Acceptance is the act of assenting to a proposal. Under S.2(b), when the person to whom the proposal is made signifies their assent, the proposal is said to be accepted, and a proposal, once accepted, becomes a promise.
Legal Framework
| Section | Act | Scope |
|---|---|---|
| S.2(b) | Indian Contract Act, 1872 | Defines acceptance: signifying assent converts proposal into promise |
| S.7 | Indian Contract Act, 1872 | Acceptance must be absolute and unqualified, expressed in usual and reasonable manner |
| S.8 | Indian Contract Act, 1872 | Acceptance by performance of conditions or receipt of consideration |
Essentials of a Valid Acceptance
1. Absolute and Unqualified. Under S.7, acceptance must correspond exactly with the offer's terms, without addition, omission, or qualification.
Why: A qualified acceptance is legally a counter offer, not acceptance, since the parties have not reached consensus ad idem on identical terms.
2. Communicated to the Offeror. Silent mental assent is not acceptance; it must be conveyed.
Why: The offeror must know their offer has been accepted before they can be bound, otherwise they remain free to revoke.
3. In the Manner Prescribed. If the offeror prescribes a mode of acceptance, the offeree should follow it.
Why: The offeror controls the terms of their own offer, including how they wish to be bound.
4. By the Person to Whom the Offer Is Made. Only the offeree, or in a general offer, any person fulfilling the conditions, can accept.
Why: A stranger to the offer cannot impose acceptance on the offeror, since the offeror never extended assent-seeking conduct toward them.
5. Made While the Offer Subsists. Acceptance after the offer has lapsed, been revoked, or rejected is void.
Why: Once an offer ends, there is nothing left to accept.
6. May Be Express or Implied by Conduct. Acceptance can be signified by words or by an act that unambiguously demonstrates assent, per S.8.
Illustrations
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Valid acceptance: A offers to sell his laptop to B for Rs. 25,000. B replies "I accept" without any variation. This is absolute and unqualified acceptance, forming a binding contract.
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Counter offer, not acceptance: A offers his car for Rs. 3,00,000. B replies, "I will pay Rs. 2,80,000." This is a counter offer under the Hyde v Wrench rule; the original offer is destroyed and cannot later be accepted by B at the original price without a fresh offer from A.
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Acceptance by conduct: A courier company leaves a parcel with instructions that payment on delivery constitutes acceptance of terms printed on the packaging. The recipient's act of paying and accepting delivery is acceptance by conduct.
Recall Check
- Why must acceptance be "absolute and unqualified" under S.7?
- What happens to the original offer once a counter offer is made?
- Can silence amount to acceptance? Explain with reasoning.
Key Cases
Hyde v. Wrench (1840) Hyde-v-Wrench-1840 Issue: Whether a counter offer, once made, allowed the offeree to later accept the original offer. Rule: A counter offer destroys the original offer; it cannot be revived by later purporting to accept it. Held: No contract existed; the counter offer had extinguished the original offer, and the subsequent purported acceptance was ineffective.
Distinctions
| Basis | Acceptance | Counter Offer |
|---|---|---|
| Effect on original offer | Concludes the contract | Destroys the original offer |
| Terms | Mirrors offer exactly | Varies offer's terms |
| Who can accept next | No further acceptance needed | Original offeror may accept or reject the counter offer |
| Governing principle | S.7, absolute and unqualified | Mirror image rule violated |
Flashcards
Q: What does S.2(b) of the Indian Contract Act, 1872 define? A: Acceptance: signifying assent to a proposal converts it into a promise.
Q: What is the legal effect of a counter offer on the original offer? A: It destroys the original offer, per Hyde v Wrench.
Q: Under S.7, what two conditions must acceptance satisfy? A: It must be absolute and unqualified, and expressed in the manner prescribed or in a usual and reasonable manner.
Q: Can a stranger to an offer accept it validly? A: No, only the offeree, or in a general offer, a person fulfilling its conditions with knowledge.
Q: Is acceptance effective the moment it is mentally formed? A: No, it must be communicated to the offeror to be effective.
Exam Scenario
X offers to sell his flat to Y for Rs. 80 lakh, valid till 5 pm on a given day. At 3 pm, Y replies, "I accept, but will pay in two instalments." At 4 pm, realising the modification may not be accepted, Y sends a second message: "I accept your original terms unconditionally." Advise Y on whether a contract has formed.
Approach: Apply S.7's requirement of absolute and unqualified acceptance. The first reply, introducing instalment payment, is a counter offer under the Hyde v Wrench principle and destroys X's original offer. Analyse whether X's original offer can still be accepted at 4 pm, or whether it was already extinguished by the counter offer, requiring X's fresh assent for any contract to form.
See Also
- Offer Definition Essentials and Types : acceptance must mirror the offer exactly for consensus ad idem to arise.
- Communication of Offer and Acceptance : timing rules governing when acceptance becomes legally effective.