to pay £950 the original offer got
lapsed and there is no contract between
the parties even later on B accepted to pay
the £1000.
3. Acceptance should be expressed
in usual/ prescribed mode
Sec. 7: In order to convert a proposal into a
promise the acceptance must be expressed in
some usual and reasonable manner, unless the
proposal prescribes the manner in which it is to be
accepted.
If the proposal prescribes a manner in which
it is to be accepted; and the acceptance is not
made in such manner, the proposer may, within a
reasonable time after the acceptance is
communicated to him, insist that his proposal
shall be accepted in the prescribed manner, and
not otherwise; but if he fails to do so, he accepts
the acceptance.
4. Acceptance should be made
while the offer is still subsisting
Offeror is free to withdraw his offer
before its acceptance, it means offer
must be accepted before its withdrawal
or before its lapse i.e. when it is alive or
subsisting.
Acceptance after the lapse of offer does
not arise any contract. Similarly the
offer is deemed to have ended by
rejection of the original offer or counter
offer.
Thank you