Table of Contents
1. Introduction
2. Definition of Acceptance
3. Essentials of a Valid Acceptance
o Absolute and Unqualified Acceptance
o Communication of Acceptance
o Acceptance in the Prescribed Mode
o Acceptance While Offer Is Subsisting
o Acceptance by the Offeree
o Knowledge of the Offer
o Intention to Create Legal Relations
4. Communication Rules and Modes
5. Revocation of Acceptance
6. Conclusion
7. References
Introduction
Contracts are legally binding agreements formed through the process of offer and
acceptance. For a contract to be valid, both parties must agree to the terms in the same
sense. Acceptance is the final expression of consent by the offeree to the terms proposed by
the offeror. It is the crucial step that transforms an offer into a binding agreement.
2. 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. A proposal, when accepted, becomes a promise.”
Acceptance transforms the offer into a contract when done in compliance with legal
requirements.
3. Essentials of a Valid Acceptance
a) Acceptance Must Be Absolute and Unqualified
The acceptance must be unconditional and must match the exact terms of the offer
(mirror image rule).
If the acceptance alters any term of the offer, it amounts to a counter-offer.
Case Law: Hyde v. Wrench (1840)
In this case, Wrench offered to sell his farm for £1,000. Hyde replied offering £950, which
Wrench refused. Later, Hyde tried to accept the original offer. It was held that the original
offer was no longer available, as the counter-offer terminated it.
b) Acceptance Must Be Communicated
Acceptance must be conveyed to the offeror. An uncommunicated acceptance has no
legal effect.
Silence or mental acceptance does not constitute acceptance.
Case Law: Felthouse v. Bindley (1862)
Felthouse offered to buy a horse and said, “If I hear no more about him, I shall consider the
horse mine.” The offeree remained silent. It was held that silence does not amount to
acceptance.
c) Acceptance Must Be in the Prescribed Mode
If the offer specifies a particular mode (e.g., in writing, by email), the acceptance
must be made accordingly.
If no mode is specified, it must be done in a usual or reasonable manner.
Section 7(2) of the Indian Contract Act states that acceptance must be in the manner
prescribed or usual and reasonable.
d) Acceptance Must Be Given While the Offer Is Still Open
An offer can only be accepted while it is still in force.
If the offer is revoked, expired, or rejected, any subsequent acceptance is ineffective.
Case Law: Ramsgate Victoria Hotel v. Montefiore (1866)
An offer to buy shares was made in June and accepted in November. The court held that the
offer had lapsed due to the unreasonable delay.
e) Acceptance Must Be Made by the Person to Whom the Offer Is Made
Only the person to whom the offer is directed can accept it.
A third party cannot accept the offer on behalf of the offeree unless authorized.
Case Law: Boulton v. Jones (1857)
Jones made an offer to buy goods from a specific person. The goods were delivered by
someone else without his knowledge. The court held that there was no valid acceptance.
f) Acceptance Must Be Made with Knowledge of the Offer
A person must know about the offer to accept it.
Acceptance made in ignorance of the offer is not valid.
Case Law: Lalman Shukla v. Gauri Dutt (1913)
A servant who performed an act without knowing about the reward offer was not entitled to
the reward as he had no knowledge of the offer when acting.
g) There Must Be Intention to Create Legal Relations
Acceptance must be made in a context where the parties intend to enter a legal
relationship.
Social or domestic agreements are usually not legally enforceable.
Case Law: Balfour v. Balfour (1919)
A husband's promise to pay monthly maintenance to his wife was held unenforceable due to
lack of legal intention.
4. Communication Rules and Modes
a) Postal Rule (In English Law):
Acceptance is complete when the letter is posted, not when it is received.
Case Law: Adams v. Lindsell (1818)
b) Instantaneous Modes:
In case of telephone, email, or fax, acceptance is complete when it is received and
understood.
5. Revocation of Acceptance
Under Section 5 of the Indian Contract Act, acceptance may be revoked before the
communication of the acceptance is complete as against the acceptor, but not
afterward.
Revocation must reach the offeror before or at the same time as the acceptance.
6. Conclusion
A valid acceptance is the foundation of a legally binding contract. For an agreement to
mature into a contract, acceptance must be clear, communicated, made in proper manner
and time, and with the intent to be bound legally. Understanding these essentials prevents
legal disputes and ensures enforceability.
7. References
Indian Contract Act, 1872
Hyde v. Wrench (1840) 3 Beav 334
Felthouse v. Bindley (1862) EWHC CP J35
Balfour v. Balfour [1919] 2 KB 571
Adams v. Lindsell (1818) 1 B & Ald 681
Lalman Shukla v. Gauri Dutt (1913) 11 All LJ 489
Pollock & Mulla – Indian Contract and Specific Relief Acts
Avtar Singh – Law of Contract and Specific Relief
