Synopsis

  1. Introduction
  2. Definition of Acceptance (Sec 2(b) of The Indian Contract Act, 1872)
  3. Essential Elements of a Valid Acceptance
    • Acceptance must be absolute and unqualified (Section 7)
    • Communication of Acceptance (Section 4)
    • Acceptance must be made in the prescribed or usual mode (Section 7)
    • Acceptance must be made within a reasonable time (Section 6(2))
    • Acceptance must be made by the person to whom the proposal is made (Section 2(b))
  4. Legal Effects of Acceptance
  5. Illustrative Examples
  6. Important Case Law
    • Carlill v. Carbolic Smoke Ball Co.
    • Lalman Shukla v. Gauri Datt
    • Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas

Introduction

In a contract, acceptance is the second fundamental element after the offer (proposal). A proposal, when accepted, becomes a promise. Without valid acceptance, no enforceable contract arises.

Definition of Acceptance (Section 2(b))

Section 2(b) of The Indian Contract Act states: “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.”

Key Points:

Essential Elements of a Valid Acceptance

1. Acceptance Must Be Absolute and Unqualified

Section 7(1) of The Indian Contract Act defines Acceptance must be absolute: In order to convert a proposal into a promise, the acceptance must be absolute and unqualified;

If the offeree introduces any new terms or conditions, it is not a valid acceptance but a counter-offer, which automatically rejects and extinguishes the original offer.

Example: A offers to sell a horse to B for ₹10,000. B replies, “I accept, provided you also include the saddle for free.” This is a counter-offer, and A’s original offer is now terminated.

2. Communication of Acceptance

Section 3 of The Indian Contract Act defines Communication, acceptance and revocation of proposals: The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.

Section 4 of The Indian Contract Act defines The 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.

Acceptance must be communicated to the proposer. A mere mental or internal decision to accept is not sufficient; the proposer must have knowledge of the assent. Silence or inaction generally does not amount to acceptance.

Example: A writes a letter to B accepting B’s offer to buy a house. The moment A posts the letter, the communication is complete as against B (the proposer). The moment B receives the letter, the communication is complete as against A (the acceptor).

3. Acceptance Must Be Made in the Prescribed or Usual Mode

Section 7(2) of The Indian Contract Act defines Acceptance Must Be Made in the Prescribed or Usual Mode: In order to convert a proposal into a promise, the acceptance must be expressed in some usual and reasonable manner, unless the proposal prescribes 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 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.

Example: A sends a letter offering a product via post. B must accept in the mode prescribed (e.g., postal acceptance).

4. Acceptance Must Be Made Within a Reasonable Time

Lapse: An attempt to accept after the prescribed or reasonable time has lapsed is invalid, as the offer is deemed to have automatically revoked.

Principle: According to Section 6(2) of The Indian Contract Act: Acceptance must be given either within the time limit prescribed by the offeror or, if no time is specified, within a reasonable time.

Reasonable Time: What constitutes a “reasonable time” depends on the nature of the subject matter and the circumstances of the case (e.g., an offer for perishable goods requires quicker acceptance than an offer for land).

Example: A offers to sell a house. B replies after 6 months. If the offer required quick response, this may not be valid.

5. Acceptance Must Be Made by the Person to Whom the Proposal Is Made

According to Section 2(b) of The Indian Contract Act: When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise;

An offer can only be accepted by the person or group of persons to whom it is made. A specific offer can only be accepted by the specified person or persons, and a general offer (made to the public at large) can be accepted by any person who, having knowledge of the offer, fulfills its conditions.

Section 8 of The Indian Contract Act ststes that 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.

Example (Specific Offer): A offers to sell his car to B. C cannot accept this offer, even if C knows about it.

Example (General Offer): A company offers a reward to anyone who finds their lost dog. Any member of the public, knowing of the offer and finding the dog, validly accepts it.

4. Legal Effects of Acceptance

5. Illustrative Examples

  1. Express Acceptance: B writes to A: “I accept your offer of ₹10,000 for your bike.” Valid acceptance.
  2. Implied Acceptance: A mails goods to B as requested, and B uses them without objection. Acceptance is implied.
  3. Unqualified Acceptance: A offers to sell 100 chairs for ₹50,000. B accepts exactly ₹50,000. Valid acceptance.
  4. Conditional Acceptance / Counter Offer: B accepts only if A delivers next week. Not valid acceptance; it’s a counter-offer.