Acceptance

A proposal when accepted, results in an agreement. It is only after the acceptance of the proposal
that a contract between the two parties can arise.

When the person to whom the proposal is made, signifies his assent thereto, the proposal is said to
be accepted [Section 2(b)]. Thus, acceptance is the assent given to a proposal.

There are essential requirements of a valid acceptance,

1. It must be accepted by the person to whom the proposal is made. No third person or
stranger can accept a proposal.
2. Acceptance should be communicated by the offeree to the offeror.
3. Acceptance should be absolute and unqualified.
4. It must be expressed in usual and reasonable manner or in prescribed manner
5. Mode of Communication of acceptance

(A) Communication of Acceptance

(1) Communication of acceptance can be made by any act or omission which has the
intention and effect of communication. (sec. 3)
(2) Communication of acceptance can be express or implied (section 9)
(3) Communication to offeror himself - A communication to any other person is no
communication in the eyes of law [as per Felthouse Verses Bindley].
Felthouse v Bindley [1862] EWHC CP J35
Contract – Offer – Tort of Conversion – Acceptance – Silence
Facts
The complainant, Paul Felthouse, had a conversation with his nephew, John
Felthouse, about buying his horse. After their discussion, the uncle replied by letter
stating that if he didn’t hear anymore from his nephew concerning the horse, he
would consider acceptance of the order done and he would own the horse. His
nephew did not reply to this letter and was busy at auctions. The defendant, Mr
Bindley, ran the auctions and the nephew advised him not to sell the horse.
However, by accident he ended up selling the horse to someone else.
Issues
Paul Felthouse sued Mr Bindley in the tort of conversion, with it necessary to show
that the horse was his property, in order to prove there was a valid contract. Mr
Bindley argued there was no valid contract for the horse, since the nephew had not
communicated his acceptance of the complainant’s offer. The issue in this case was
whether silence or a failure to reject an offer amount to acceptance.
Held
 It was held that there was no contract for the horse between the complainant and his
nephew. There had not been an acceptance of the offer; silence did not amount to
acceptance and an obligation cannot be imposed by another. Any acceptance of an
offer must be communicated clearly. Although the nephew had intended to sell the
horse to the complainant and showed this interest, there was no contract of sale.
Thus, the nephew’s failure to respond to the complainant did not amount to an
acceptance of his offer

(4) Communication by acceptor himself - Information received from an unauthorized person

is ineffective as it is like overhearing from behind the door [Powell Verses Lee].

Powell v Lee. At this case, Powell had applied for the position of headmaster and
had been told by one of the school board member that he had successful of getting
the job However, the board later changed their mind and had appointed another
person to this job. Although one of the board members told him that he was the
successfully applicant but that doesn’t mean the acceptance of an offer either by
the offeree of the authorized agent. That particular board of member had acted
prematurely and without the authority from the school board. Hence, there is no
acceptance by the board to Powell’s offer and no contract is form. Powell can’t
sue them for the breach of contracts

(B) Absolute and Unqualified Acceptance

Section 7 provides that in order to convert a proposal into a promise, the acceptance must be
absolute and unqualified that is without any qualification or condition. For a valid acceptance, there
must be an ad idem "concurrence of mind' that is agreeing on the same thing in the same course/
sense and at the same time.

The following acceptances are not absolute and unqualified acceptance.

(1) Counter proposals - An acceptance with a variation (that is introduction of new terms) is no
acceptance, it is simply a counter proposal, which must be accepted by the original promisor before a
contract is made. A counter offer implies the stage of negotiation has not yet passed. A counter offer
puts an end to the original offer and it cannot be revived by subsequent acceptance by the acceptor,
(Hyde v Wrench (1840)

(2) Provisional acceptance - An acceptance made subject to the approval is called provisional
acceptance. It does not ordinarily bind either party until the final approval is given. Meanwhile the
offerer is at liberty to cancel his offer unless there is a contrary condition supported by
consideration. (Union of India v. Narain Singh)

(c) Modes of Acceptance

(1) When communication not necessary - In all cases of general offers (unilateral contracts), the
acceptance is usually by conduct. Section 8 provides that performance of the condition of a proposal
is an acceptance of proposal (Car/ill Verses Carbolic Smoke Ball Co.). In such cases, communication
of acceptance is not necessary.

(2) Manner of Acceptance - Section 7 provides that acceptance has to be made in the manner
prescribed by the proposer (if not prescribed, then in some usual and reasonable manner). Further,
a duty is cast on the offeror to reject such acceptance within reasonable time and if he fails to do so,
the contract is concluded.

(3) Acceptance by performance of Condition- Section 8 provides for the Modes of Acceptance by
performing conditions, or receiving consideration. Acceptance by performing conditions, or ©

Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal
promise which may be offered with a proposal, is an acceptance of the proposal.

a) Performance of conditions of proposal

Carlil v. Carblic Case

Harbhajan v. Harcharan Case

Lal Man Shukla v. Gauri Dutt

b) Receiving consideration

(6) When communication of acceptance complete - When the parties are in the presence of
each other, the contract is concluded when acceptance is communicated to the proposer. When the
parties are at a distance and are contracting through post or by messengers, the proposer become
bound as soon as the acceptance is put in the course of transmission to him (that is when letter of
acceptance posted by acceptor)./But the acceptor will become bound only when the communication
of acceptance is received by the proposer (Section 4). When the acceptance is by telephone or telex
(that is direct communication), the contract is complete only when the acceptance is received by the
offeror (Bhagwandas Kedia Verses Girdharilal & Co.).