Acceptance under the Indian Contract Act, 1872
Introduction
Acceptance is the second essential step in forming a contract. A contract is created only when an offer made by one party is accepted by another party. The Indian Contract Act, 1872 explains how acceptance must take place for a valid contract to arise.
Without a valid acceptance, an offer remains only a proposal and does not create legal obligations (legal duties enforceable by law).
Meaning / Definition
Definition under Section 2(b)
Section 2(b) of the Indian Contract Act, 1872 states:
When the person to whom the proposal is made signifies his assent (agreement) thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.
In simple terms:
- The person receiving the offer agrees to it.
- This agreement must be communicated to the offeror (person who made the offer).
Once the offer is accepted:
- The proposal becomes a promise.
- A contract may arise if other legal requirements are satisfied.
Modes or Types of Acceptance
1. Express Acceptance
Express acceptance takes place when the acceptance is clearly communicated through:
- Spoken words, or
- Written communication
Example:
A offers to sell his laptop to B for ₹20,000.
B replies, “I agree to buy it.”
This is express acceptance.
2. Implied Acceptance
Implied acceptance occurs when acceptance is shown through conduct (actions) rather than words.
Example:
When a passenger boards a bus and travels, it implies agreement to pay the required fare.
Here, acceptance is understood from the actions of the passenger.
Who Can Accept an Offer?
Acceptance depends on the type of offer.
Acceptance of Specific Offer
If the offer is made to a particular person, only that person can accept it.
Example:
A offers to sell his car to B.
Only B can accept the offer.
Acceptance of General Offer
A general offer is made to the public at large (any person).
Any person who performs the required conditions accepts the offer.
Example:
A announces a reward for finding his lost dog.
Anyone who finds and returns the dog accepts the offer by performing the condition.
Effect of Acceptance
Acceptance has important legal consequences.
Before Acceptance
Before acceptance:
- The offeror may revoke (withdraw) the offer.
- The offeree may reject the offer.
At this stage, no contract exists.
After Acceptance
Once acceptance takes place:
- The offer becomes a promise.
- Both parties become legally bound by the agreement.
If all other elements of a valid contract are satisfied, a contract is formed.
Essentials of Valid Acceptance
For acceptance to be legally valid, the following conditions must be satisfied:
-
Acceptance must be communicated to the offeror.
-
Acceptance must be absolute and unqualified
(complete agreement without changing the terms). -
Acceptance must be made in the prescribed manner, if the offer specifies a method.
If no method is specified, it must be made in a reasonable and usual manner. -
Acceptance must be made while the offer is still open (not withdrawn or expired).
Communication of Acceptance
Acceptance must be communicated to the offeror.
Communication may be:
- Express (through words), or
- Implied (through conduct or actions).
The law requires external manifestation (clear outward indication) of acceptance.
Silence alone does not amount to acceptance.
Important Case Law
Felthouse v. Bindley
Facts
Felthouse wrote to his nephew offering to buy his horse for ₹10,000.
He added in the letter:
“If I hear no more about the horse, I consider the horse mine.”
The nephew intended to sell the horse but did not communicate acceptance to Felthouse.
He only informed the auctioneer not to sell the horse.
The auctioneer later sold the horse by mistake.
Judgment
The court held that no valid acceptance had taken place.
Therefore, no contract existed.
Principle
- Acceptance must be communicated to the offeror.
- Silence cannot be treated as acceptance.
Powell v. Lee
Facts
Powell applied for the post of headmaster in a school.
The Board of Managers passed a resolution (formal decision) selecting him.
However, the decision was not officially communicated to Powell.
One board member, who was not authorised, informed Powell about his selection.
Later, the board cancelled the decision.
Judgment
The court held that no valid contract existed because acceptance was not properly communicated by an authorised person.
Principle
Acceptance must be communicated by a person authorised to do so.
Distinction / Comparison
Express Acceptance vs Implied Acceptance
| Basis | Express Acceptance | Implied Acceptance |
|---|---|---|
| Meaning | Acceptance communicated through words | Acceptance inferred from conduct (actions) |
| Communication | Spoken or written communication | Behaviour indicates agreement |
| Example | Saying “I accept your offer” | Boarding a bus and travelling |
Practical Example
Example of Implied Acceptance
A passenger enters a public bus and travels to a destination.
Even though the passenger does not verbally agree, the law assumes acceptance because:
- Travelling on the bus implies agreement to pay the fare.
Thus, acceptance occurs through conduct.
Summary
- Acceptance is defined under Section 2(b) of the Indian Contract Act, 1872.
- Acceptance occurs when the offeree signifies assent (agreement) to the offer.
- Once accepted, a proposal becomes a promise.
- Acceptance may be express (through words) or implied (through conduct).
- A specific offer can be accepted only by the person to whom it is made.
- A general offer can be accepted by anyone who performs the conditions.
- Acceptance must be communicated to the offeror.
- Silence does not amount to acceptance, as established in Felthouse v. Bindley.
- Proper communication of acceptance is necessary to create a legally binding contract.