Acceptance

Acceptance Defined
• Acceptance “Acceptance to offer is what a lighted Match to a train of Gunpowder”- Anson’s Law of
Contract
• A manifestation of willingness to be bound by the terms of an offer made in a manner invited or
required by the offer.
• An acceptance of an offer must be absolute and unconditional.
• For the acceptance to be effective, all the terms of the offer must be
accepted without change or condition.
• Sec 2(b) of Indian Contract Act 1872
• “Whenapersontowhomtheproposalismadesignifieshisassentthereto, the proposal is said to be
accepted. A proposal, when accepted, becomes a promise.”

• Acceptance results in the formation of a contract: both parties are bound and neither can
withdraw from the bargain without incurring liability to the other. Ordinarily, acceptance must be
expressed or communicated by the offeree to the offeror, in order to manifest mutual assent.
• The manner in which acceptance is to be communicated may be specified in the offer, in which
case that becomes the exclusive means of acceptance. But if the offer prescribes no means any
reasonable and usual mode may be adopted.

• Silence Not Ordinarily Acceptance Since acceptance must be communicated, ordinarily silence
cannot constitute an acceptance to enter into a contract.
• Mirror Image Rule
• At common law, an acceptance which added qualifications or conditions or which in any way
varied from the terms of the original offer was treated as a rejection and counter-offer. This was true
no matter how trivial the qualification or condition.
• This was known as the "Mirror Image Rule." The underlying rationale is that the making of a
counteroffer communicates to the offeror that the offeree does not wish to accept the offer.

ACCEPTANCE MUST BE ABSOLUTE

• In order to convert a proposal into a promise, the acceptance must –
• (1) be absolute and unqualified;
• (2) be expressed in some usual and reasonable manner, unless the proposal prescribed the manner
in which it is to be accepted.
• If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made
in such a manner, the proposer may, within a reasonable time after the acceptance is communicated
to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but if
he fails to do so, he accepts the acceptance. [section 7]

• Manner of Acceptance
Traditional Approach-
• Traditionally, the nature of the contract dictated whether the offer could be accepted by a return
promise or by actual performance of the promised act.
• Acceptance by Performance;
• In such a contract, the offer empowers the offeree to only accept by complete performance of the
promise. The offeree's failure to perform does not constitute a breach since no contract is formed
until the offeree renders full performance.
 • AcceptancebyReturnPromise-
• In such a contract, the offers empower the offeree to only accept by return promise. Bilateral
contracts are formed upon the giving of the promise to perform an obligation in the future, and
failure to fulfill such promise results in breach.
• Modern Approach-
• Under the modern approach, an offer invites acceptance by any means reasonable under the
circumstances, unless otherwise indicated by language or circumstances.
• This approach reflects the fact that many offers do not specify whether acceptance is to be by full
performance or promise. A contract may be formed even if an offer clearly indicates that acceptance
is to be by promise if-
❖ The offeree begins to perform, in lieu of making the required promise; and the offeror learns of
the commencement of performance and acquiesces to such manner of acceptance.

• Acts Inconsistent with Offeror's Ownership or Receipt of Benefits- The common law holds that one
who receives goods with knowledge or reason to know that they are being offered for a price is
bound by the terms of the offer if he exercises dominion or control over such goods or engages in
any other act inconsistent with the offeror's ownership.
• If the act wrongs the offeror, it is deemed a valid acceptance only if ratified by the offeror.
Similarly, one who receives benefits from services that he knows or has reason to know are being
offered with the expectation of compensation, and where he has a reasonable opportunity to reject
them, is liable for the reasonable value or stated value of such services.

• Acceptance by silence- Silence may not constitute an acceptance except where: based on prior
dealings between the parties, it is reasonable that the offeree should notify the offeror if he does
not intend to accept; or "where the offeror has stated or given the offeree reason to understand
that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive
intends to accept the offer."
• Medium of acceptance
• Unless the offeror indicates otherwise, the offeree may use any medium that is reasonable under
the circumstances or, in non-goods contracts, the same medium as was used to communicate the
offer or any other medium "customary in similar transactions at the time and place the offer is
received."

