Acceptance in Law of Contract

The Term Acceptance [ELABORATED]

Introduction:

A proposal to make a contract, being an offer, in the form of an express or implied promise, to exchange a promise for an assent, or of an act for a promise, or of a promise for an act or of a promise for a promise, requires the assent of the offeree, that is his acceptance of it, to become a promise. Without the acceptance of the proposal, no agreement can come into being. The acceptance of the proposal often gives the consideration desired by the proposer. The acceptance has to be made by some words or acts or conduct, indicative of assent. 

Meanings and Definitions of Acceptance:

Meaning of Acceptance: 

  • (a) Assenting to the proposal; or 
  • (b) Acceding to the terms of the proposal, or 
  • (C) Admitting and agreeing to the proposal.

 Definitions of Acceptance:

(a) According to Anson: 

“Acceptance is to an offer what a lighted match is to a train of gun powder. It produces something which cannot, be recalled or undone. But the powder may have lain till it has become damp or the man who laid the train may remove it before, the match is applied. So an offer may lapse for want of acceptance or-lie revoked before acceptance. Acceptance converts the offer into a promise and it is then too late to revoke it”. 

(b) Chitty's Definition: 

“An acceptance is a final and unqualified expression of assent to the terms of an offer.

(c) Black's Law Dictionary:

Acceptance means "The taking and recurring of anything in good part, and as it were a tacit agreement to a proceeding act, which might have been defeated or avoided if such acceptance had not been made".

(d) Section 2(b) Contract Act 1872 Defines Acceptance as:

When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.

legal definitions meanings and essentials of acceptance business law contract law

Legal Requirements of An Acceptance:

Acceptance, in order to become a promise, must comply with the following requirements:

(1) Acceptance must comply with Terms of Proposal:

In order to make a promise, it is necessary, that the acceptor should give, in return for the proposer’s promise, exactly the consideration which the proposer requests if he requests an act, the acceptor must perform the very act, and no other’ If the proposer requests a promise, the acceptor must make that very promise absolutely. A substantial compliance is required in the sense that the acceptor must, in effect agree to make precisely the promise requested. If the acceptor adds any provision to which the proposer did not assent the consequence is that the offer is rejected. 

Illustrations:

(a) A offers a reward for an act and B does the act in ignorance of the offer. B cannot claim the reward when he becomes aware of its existence. 
(b) A company allotted some shares to the person who had not applied for them. Subsequently he applied for shares being unaware of the previous allotment. It was held that the previous allotment of shares was invalid.

(2) Acceptance must be absolute and Unconditional: 

Acceptance must further be absolute and unqualified. If the offeree purports to accept subject to conditions, additions, restrictions or alterations, the purported acceptance counts as a refusal of the original offer and is a new offer in those terms. However, conditions which do not qualify the offer but merely expression of an abundance of caution, what the offer already implies in fact or in law, do not impair the acceptance; nor do added terms requested as a favor or requests for information or explanation. 

Illustrations: 

(a) A offers to sell his watch to B for Rs. 500 and B replies that he can buy it only for Rs. 300, there is a material variation in the acceptance. Therefore, there is no agreement as the acceptance is not absolute and unconditional.
(b) In Nihal Chand vs. Amar Nath A offered by a letter to sell certain claims to B at a specified rate. B in turn offered to buy at a little less rate which A did not accept, but he did not withdraw his original offer. Then B accepted the rate as originally offered. This also A did not accept and B sued him for breach of contract. It was held that B by his counter offer to buy at a reduced rate rejected A’s original offer and there was no contract [(1926) AIR Lab. 625] 

(a) Conditional Assent: 

A conditional acceptance, or an acceptance which adds new terms to the contract is no acceptance in law. Thus a purported acceptance containing various terms which had never been suggested in the offer would not result in a contract. 

Illustration:

Acceptances "subject to the title being approved by our solicitors" "subject to a proper contract being prepared by the vendor’s solicitors" "subject to suitable arrangements being made between your solicitor and mine" "do not constitute such in unconditional acceptance as is necessary for a concluded contract. In these cases it is clear that the purported 'acceptance' is mere negotiation in contemplation of a contract coming into existence at some future date on the fulfillment of the condition stipulated. 

(3) Acceptance must be distinguished from Cross-Offer: 

A counter offer is an alternative proposal made by the offeree in substitution for  the original offer. When the purported acceptance of an offer contains a counter offer, it is no acceptance at all, and is equivalent to a rejection of the original offer. Such a counter-offer may, however, in its turn be accepted by the original offeror and thus result in a contract. A counter-offer will not, in general, operate as a rejection of the original offer if the offeree in his counter offer states that in spite of the counter-offer the original offer shall not be terminated. In order that such alternative proposal may be treated as a counter offer and not a mere stage in negotiation, it must have the effect of destroying the original offer.

