Acceptance in Business

When the person to whom a proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. The person making the proposal is called Promisor and the person accepting the proposal is called the Promisee.

Performance of the conditions of a proposal, the acceptance of any consideration for reciprocal promise which may be offered with a proposal is an acceptance of the proposal (Sec 8). An acceptance need not always be expressed in words. Performance of the conditions of a proposal is an acceptance of the proposal.

In order that there must be binding contract, there must be absolute and unconditional acceptance of the terms of a proposal.

Illustration:

A offers to sell his house for Rs 25,000 to B. B accepts the offer to purchase the house for Rs 25,000 . This is acceptance.

The first stage to constitute a contract is making of a proposal or an offer. A’s proposal is made with an intention to be accepted. The second stage, therefore to constitute a binding contract is acceptance of such a proposal. In order to constitute a valid acceptance the following conditions must be present:

Essentials of a valid acceptance – How an Acceptance is made?

Section 7 of the Act lays down that in order to convert a proposal into a promise, acceptance must –

1. be absolute and unqualified
2. 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 the 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.

Acceptance must be absolute and unqualified: Acceptance of a proposal with conditions variations and reservations is no acceptance at all. Acceptance with variations is a counter proposal and there is no contract until this counter proposal is accepted by the original proposer.

In Neele v Meritt (1930 W N 189) Meritt offered land to Neele at $280. Neele accepted the proposal subject to making payments in installments. It was held that there was no contract as the acceptance was qualified. To constitute a valid acceptance, it should be unqualified. Proposal should be accepted as proposed or offered without any reservations, conditions or variations, This means that the parties to the contract must be ad idem that is consenting on the same thing in the same sense. Similarly in Sir Mohamed Yusuf v. S of S for India (22 Bom. LR 872 ), where a proposal of assurance was in the nature of a counter proposal . But take a case like this:
An offer to sell land is accepted subject to the title being approved by the Solicitors. This does not constitute a qualified acceptance, but only allows the purchaser to claim a common right of investigating the title to the land through his Solicitors.

Addition of any collateral or conditional term to acceptance as a qualified or conditional acceptance However, a proposal relating to supply of goods in installments or on consignments basis accepted with a condition that if the prices increase, purchaser shall be liable to pay increased price, is not a qualified acceptance. Such a condition will not apply to the goods already delivered or consigned. Similarly a provisional acceptance is not an absolute acceptance, where certain conditions have to be complied with or negotiations are to take place before the proposal is finally accepted. It does not bind the parties to the contract unless it is finally accepted. Conditions imposed by the offerer that the proposal shall be accepted only on payment of deposit or earnest money or on executing a certain document will lapse the proposal, if such a condition is not accepted by the offeree.

Acceptance must be expressed in some usual and reasonable manner-mode of acceptance: Acceptance may be made either by words or by conduct. It may also be expressed by post or by telegram. If the proposer prescribes the manner in which the proposal 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 tohim, 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. Therefore, if the proposer prescribes a method of goods at a particular place he is not bound to accept delivery at any other place.

Mental acceptance is not sufficient in law: Silence cannot amount to acceptance. Mere un-communicated or mental acceptance is not enough. Acceptance to be complete must be communicated by words or conduct by an offeree to the proposer.

Acceptance must be communicated to the offerer: It should be signified and communicated to the offerer himself. If the acceptance is not communicated to the offere, no contract is created. Intentions must be communicated.

Acceptance of the proposal: Acceptance of the proposal is the acceptance of all the terms even though the offeree is ignorant of some of the terms of the offer, except where the terms are not apparent on the face ad no reasonable caution is taken to draw attention of the acceptor, for example a ticket issued by the railways with the terms and conditions printed overleaf.

Acceptance of the proposal need not always be expressed in words; Performance of the conditions of a proposal is an acceptance of the proposal (Sec8)

Acceptance must be by a certain person: An offer may be made to an unascertained number or to the world at large but no contract can arise until it has been accepted by a certain person who first gives information other by words or by conduct. Such an offer is called a general offer. The general offer is closed as soon as it is accepted by a definite person.