A proposal, when accepted, results in an agreement. Therefore, acceptance is the second step in the formation of a valid contract. Acceptance is the consent of the party to whom the offer is made. A binding contract is created between the parties as soon as the proposal is accepted. According to Anson, “Acceptance is to an offer what a lighted match is to a train of gunpowder.15”

Definition:-

S. 2 (b) of the Act defines Acceptance as “when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.”16.

II. Essentials of a valid acceptance:-

For a valid acceptance, the following conditions are necessary: –

1) Acceptance must be Communicated17:-

Acceptance must be communicated to the offeror.

In Felthouse V/s Bindley18

Facts:- By a letter, the plaintiff offered to purchase his nephew’s horse for £ 33.15. He also informed him that he would presume that the horse had been sold to him for that amount in case of no reply. The nephew told his auctioneer not to put the horse on the auction sale, as he had sold it to his uncle. The nephew did not communicate his intention to the uncle, who had decided to accept his offer. The auctioneer, by mistake, sold the horse. Uncle (Felthouse) sued the auctioneer for the sale of his house.

The court held that the nephew had not communicated his acceptance to his uncle; therefore, a binding contract was not created between them. Therefore, the acceptance must be communicated not only to the offeror but also to a person having authority for it. Therefore, the horse had not become Uncle’s property since the nephew had not communicated acceptance to him.

2) Acceptance may be express or implied[3]:-

When acceptance is given either by words spoken or written, it is called express acceptance. But when an act or conduct gives acceptance, it is called implied acceptance.

In Carlill V/s Carbolic Smoke Ball Co20.

Facts:- It is the leading case on this issue. The Carbolic Smoke Ball Company made an advertisement that anyone who takes the ball (medicine) according to the printed directions will not be affected by influenza. The company declared an award of £ 100 to a person who would be affected by influenza even after using the ball according to the directions. It was also added that £ 100 was deposited with the Alliance Bank, showing their sincerity in the matter. One Mrs Carlill used the ball but was affected by influenza. She claimed £ 100. The company argued that it was mere an advertisement and not made an offer to any particular person (i.e. Carlill); there was no acceptance conveyed on her behalf to the company.

The Court Held:- that it was an offer, a general offer. Mrs Carlill had accepted it by acting according to the terms of the offer (implied acceptance). Therefore, she was entitled to the reward.

Moreover, in Amit Mondal v. Pannalal Das (AIR 2017 (NOC) 854 (Cal))

Facts- The purchaser signed the agreement. However, the seller accepted earnest money.21 from the purchaser. The seller subsequently denied the agreement.

The court held that a valid contract was created, and the seller, by accepting earnest money, impliedly accepted the contract.

3) Acceptance should be Absolute[4], Unqualified22:-

An acceptance must also be absolute and unqualified and correspond to the terms of the offer. If it is not, the offer lapses by rejection or counteroffer.

In Hyde V/s Wrench23

Fact:- In this case, an offer to sell a farm for £1,000 was rejected by the plaintiff, who offered £ 950 for it. This was denied by the offeror, and then again, the plaintiff agreed to pay £ 1,000.

The Court held- Holding that the defendant was not bound by any such acceptance, the court observed that: “The defendant offered to sell it for £ 1,000, and if that had been at once unconditionally accepted, there would undoubtedly have been a perfect binding contract, instead of that, the plaintiff made an offer of his own, to purchase the property for £ 950 and thereby rejected the offer previously made by the defendant. Therefore, there exists no obligation of any sort between the parties.”

4) Acceptance should be in the prescribed mode[5]:-

The proposal should be accepted in the manner provided by the proposer. Acceptance, which is not in prescribed mode, is liable to be rejected by the promisor. But if the proposer has not prescribed any mode of acceptance, it should be accepted in a usual and reasonable manner. Thus, if the proposal is made through the post and no other mode of communication is prescribed, acceptance usually must be through the post. If acceptance is required through telegraph, it must be through telegraph.

