Sujith

Acceptance

“Acceptance to offer is what a lighted Match to a train

of Gunpowder”- Anson’s Law of Contract
Acceptance Defined

 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.
 In order for the acceptance to be effective all of the
terms of the offer must be accepted without change or
condition.
 Sec 2(b) of Indian Contract Act 1872
 “When a 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.”
 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 bilateral
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; Unilateral Contracts
 In a unilateral 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.
 Acceptance by Return Promise; Bilateral Contracts
 In a bilateral 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 offerer 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.
 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.
 Partial Acceptance
 Acceptance must be of the whole of the offer.
 Can not accept a part which is favorable 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.
 Where all the proposed terms are accepted and the
counter proposal 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:
 Sec 4. Communication when complete:
communication of an acceptance is complete as against
the proposor, 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 proposor.
Adams v Lindsell rule

 Adams v Lindsell 106 Eng.Rep. 250 (Court of King’s

Bench, 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.
 That night, Plaintiffs accepted Defendant’s offer, and
mailed it directly back in a 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
recognised 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 recent 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 recognised the difficulties
that can arise and Lord Wilberforce’s comments when
determining such cases.