Acceptance under Indian Contract Act, 1872

This article is authored by Sujata Porwal, third year BA LLB (Hons.) student at Symbiosis Law School, Pune. The article presents a critical analysis of ‘Acceptance under Indian Contract Act, 1872’.

INTRODUCTION

Acceptance has acquired a varied meaning under the Indian Contract Act, 1872 as compared to the common understanding of the term. Defined in Section 2 (b) of the Act, acceptance is a mode of signifying assent to another person. When assent is expressed with regards to a proposal made to the individual, the offer is considered to be accepted under the law. Any proposal, upon receiving assent, converts into a promise. The pre-requisite of such assent is that it shall be ‘unconditional’ in nature. If a condition is attached with the acceptance then it becomes a counter-offer instead of a promise.

Example – X offers to sell his white horse to C for 2,00,000/- and C accepts the offer. Such offer can hence be termed as a promise.

It is important to note that a proposal/promise is irrevocable in nature. While an offer creates no legal obligation on any party, acceptance to that offer ushers legal meaning to the agreement thereby creating legal obligations on both the parties. An offer can be subjected to revocation or withdrawal before it is formally accepted.

The Indian Contract Act, 1872 has laid down several rules to ensure a smooth and steady flow of contracts in the country. These rules are the guiding light of a contract that is free from legal errors. Such rules, with regard to valid acceptance, are:

Acceptance can be Communicated, only by the Person to whom the Offer was Made

If an offer is made to someone, acceptance to that offer can only be provided by that person itself. For example, if A proposes to sell his toy car to B for 2000 Rs. then C cannot enforce a legally binding contract against A by giving acceptance to such offer. Therefore, no third party, without the knowledge of the offeree, shall accept the contract.

However, an exception to this rule is general contracts which are made to a huge group of people. A general offer can be accepted by anyone.

Acceptance shall be Absolute and Unqualified

The communication of acceptance shall be free from any conditions to the original offer. A conditional acceptance gives rise to a counter-offer, nullifying the effect that a valid acceptance has on an offer.

Besides, acceptance must be expressed in the manner prescribed by the laws. If the laws do not express a prescribed manner then the acceptance shall be communicated in a reasonable manner, as under normal course of events

Implied acceptance is also considered to be valid acceptance under Indian law. This shall not be equated to ‘silence as a valid acceptance’. If no reply is given, the offer shall not be deemed to be accepted.

Communicating Acceptance

An important pre-requisite of a contract is the communication of acceptance to the offer. The condition also exists in cases of implied acceptance. Moreover, the offeree must have adequate knowledge of the offer in order to accept the offer so made. An offer cannot be accepted if the offeree is not aware of the terms of the offer.

Acceptance can be revoked before it is communicated. In other words, if A sends a letter of acceptance to B for the offer made by B but successfully stops the letter mid-way, before it reaches B, then the acceptance shall not be supposed to be communicated.

The ‘Prescribed’ Mode

If the offeror has laid down a method of communication of the acceptance that it shall be strictly adhered to. For example, if A demands that B shall communicate with him through emails only then an acceptance through a WhatsApp message may be deemed invalid. However, the method prescribed by the offeror shall be reasonable in nature.

The lack of a prescribed method of acceptance leads to the presumption that the offeror is open to accept communication in any form. One must also abide by the time limit set by the offeror.

For example, A asked B to communicate his acceptance or rejection by 5^th March, failing which the offer shall no longer be open to B. A sold the antique miniature aircraft to C on 7^th March. In this case, if B conveys acceptance to purchase the miniature aircraft on 6^th March, it does not give rise to a valid contract that can be enforced in the court of law.

The rules governing a valid acceptance, therefore play an vital role in the structuring of a valid contract.

Types of Acceptance

Expressed Acceptance

It is a mandatory requirement of certain contracts that the acceptance shall be written in nature. Such contracts include contracts of lease, sale, etc. However, one may also express an oral consent for certain contracts. Thus, expressed acceptance can be communicated orally as well as in the written form.

Implied Acceptance

The offeree can also choose to express his/her consent without the use of words i.e., through implied gestures or actions. Section 8 of the Indian Contract Act, 1872 has laid the premises for the same.

For example, if A says to B that, ‘if you want my white pony then you must reach port station at sharp 5pm with 1 Lakh Rs.’ and B is found at thee exact time with the required amount of money, his actions would be considered as valid acceptance even though he did not express his consent vividly. It can be concluded that implied acceptance is communicated by conduct instead of words.

Conclusion

It is noteworthy that valid acceptance constitutes as a part of the basic structure of a valid contract. A contract can only take shape once the acceptance is communicated by the offeror to the offeree. The acceptance shall be given with an intention to enter into a legally binding contract and with a free will in order to be considered as a valid acceptance.

References

Indian Contract Act, 1872

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