5) Acceptance should be given in a prescribed or reasonable time[6]:-

Acceptance must be conveyed within the prescribed period mentioned by the offeror. S. 6 provides that the proposal is revoked by the lapse of the time prescribed in such proposal for its acceptance or after a lapse of reasonable time.

III. Communication, Acceptance and Revocation of the Proposal-

When the contracting parties meet face to face to make the contract, no question of communication of offer, acceptance, or revocation arises. But when contracting parties are residing at distant places and contracts through post or telegraph, the question of communication of offer, acceptance or its revocation becomes important to decide their liabilities. It is, therefore, necessary to determine the exact time when the offer or acceptance is made or completed. Ss. 4, 5 and 6 are applicable in such circumstances to determine the exact time of making an offer or acceptance.

3 provides, in general terms, two modes of communication, viz, (i) by any act[7], or (ii) by omission[8], – intending thereby to communicate to the other (or which has the effect of communicating it (offer or acceptance) to the other). Thus, an offer’s acceptance and revocation may be communicated, expressed or implied.

A) Communication of Offer:-

The communication of an offer is complete when it comes to the knowledge of the person to whom it is made (S. 4). An offer may be communicated either by words spoken or written, or it may be inferred from the conduct of the parties (i.e. implied).

When a proposal is made by post, its communication is completed when the letter containing the proposal reaches the person to whom it is made. For example, A proposes B sell his house for rupees twenty lakh. The letter was posted on 10 March. The letter reached B on 12 March. The offer is said to have been communicated on 12 March, when B received the letter.

B) Communication of Acceptance:-

4 provides that communication of an acceptance is complete-

(i) as against the proposer- when the acceptance is put in the course of transmission to him so as to be out of the power of the acceptor to withdraw the same;

(ii) as against the acceptor- when the acceptance comes to the knowledge of the proposer.

When a proposal is accepted through a letter sent by post, the communication of acceptance is complete against the proposer when the letter of acceptance is posted and against the acceptor when the letter reaches the proposer.

In the example given above, if B accepts A’s proposal and sends his acceptance by post on the 14th. The communication of acceptance as against A is complete on the 14th (i.e. when the letter is posted), and as against B, it completes when the letter reaches A. Suppose this letter of acceptance was duly posted but was delayed in the post or lost in transit, even then B’s acceptance will bind a. The rule is that the proposer becomes bound by the contract from the moment the acceptor posts the letter of acceptance. But the acceptor will be bound by his acceptance only when the letter of acceptance reaches the proposer. Thus, the loss of letters by post, late delivery, etc., will not affect the contract’s validity. But the letter of acceptance must be correctly addressed, sufficiently stamped and posted.

C) Revocation of Offer[9]:-

Revocation of the proposal may be made in any of the following ways.

1) By communication of notice of revocation by the proposer to the other party.-

Under S. 4, the communication of revocation is complete-

(i) as against the person who makes it, when the proposal is put into a course of transmission to the person to whom it is made so as to be out of the power of the person who makes it;

(ii) as against the person to whom it is made when it comes to his knowledge.

In the above example, if you (proposer) revoke your proposal by telegraph, the revocation will be complete so far as you (proposer) yourself are concerned when you have dispatched the telegraph. But so far as I (the acceptor) am concerned, it will be complete when I actually receive the telegraph. As regards the revocation of acceptance, I revoke my acceptance by telegraph. My revocation of acceptance is complete against myself as soon as I (acceptor) have dispatched the telegraph and as against you (proposer) when it reaches you.

Under S. 5, a proposal may be revoked by the proposer at any time before the communication of its acceptance is complete. The acceptor may revoke an acceptance at any time before the communication of acceptance is complete as against the acceptor.

2) By Lapse of Specified or Reasonable Time:-

A proposal is revoked by the lapse of a specific time or, if no time is specified, by the lapse of reasonable time. What is a reasonable time? It is the question of fact that is to be decided by the court from time to time.

