acceptance session5
TRANSCRIPT
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ACCEPTANCE
INDIAN CONTRACT ACT,1872
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DEFINITION
S.2(b) ICA-
When the person to whom the proposal oroffer is made;
Signifies his assent (acceptance) thereto;
The proposal (offer) is said to be accepted.
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Acceptance means, in general, the expression
ofassent or consent to the proposal (offer) by
the offeror.
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An offer or proposal will be converted into a
promise only when it is accepted by the
offeree.
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Offer and acceptance in a contract are like the
two sides of a coin and the absence of any
one will not create any contractual
relationship between the parties.
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HOW ACCEPTANCE IS MADE?
Express Acceptance: Acceptance made by
words spoken or written.
Implied Acceptance: Acceptance made byconduct.
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WHO CAN ACCEPT?
An offer can be accepted only by the person to
whom it is made.
Therefore, when A makes an offer to B, Ccannot accept it.
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ESSENTIALS OF A VALIDACCEPTANCE (S.7)
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ACCEPTANCE MUST BE ABSOLUTE
AND UNQUALIFIED
An acceptance must be unconditional.
It should correspond with all the terms of the
offer. The offeree either should accept the item of
offer in toto or should reject it in toto.
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There should not be any variation in terms
while accepting the offer.
If there is any variation in terms or addition ofcertain terms to the original offer, it is not a
valid acceptance. But, it will only amount to a
counter offer.
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Example: A says to B I offer to sell my
house for Rs.5 lakh. B replies, I will
purchase it only for Rs.2 lakh. This isnot an acceptance but only a counter
offer. In other words, it is only a partial
acceptance. Partial acceptance is noacceptance at all.
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Example: M offered to sell a piece ofland to N at 280. N accepted and
enclosed 80 with a promise to paythe balance by monthly installmentsof 50 each. Held, there was nocontract between M and N, as the
acceptance was not unqualified.[Neale v. Merret, (1930) W.N.189].
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Example: A made an offer to B to
purchase a house with possession from
25th
July. The offer was followed by anacceptance suggesting possession from
1st August. Held, there was no
concluded contract. [Routledge v. Grant,[(1828) 4 Bing. 653]
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ACCEPTANCE MUST BE
COMMUNICATED TO THE OFFEROR
If the offeree remains silent and does nothing
to show that he has accepted the offer, nocontract is formed.
The offeree must do something to signify hisintention to accept.
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Acceptance must be communicated to the
offeror himself. A communication to any other
person is as if no communication has been
made.
Examples: A tells B that he intends to
marry C, but tells C nothing of his
intention. There is no contract, even if
C is willing to marry A.
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ACCEPTANCE MUST BE MADE WITHIN
THE TIME ALLOWED
Acceptance must be made within the time
allowed by the offeror. Ifno time is specified, it must be made within
a reasonable time.
Acceptance made after the offer has beenwithdrawn is invalid.
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ACCEPTANCE MUST BE
COMMUNICATED
IN TH
E MOD
EPRESCRIBED
If the offeror prescribes a particular manner of
acceptance it shall be given in that form. If the offeror prescribes no particular manner
it shall be given in some usual and reasonable
manner.
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Example:A makes an offer to B and says: If
you accept the offer, reply by wire. B sends
the reply by post. It will be a valid acceptance
unless A informs B that the acceptance is no
according to the mode prescribed.
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ACCEPTANCE MAY BE EXPRESS OR
IMPLIED
When acceptance is made by word spoken or
written, it is an express acceptance.
When acceptance is made by conduct it is an
implied acceptance.
E
xample:
When a person goes to a hotel andeats some food, he impliedly accepts to pay
for it.
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ACCEPTANCE MUST BE MADE BY THE
OFFEREE
Acceptance must be made only by the person towhom the offer is made and not by others.
If it is accepted by another then there is no validacceptance.
Example: When the offer is made by A to B theacceptance of the offer by C would be inoperative.
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ACCEPTOR MUST BE AWARE OF THE
PROPOSAL AT THE TIME OF THE
OFFER
If the acceptor is not aware of existence of the
offer and conveys his acceptance, no contract
comes into existence.
An act done in ignorance of the offer of a
reward, cannot be the acceptance of thatoffer.
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ACCEPTANCE MUST BE MADE ONLY
AFTER THE OFFER IS MADE
There can be no acceptance at all before the
communication of an offer.
Example
:In a company, shares were allottedto a person who had not applied for them.
Subsequently, when he applied for shares, he
was unaware of the previous allotment. The
allotment of shares previous to theapplication is invalid.
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ACCEPTANCE CANNOT BE IMPLIED
FROM SILENCE
The acceptance of an offer cannot be impliedfrom the silence of the offeree or his failure toanswer, unless the offeree has by his previous
conduct indicated that his silence means thathe accepts.
Example: A wrote to B, I offer you my car forRs. 50,000. If I dont hear from you in sevendays, I shall assume that you accept. B didnot reply at all. There is no contract.
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ACCEPTANCE SUBJECT TO CONTRACT
Where an offeree accepts an offer subject to
contract or su
bject to formal contract to beapproved by solicitors (lawyer), the matter
remains in the negotiation stage and the
parties do not intend to be bound until a
format of contract is prepared and signed bythem.
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Example: C and D signed an agreement forthe purchase of a house by D subject to aproper contract to be prepared by Cs
solicitors. A document was prepared by Cssolicitors and approved by Ds solicitors, butD refused to sign the document.
Held, there was no contract as the agreementwas only conditional [Chillingworth v. Esche,(1924) 1 Ch. 97]
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Unless there is an agreement to the contrary,
a contract is made between two parties either
when a formal contract is signed by them, or
If each party is to sign a separate counterpart
of the contract, when the separate
counterparts so signed are exchanged.
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Example: E bought certain property from B
subject to a contract. The terms of formal
contract were agreed and each party signed
his counterpart. E posted his counterpart but
B in the meantime changed his mind and did
not post his counterpart. Held, there was no
binding contract between the parties. [Ecclesv. Bryant (1948) Ch. 93]
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AGREEMENT TO AGREE IN FUTURE IS
NO ACCEPTANCE
If the parties have not agreed upon the terms of
their contract but have made an agreement to
agree in future, there is no contract.
Example: An actress was engaged by a theatrical
company for a certain period. One of the terms
of the agreement was that if the play was shown
in London, she would be engaged at a salary tobe mutually agreed upon. Held, there was no
contract [Loftus v. Roberts, (1902) 18 T.L.R. 532]
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CASE ANALYSIS 1
X gave a tender to the Government for
printing and binding of certain government
publications for a period of 8 years. The
tender was accepted by the Government. But
owing to change in the Government, no order
was placed. So, X filed a case for damages
against the Government. Will X succeed?
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CASE ANALYSIS 2
X wrote to his nephew offering to purchase hishorse for a particular price and added that in theevent of his nephew not replying him, he (X)
would consider the proposal to have beenaccepted. The nephew really intended to acceptthe offer and told his auctioneer, P not to sell thesame. But, the nephew did not give any reply to
the letter. By mistake, P sold that horse. X filed acase for the breach of contract.
Will X succeed?
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CASE ANALYSIS 3
X sent a letter to Y, a driver, offering to buy
300 barrels of flour from Y and requesting that
the reply should be sent through the driver
who brought the offer. But, Y sent his letter of
acceptance by post instead of sending it
through the driver.
Is there a contract between X and Y?