Acceptance in Contract Law

In the formation of a contract, the essential requirement is that there should be a consensus between the contracting parties by means of proposal/offer and acceptance. There must be a definite proposal/offer by one party to the other and an unqualified acceptance by the other party. Here you will learn in detail acceptance in contract law.

Related Post: Offer in Contract Law

Relevant Provisions:

Section 2(b), 5,7, and 9 of the Contract Act,1872.

Definition of Acceptance in Contract Law:

According to Black’s Law Dictionary:

“The act of a person to whom a thing is offered or tendered by another, whereby he receives the thing with the intention of retaining it, such intention being evidenced by a sufficient act.

According to Tomilin’s Dictionary:

“The taking and accepting of anything in good part and as it were a tacit agreement to a preceding act, which might have been defeated and avoided were it not for such acceptance.

Statutory Definition Section 2 (b) of the Contract Act,

According to section 2 (b), acceptance is defined as “When the person to whom the proposal is made signifies his assent there to the proposal is said to be accepted.”

In Simple Words the Acceptance Definition:

It is the act of giving consent to the proposal. A contract emerges by coinciding with the offer and acceptance.

Mathematically:

Offer + Acceptance = Contract

When an acceptance is communicated it cannot be recalled or undone. So when the offeree signifies his assent to the offeror, the offer becomes a promise.

Related Post: Contract: Definitions and Essentials

Ingredients/Elements of Acceptance in Contract Law:

(i) Person to whom Proposal is made:

As a matter of fact, an offer can be accepted only by the person to whom it is made. In most cases, the offeree’s giving a requested return itself manifests his assent. But this can not be so, where it is given without knowledge of the proposal. Therefore knowledge of the proposal by the offeree is essential to acceptance.

Exception of General Rule:

There is also an exception to this general rule i.e. the acceptance can also be given by a person other than the proposee, who is the agent of that particular person.

(ii) Signifies his Assent:

Acceptance means assenting to the proposal, acceding to the terms of the proposal; or admitting and agreeing to the proposal. A proposal to enter into a legal relation upon definite terms, or create a legal relation, must be followed by the assent, act, or promise of the offeree before it can result in a promise.

Related Post: Consent In Contract Law

(iii) Thereto:

The word “thereto” used in the definition of acceptance as given in Section 2 (b) of Contract Act, 1872, means that a person’s acceptance is valid according to this definition only when he accepts to same terms and conditions as described by the offeror in his proposal. Evan’s slight deviation from the proposal would not amount to acceptance and hence the contract would be declared to be void.

Example:

“A” offers to sell a car to “B” for Rs. 5 lacs. B agrees to purchase that car for Rs. 5 lac. This is acceptance when B agrees.

Essentials of Acceptance in Contract Law:

(i) Acceptance must be absolute and unqualified:

Section 7, of the Contract Act, of 1872, provides that in order to convert a proposal into a promise, the acceptance must be absolute and unqualified.

If there is the slightest variation in the acceptance, it would be a counteroffer. The counteroffer is the rejection of an original offer. The Rule of Mirror Image must be applied in this way.

(ii) Acceptance must be in the Prescribed Way:

Acceptance must be according to the conditions expressed in the offer. If no particular manner is prescribed in the offer then acceptance should be made in a reasonable manner.

(iii) Knowledge of the Offer is necessary to give Acceptance:

The offer must have come to the knowledge of the offeree only then he can accept or reject it.

Example:

A offers a reward for an act but B does the act in ignorance of the offer B cannot claim the reward when he becomes aware of its existence.

Case Law: Lalman V/s Gauridutt:

It was held that the servant could not get the rewards as he was unaware of the offer.

(iv) Partial acceptance is not qualified for contract:

Acceptance should be of the whole of the offer. The offeree can not accept a part of its terms that are favorable to him and reject the rest. Such an acceptance is another kind of counter-proposal and does not bind the offeror unless he agrees to the qualified acceptance.

(v) Acceptance must succeed the offer:

Acceptance must be given after receiving the offer. It should not precede the offer.

Nature of Acceptance in Contract Law:

It is absolutely correct to say that the nature of acceptance is different to some extent in different countries. In England, America, Pakistan, and India there a different rules regarding offer and acceptance, as given below.

(i) Mirror Image Rule; Common Law:

The mirror image rule is applied in England. By the term mirror image, it means that the acceptance must be 100% according to the offer.

(ii) Uniform Commercial Code:

Uniform commercial code is applied in the United States. This code gives two rules regarding acceptance i.e.

1. Gap Filter Rule: According to this rule, if there is any kind of gap in offer and acceptance, it must be filled by the court at its own discretion. As the object of the court is to promote commercial contracts it should give its ruling taking the interests of the parties in front of it.
2. Knock out Rule: It means that if there are any conflicting clauses in the first and second document i.e. offer and acceptance then both clauses would be thrown out of the contract and both parties have to perform the contract according to all other clauses as given in the contract.

