Acceptance in Contract

Acceptance in Contract

Offer and acceptance are components of an agreement. Offer constitutes question and acceptance constitutes answer. One who gives acceptance is called Offeree or Promisee or Acceptor. 

Definition of Acceptance

When the person to whom the proposal is made, signifies his ascent there to, the proposal (offer) is said to be accepted. A proposal (offer) when accepted becomes a Promise. - Section 2(b) of Indian Contract Act

Features of Valid Acceptance

Acceptance must be given by that person only to whom the offer is made: If it is specific offer, acceptance is to be given by that person only to whom the offer is made.

·                     A case on this point is Balton Vs Jones. In this case A and B are traders and C is A`s Customer. On one day C writes a letter to A requesting A to send goods. It Constitutes C`s offer to A. By the time of receiving that letter, A has no such business & it had already been sold to B, his fellow delivery. Here court decides that the acceptance given by B is not valid because C has made this offer to A.

Acceptance must be Communicated: Offeree has to communicate his acceptance to offerer. There after only, Acceptance adopts Validity.

·                     A case on this point is Brogden Vs Metropolitan Railway Company. In this case Mr. A obtains a coal mine on lease. He wants to supply the extracted coal to a railway company. Therefore he writes a letter to the manager of Metropolitan Railway Company, Communicating his willingness to Supply Coal. That letter constitutes offer. The Manager of Railway Company gives his acceptance on the letter, but gets failed in communicating his acceptance. In the court it is decided that un-communicated acceptance is not valid.

·                     Same decision is made in Powell Vs Lee and Felthous Vs Bindley.

Acceptance Period: In case where offerer specify certain period to give acceptance, then acceptance is to be given before expiry of such specified period. But at times, offerer does not specify any period to give acceptance. In such a case acceptance should be given within reasonable period. The Concept of reasonable period depends upon nature of situation.

·                     A case on this point is Rarmsgate Victoria Hotel Company Vs Montiforie. In this case an investor applies for shares, in a company. It is well known that share application constitutes offer. Therefore allotment becomes acceptance. Here the company makes allotment after five months from the date of share application. Court decides that acceptance is not made within reasonable period and hence the allotment is not valid.

Acceptance must be Un-Conditional: No conditions should be linked to acceptance. Conditional acceptance is not valid. On the other hand it can be analyzed that conditional acceptance is not at all acceptance, But counter offer. Whenever it is taken as counter offer, it can be conformed that there is no contract.

·                     A case on this point is Union of India Vs Mrs. Babulal. In this case A makes an offer to sell his car to B at a price of Rs. 5000/-. B gives acceptance conditionally saying that he wants to purchase that car at Rs. 4500/-. Here court decides that conditional acceptance carries no validity and moreover it is B’s counter offer to A.

Acceptance should be made in the method specified by offerer: When offer is made, acceptance should be made in the method specified by offerer. For Example: Mr. A has made an offer and adds that if any person wants to give any acceptance he has to raise his hand. Now, to give acceptance that method only is to be adopted.

Acceptance given to revoked offer is not valid: When an Offer is revoked, the acceptance given to revoked offer is not valid. Offer must be revoked before acceptance.

Acceptance given to renewed offer is Valid: It might have been revoked previously. It is sufficient if offer is in force at the time of acceptance.

Acceptance must be absolute: That means acceptance should be given to entire offer. Partial acceptance is not Valid. It can be analyzed that partial acceptance is nothing but conditional acceptance and therefore Counter offer.

Acceptance must be communicated in the method specified by offerer: When an offer is made for the same, acceptance must be communicated in the method specified by offerer. For example: an offerer has suggested to communicate acceptance by means of registered post then such channel only should be adopted.

Acceptance is Irrevocable: When once acceptance is given. It cannot be taken back under any circumstances. Soon after acceptance contract comes into force and binds over the parties. So, revocation of acceptance is nothing but breach of contract. Thus it is aptly said that acceptance is like a lighted match stick to a train of gun powder.