Define Acceptance

According to Section 2(b) of the Indian Contract Act, 1872:

“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.”

Communication of acceptance is complete under section 4 of The Indian Conteract Act:

• 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 by conduct is valid when the offeree performs the act requested in the offer (as in unilateral contracts) and the conduct has effect of communatimg it.

Essential Elements of a Valid Acceptance

• Acceptance must be absolute and unqualified – It must be unconditional and correspond exactly to the terms of the offer.
• (Section 7)
• Acceptance must be communicated to the offeror – Silence cannot amount to acceptance.
• Acceptance must be made in the prescribed mode – If no mode is prescribed, it should be in a usual and reasonable manner.
• Acceptance must be made within a reasonable time – Especially if no specific time is mentioned.
• Acceptance must be made before the offer lapses or is revoked.

Express Acceptance

This is when assent is signified through words, which can be spoken (oral) or written.

• Example 1 (Written):
  • Proposal: A offers, by letter, to sell his antique watch to B for ₹50,000.
  • Acceptance: B replies by email, stating, “I accept your offer to buy the watch for ₹50,000.”
  • Result: B has expressly signified his assent in writing, and the proposal is accepted.
• Example 2 (Oral):
  • Proposal: C phones D and offers to rent out his apartment for ₹15,000 a month.
  • Acceptance: D replies on the phone, “Yes, I agree to your terms.”
  • Result: D has expressly signified his assent orally, and the proposal is accepted.

Implied Acceptance (Acceptance by Conduct)

This is when assent is signified by the conduct or actions of the offeree, rather than by direct words.

• Example 3 (Action/Performance):
  • Proposal: A transport company leaves a delivery truck parked in front of E’s business premises with a sign that reads: “We will deliver your goods to the dock for a flat rate of ₹5,000.” (This is a general offer).
  • Acceptance: E, seeing the offer, loads his packed goods onto the truck without saying anything.
  • Result: E’s conduct of loading the goods constitutes an implied acceptance of the proposal.
• Example 4 (Availing Service):
  • Proposal: In a self-service restaurant, the price list of all items is clearly displayed.
  • Acceptance: F selects an item from the counter and proceeds to pay the amount at the cash desk.
  • Result: F’s action of taking the food and offering payment implies acceptance of the restaurant’s proposal to sell the item at the displayed price.

Important Case law

1. Felthouse v. Bindley

Facts:

An uncle (Felthouse) offered to buy his nephew’s horse, saying, “If I hear no more about it, I shall consider the horse mine.” The nephew did not reply but told the auctioneer not to sell it. The auctioneer mistakenly sold the horse. Felthouse sued Bindley (auctioneer).

Issues:

Whether silence of the nephew could be treated as acceptance.

Analysis:

The court held that there must be a clear communication of acceptance to the offeror. Silence or inaction cannot amount to acceptance.

Judgment:

The uncle (Felthouse) could not enforce the contract because there was no valid acceptance communicated. This case established that silence does not amount to acceptance.

2. Carlill v. Carbolic Smoke Ball Co.

Facts:
The company advertised that anyone who used their “Smoke Ball” medicine and still caught influenza or flu would get £100. To show their sincerity, they claimed to have deposited £1000 in a bank. Mrs. Carlill bought the product, used it as directed, and still contracted the flu. She sued to claim the £100 reward.

Issues:
Whether the advertisement constituted a valid offer and whether her act amounted to acceptance.

Analysis:
The court held that the advertisement was a unilateral offer made to the public, and Mrs. Carlill accepted it by performing the conditions mentioned. No separate communication of acceptance was required because her conduct itself was acceptance.

Judgment:
The company was held liable to pay £100. The case established that acceptance can be by conduct in unilateral contracts.

3. Powell v. Lee

Facts:
Powell was selected for a job by a school committee, but the decision was communicated to him by one of the member of Board, not officially authorized by the Board Managers. Later, the Board Managers changed its decision.

Issues:
Whether communication of acceptance by an unauthorized person creates a valid contract.

Analysis:
The court observed that acceptance must be communicated by a person duly authorized by the offeree. A communication made by an unauthorized person is not binding.

Judgment:
There was no valid acceptance, and therefore, no contract. This case established that acceptance must be properly communicated by an authorized person.