(iii) Statutory Provision In Pakistan & India:

In Pakistan and India, there is the same rule as that of common law rule i.e. mirror image rule. It is because of the reason that a s Pakistan and India were once colonies of England and therefore same rule of common law was enacted in this region. After independence, Pakistan and India did not change their law and so the same is prevailing in our country.

Communication of Acceptance in Contract Law:

A mere expression to accept an offer is not a valid acceptance. The acceptance must be communicated to the offeror by words or by his conduct. The general rule is that an acceptance has no effect until it is communicated to the offeror.

Modes of Communication:

Acceptance may be expressed or implied Section 9 of the Contract Act, of 1872, Act says that when acceptance is given by words it is expressed acceptance and when it is given by conduct, it is called implied acceptance.

Modes/Ways of Acceptance in Contract Law:

Except where the proposal prescribed a particular mode of acceptance in contract law, the acceptance must be made in such a manner that it may come to the knowledge of the proposer. The following are some of the most important ways/modes of acceptance of a proposal.

(i) By Assent:

Acceptance may be made by mere assent when (a) the proposal invites such form of acceptance, or (b) it does not prescribe any particular mode of acceptance.

(ii) By Act:

When the proposal requests that the offeree should do a particular act, the performance of the act is the only thing necessary to create a binding promise. The performance of the act must be induced by the proposal and be in accordance with it.

(iii) By Conduct:

The acceptance of an offer may be inferred from the conduct, so where a consumer of electricity pays the electricity charges according to the new system of paying minimum charges in accordance with the notification issued by the government, such conduct by the consumer amounts to acceptance of the terms of the notification and he is liable to pay the charges accordingly.

(iv) By Promise:

A proposal may be accepted by giving a promise. Thus where a person offers to another a certain sum, if he will do something, the other may accept the proposal by promising to do that thing according to the condition of the proposal. The promise needs not to be made in express words; it may be inferred from the acts of the parties.

(v) By Acquiescence or Silence:

Generally speaking, the person to whom the proposal is made needs to make no reply. His silence and inaction cannot be construed as an assent to the proposal, unless the relations between parties, or other circumstances, are such as to justify the proposer in expecting a reply and therefore, in assuming that the silence or inaction indicates assent to his proposal.

(vi) By signing a document:

Acceptance can be given by signing a document. This is the most established mode of acceptance.

(vii) By accepting a paper containing the terms:

When a party accepts the paper containing the terms of the proposal it amounts to an acceptance.

COMMUNICATION OF ACCEPTANCE; WHEN COMPLETE:

According to section 4 of the Contract Act 1872, “the communication of an acceptance is complete, as against the proposer, when it is put in the course of transmission to him, so as to be out of the power of the acceptor, and as against the acceptor when it comes to the knowledge of the proposer.”

Revocation of Acceptance in Contract Law:

Section 5 of the Contract Act, of 1872, provides that “an acceptance may be revoked at any time before the communication of the acceptance is complete against the acceptor but not afterward.”

Example:

A proposes to B to sell his house by a letter. B accepts offer B may revoke his acceptance at any time before the letter of acceptance reaches A but if the letter of acceptance has reached A the revocation of acceptance is ineffective.

Modes of Revocation:

The following are the modes of revocation:

(i) By notice of Revocation:

An acceptance can be revoked by sending a notice of revocation provided that the notice must reach before the letter of acceptance.

(ii) By lapse of time:

If the acceptance is made after the prescribed time in the proposal, the acceptance stands revoked.

(iii) Death or Insanity:

If the proposer dies or becomes in same and the acceptor has knowledge of his death or insanity, in such a case acceptance stands revoked as the offer itself is revoked.

(iv) Failure to accept condition precedent to acceptance:

If the acceptor fails to accept the condition precedent to acceptance, such acceptance stands revoked.

Example:

‘A’ sends an offer to sell his motorcycle. B accepts the offer but makes a condition that if ‘A’ would send him a Motorcycle by air with his own expenses then he would accept the Motorcycle. ‘A’ fails to accept the condition precedent and hence, the acceptance is revoked.

Conclusion:

To conclude that proposal is a vital and initial step of a contract, it may be expressed or implied, general or specific but there must be an expression of willingness by one person to another person to that act or abstinence; having legal consequences, and acceptance makes another to do something or not to do something with the intention to obtain the assent of the contract complete. Acceptance in contract law requires the offeree’s assent to the proposal and the agreement to give or give the requested return. The acceptance has to be made by some words, acts, or conduct, indicative of assent.

Frequently Asked Questions (FAQs):