Contract assignment
Introduction
In the law of contract, an agreement is formed when an offer made by one party is accepted by
the other. Acceptance is the final expression of assent to the terms of an offer. Without proper
acceptance, no valid contract can come into existence. Therefore, understanding the essentials
of acceptance is crucial in the study of contract law.
Definition of 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.”
Thus, acceptance is the consent given by the offeree to the offer made by the
offeror.
Essentials of a Valid Acceptance
1. Acceptance Must Be Communicated
• Mere mental agreement does not amount to acceptance.
• Communication can be expressed (oral/written) or implied (conduct).
• Case Law: Felthouse v. Bindley (1862) – Silence cannot be treated as
acceptance.
2. Acceptance Must Be Absolute and Unqualified
• It should correspond exactly with the terms of the offer.
• A conditional or varied acceptance amounts to a counter-offer.
• Case Law: Hyde v. Wrench (1840) – Counter-offer destroys the original
offer.
3. Acceptance Must Be Made in Prescribed Mode
• If the offeror prescribes a mode of acceptance, it must be followed.
• If no mode is specified, it should be made in a reasonable manner.
4. Acceptance Must Be Made Within the Time Limit
• If a time is prescribed, acceptance must be given within that period.
• Otherwise, it must be within a reasonable time.
5. Acceptance Must Be Given by the Person to Whom the Offer Is Made
• Only the offeree or his authorized agent can accept the offer.
• Third-party acceptance is invalid.
6. Acceptance Must Be Made While the Offer Is Subsisting
• If the offer is revoked, rejected, or has lapsed, it cannot be accepted.
7. Acceptance Cannot Be Implied by Silence
• Silence does not constitute acceptance unless expressly agreed by both
parties.
Stages of Acceptance
Basic Points
1. Offer is Made – The process begins when one party (offeror) makes a
proposal.
2. Knowledge of Offer – The offeree must have knowledge of the offer.
3. Consideration of Terms – The offeree reviews and considers the terms of
the offer.
4. Decision to Accept or Reject – The offeree decides whether to accept,
reject, or negotiate.
Major Points
1. Expression of Assent – The offeree expresses agreement, either orally, in
writing, or through conduct.
2. Communication of Acceptance – The acceptance must be communicated to
the offeror directly or indirectly.
3. Legal Binding Effect – Once communicated, acceptance transforms the
proposal into a legally binding agreement.
4. Formation of Contract – The acceptance completes the process, and a
valid contract comes into existence.
Types of Acceptance (Elaborated)
1. Express Acceptance
• When the offeree communicates acceptance in clear words, either orally
or in writing.
• Example: A writes a letter or email to B saying, “I accept your offer.”
2. Implied Acceptance
• When acceptance is shown through conduct or behavior, not words.
• Example: A boards a bus, which implies acceptance of the terms of
travel.
3. Conditional Acceptance
• When acceptance is made subject to certain changes or conditions.
• This is not a true acceptance; rather, it is treated as a counter-offer.
• Example: A offers to sell his bike for ₹50,000. B says, “I accept,
provided you reduce the price to ₹45,000.”
4. Acceptance by Conduct
• Performance of the conditions of the offer amounts to acceptance.
• Example: In a reward contract, when a person finds and returns a lost
dog as per the advertisement, it is implied acceptance.
5. Acceptance by Silence (Exception)
• As a general rule, silence is not acceptance (Felthouse v. Bindley).
• But, in some cases where prior agreement exists, silence may be treated
as acceptance.
Communication of Acceptance (Elaborated)
• Governed by Section 4 of the Indian Contract Act, 1872.
• Against the Proposer (Offeror): Communication is complete when the
acceptance is put in transmission (e.g., posted, emailed).
• Against the Acceptor (Offeree): Communication is complete when it comes
to the knowledge of the proposer.
Modes of Communication
1. Postal Communication (Postal Rule) – Acceptance is complete when the
letter of acceptance is posted, not when it reaches the proposer. (Adams v. Lindsell,
1818).
2. Telephone / Instant Communication – Acceptance is complete when heard
and understood by the proposer. (Entores Ltd v. Miles Far East Corp, 1955).
3. Email / Electronic Communication – Similar to instant communication,
acceptance is valid when received in the proposer’s inbox.
4. Conduct – Performing an act, such as starting delivery of goods.
Important Case Laws (Elaborated)
1. Felthouse v. Bindley (1862) – Silence cannot be treated as acceptance.
2. Hyde v. Wrench (1840) – A counter-offer destroys the original offer.
3. Adams v. Lindsell (1818) – Established the postal rule of acceptance.
4. Powell v. Lee (1908) – Acceptance must be communicated; it cannot be
valid unless conveyed.
5. Entores Ltd v. Miles Far East Corp (1955) – In instantaneous
communication, acceptance is complete when heard by the offeror.
6. Carlill v. Carbolic Smoke Ball Co. (1893) – Performance of conditions of an
offer amounts to acceptance.
Practical Examples of Acceptance
1. Online Shopping – Clicking “Place Order” or “I Agree” button shows express
acceptance.
2. Job Offer – Accepting an employment offer via email or letter is valid
express acceptance.
3. Travel Tickets – Buying a train/bus/flight ticket implies acceptance of terms.
4. Reward Contracts – Finding and returning a lost pet as per an ad is implied
acceptance.
5. Banking Apps / Services – Clicking “Accept Terms & Conditions” in
apps is acceptance by conduct.
Conclusion
Acceptance plays a vital role in the formation of a contract. For a contract to be valid,
acceptance must be properly communicated, unconditional, timely, and made by the appropriate
person while the offer is still valid. Any deviation from these essentials may render the contract
void or voidable.
Diagram / Flowchart of Acceptance
Here’s a simple flowchart representation:
Offer Made
↓
Knowledge of Offer
↓
Consideration of Terms
↓
Decision (Accept / Reject / Counter-Offer)
↓
Expression of Assent
↓
Communication of Acceptance
↓
Formation of Contract