(4) Acceptance must Create Legal Relations:

An acceptance, like an offer, to be effective in creating a contract, must manifest an intention to create a legal relation between the parties. Mere statement of intention, promissory expressions, or proposal to deal are not sufficient, unless the agreement which the parties contemplate purports to produce a legally binding result, as opposed to engagements of a mere social character. It is not necessary, that the parties to conscious of the legal relations created by their words or conduct, but the acts manifesting assent to the proposal must be done intentionally, and be capable of producing a legal relation.

(5) Acceptance must be manifested: 

Acceptance must be manifested if it is to be given any legal effect. An unexpressed consent, propositum in mente retentum, is regarded in law as non-existent. An exception to this proposition is however constituted by those special cases in which silence or inaction may amount to acceptance. 

(6) Acceptance must be in Manner Indicated: 

The offeror is master of his offer and is therefore entitled, should he so desire, to prescribe the method of acceptance of his offer to the exclusion of other methods. In such cases, the offeree is not at liberty to accept in a different manner. Where no exclusive method of acceptance is indicated, the offeree is entitled to accept by an equally expeditious, or more expeditious, method than that indicated, If he chooses a method of acceptance which turns out to be less expeditious, he does so at his own risk.

Illustration:

In the American case of Eliason v. Henshaw Eliason offered to buy flour from Henshaw requesting that an answer should be sent by the wagon which brought the offer. Henshaw accepted by post thinking this a speediermethod of reaching Eliason. It was held that Eliason was entitled to refuse to purchase, as his offer had not been accepted in the manner indicated by him [(1819) 4 Wheaten 225]

(7) Acceptance must be Unequivocal: 

An acceptance must be positive and unambiguous. It must not change, add to, or qualify, the terms of the offer, for such changes or qualifications prevent an acceptance from being positive and unequivocal. But once the acceptance has been unequivocal, there IS a promise, and its binding force cannot be affected by subsequent communications, unless they amount to a mutual agreement to rescind or abandon the contract. To constitute the acceptance of a proposal a promise, the intention of the offeree to accept the proposal must be so expressed, as to leave no room for doubt as to the fact of acceptance, or as to the correspondence of the terms of acceptance with those of the proposal. 

(8) Acceptance must be communicated:

The communication of an acceptance of the terms of the proposal, by the person to whom they are offered to the person’ making the proposal, is necessary to complete an agreement. An acceptance which is not communicated to the proposer does not bind him.

Illustrations: 

(a) A proposes by letter to purchase B’s house B expresses his intention to sell it to 
A but does not send a reply to him The house is sold to C despite B‘s intention. A has no legal remedy against B. 
(b) In Powell vs Lee, P was a candidate for the post of headmaster in a school. The managing committee of the school passed a resolution selecting him for the post. A member of the managing committee, acting in his individual capacity, informed P that he had been selected, but P received no other intimation. Subsequently, the resolution was cancelled and P was not appointed to the post. P filed a suit against the committee for breach of contract. The court held that in the absence of unauthorized communication from the committee there was no binding contract. [(1908) 99 LT 284] 

(9) Acceptance must be made by Offeree:

Ordinarily it is only the offeree who Is entitled to accept P. revocable, offer If it is accepted by a third party, there 15 no concurrence of minds, and therefore no contract. 

Illustration: 

In Boulton vs Jones X had taken over the business of Y with whom the defendant, Z, had been used to deal, and against whom he had a set-off. Z sent an order for goods to Y, which X supplied without informing him that the business had changed hands. When Z learned that the goods had not come from Y, he refused to pay for them, and was sued by X for the price. It was held that Z was not liable to pay for the goods, there being no contract between Z and X. [(1857) 2 H & N. 564] 

(10) Acceptance must be made before Revocation of Offer: 

In order to be valid acceptance, it must be given within the/specified time limit. If no time limit IS mentioned, then acceptance must be given within a reasonable time 

Conclusion:

Agreement, which is so important to the formation of contract, defends in its turn on the intention of the contracting parties. The inner or true intention of a person is, however, not generally capable of ascertainment with any degree of assurance by another, if indeed it is capable of ascertainment at all. The law therefore adopts an objective lest in determining the intention of the parties to a contract, and is guided by their manifestations of intention whether by words or by acts Must agreements are reducible to an offer by one party and its acceptance by the oilier”. The search for offer and acceptance is convenient and adequate as an aid to determining with precision the moment at which agreement is reached, and perhaps the exact terms of the contract.

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