In Henthorn V/s Fraser25

Facts:- The plaintiff received an offer from the defendant to purchase a certain property within 14 days. The plaintiff responded to the offer with an acceptance, which was posted the next day. The defendant withdrew the offer before receiving the acceptance but after the plaintiff posted the acceptance.

Held- that the contract was concluded, as revocation was not effective.

3) By failure to accept condition precedent[10].-

A proposal is also revoked if the acceptor fails to fulfil the condition precedent for the acceptance. For example, A proposes to B, ‘I can sell my house to you for Rs. 20,00,000/—lakh provided you lease out your land to me.’ If B refuses to lease out the land, the offer will be revoked.

‘Condition precedent’ is a condition which prevents an obligation from coming into existence until the condition is satisfied. An offeror may impose conditions such as executing certain documents or depositing certain amounts as earnest money. Failure to satisfy any such condition makes the proposal lapsed.

4) By the death or insanity of the proposer:-

Death or insanity of the proposer, under Indian law, operates as the revocation of the proposal.

D) Revocation of Acceptance-

In English law, acceptance, is once given, cannot be revoked. Therefore, Anson has stated that “acceptance is to offer what a lighted match is to a train of gunpowder”. However, in India, acceptance is revocable. Acceptance can be revoked only by adopting a speedier mode of communication, which would reach earlier than the acceptance.27.

Present scenario-

In modern times and in the digital age, communication has become faster than the modes of communication existing at the time of the enactment of this Act. Communication through post and telegraph has almost become outdated. Therefore, the object of this topic of communication of an offer, acceptance, and revocation has lost its relevance to a great extent in today’s modern time.

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[1] djkj dj.;klkBh ik=rk

[2] स्वीकृति

15 (Refer Adikanda Biswal v. Bhubaneswar Development Authority AIR 2006 Ori 36.) [संमती ही प्रस्तावासाठी अशा प्रकारे असते जशी पेटविलेली काडी सुरूंगाच्या दारूसाठी असते]

16 ज्या व्यक्तीला हा प्रस्ताव देण्यात आला आहे तो जेव्हा त्याची संमती दर्शवितो तेव्हा तो प्रस्ताव स्वीकारला गेला असे म्हटले जाते [जब जिस व्यक्ति को प्रस्ताव दिया जाता है, वह उस पर अपनी सहमति व्यक्त करता है, तो प्रस्ताव को स्वीकृत कहा जाता है| According to Anson, “Acceptance of an offer is the expression by words or conduct of assent to the terms of the offer in the manner prescribed or indicated by the offer”.

17 स्वीकृती कळविने अवश्यक आहे [स्वीकृति का संचार किया जाना चाहिए]

18 (1863) 7 LT 835.

[3] स्पष्ट अथवा सुचीत करून स्वीकृति [व्यक्त या निहित हो सकती है|]

20 [1 Q.B. 256, 1893]

21 अग्रिम रककम, ईसाराची रककम

[4] पूर्ण

22 स्विकृती ही पुर्ण व कोनत्याही अटीशिवाय असली पाहीजे, [बिना किसी शर्त के]

23 1840.

[5] स्वकृती ही ;जर नमुना दिला असेल तर त्या विहीत नमुण्यात असली पहीजे. [स्वीकृति निर्धारित मोड में होनी चाहिए]

[6] स्विकृती ही ;जर कालावधी दिला असेल तरद्ध त्या कालावधीत अथवा वाजवी वेळेत असली पहीजे [स्वीकृति निर्धारित या उचित समय में दी जानी चाहिए।]

[7] कृती करून [किसी भी कार्य द्वारा]

[8] वगळून [अकृत्य से। कर्तव्यात कसुर करून / अकृत्य]

[9] दिलेला प्रास्ताव रदृद करने [प्रस्ताव का निरसन]

25 [(1892) 2. Oh. 27]

[10] मुलभुत अट मान्य न केल्याने [मुख्य शर्त को स्वीकार करने में विफलता से]

27 S. 5 provides that an acceptance may be revoked at any time before the communication of acceptance is complete as against the acceptor but not afterwards.