Notice of Acceptance-
• The offeror is entitled to notice of the acceptance. Thus, even if the offeree effectively accepts an
offer and a contract is formed, failure by the offeree to notify the offeror of the acceptance within a
reasonable time may preclude the offeror from enforcing the contract.
• Notice of Acceptance by Performance
• Under common law, where an offer invites acceptance by performance, no notice is required to
make the acceptance effective, unless the offeror so specifies. However, if the offeree has reason to
know that the offeror has no adequate means of learning of the performance with reasonable
promptness and certainty, the offeror's contractual duty will be discharged unless:
• The offeree exercises reasonable diligence to notify the offeror of acceptance; or
• The offeror learns of the performance within a reasonable time; or
• The offer indicates that notification of the acceptance is not necessary.

Notice of Acceptance by Performance

• Under common law, where an offer invites acceptance by performance, no notice is required to
make the acceptance effective, unless the offeror so specifies.
• However, if the offeree has reason to know that the offeror has no adequate means of learning of
the performance with reasonable promptness and certainty, the offeror's contractual duty will be
discharged unless:-
• The offeree exercises reasonable diligence to notify the offeror of acceptance; or
• The offeror learns of the performance within a reasonable time; or
• The offer indicates that notification of the acceptance is not necessary.

Notice of Acceptance by Performance

• Under common law, where an offer invites acceptance by performance, no notice is required to
make the acceptance effective, unless the offeror so specifies. However, if the offeree has reason to
know that the offeror has no adequate means of learning of the performance with reasonable
promptness and certainty, the offeror's contractual duty will be discharged unless:
• The offeree exercises reasonable diligence to notify the offeror of acceptance; or
• The offeror learns of the performance within a reasonable time; or
• The offer indicates that notification of the acceptance is not necessary.

When an Acceptance Becomes Effective

• An acceptance becomes effective according to the following rules:
• The offeror may specify when the acceptance will be effective.
• Absent such specification, an acceptance is effective when sent, if sent by reasonable means, e.g.,
by an authorized medium and with proper postage and correct address.
• If an acceptance is sent by means that are not appropriate or reasonable under the circumstances
or if it is improperly dispatched, the acceptance will be effective upon receipt.
• However, if the acceptance is reasonably but improperly dispatched, it will still be deemed
effective when sent if it is received within the time in which a properly dispatched acceptance would
have been received.

PartialAcceptance-
Acceptance must be of the whole of the offer.
Can not accept a part which is favourable and reject the remaining.
It is treated as counter offer unless the offeror agrees for the qualified acceptance.
Inquiry into the terms of the proposal- not a counter proposal.
Wherealltheproposedtermsareacceptedandthecounterproposal related only to the technical details
of the proposal, the acceptance is binding.
Acceptance by a person to whom the proposal was not addressed is no acceptance.

When the contract is concluded:

Sec4.-Communicationwhencomplete:
Communication of an acceptance is complete as against the proposer, when it is put in a course of
transmission to him, so as to be out of the power of the acceptor ; as against the acceptor, when it
comes to the knowledge of the proposer.
Adams v Lindsell, 1818
The Defendants, wool dealers, sent a letter to Plaintiffs, wool manufactures, offering to sell them
fleeces, upon receipt of their acceptance in the course of post.
Defendants mailed their offer to sell on the 2nd of September, 1817.
The Defendants’ letter was misdirected and did not reach the plaintiffs until 7:00 p.m., Friday the
5th.

• Thatnight,PlaintiffsacceptedDefendant’soffer,andmaileditdirectlybackina timely manner.

• It was received by Defendant on the 9th, but they expected to receive it on the 7th and, in the
meanwhile, had offered and sold their wool to another person.
• Plaintiffs brought suit for the losses they sustained by not receiving the fleeces.
• The question was whether a valid contract had been formed prior to the wool being sold. The
court concluded that it had as soon as the acceptance letter was posted, and the defendants had
therefore breached the contract by selling the wool to a third party.
• The justification often given for the postal rule is if an offeror decides to conduct negotiations by
post, they should accept the risks of delay. They can avoid this by stating in the offer letter a contract
will only be formed once they receive an acceptance, so excluding the postal rule.

• In 1955, the courts decided the postal rule would not apply for telex, which was “instantaneous”,
and acceptance would be on the basis of receipt by the offeror.
• This decision was followed in 1983, but the courts recognized a telex may not reach the recipient
immediately, for example if the message is received out of hours. Lord Wilberforce concluded: “No
universal rule can cover all such cases: they must be resolved by reference to the intentions of the
parties, sound business practice and in some cases by a judgment where the risks should lie.”
• The case of Thomas v BPE Solicitors concluded acceptance by email should be treated in the same
way as other forms of instantaneous communication. The court recognized the difficulties that can
arise and Lord Wilberforce’s comments when determining such cases.