If an offer is the “question,” acceptance is the “answer.” Just as a lit matchstick causes no fire without gunpowder, an offer creates no legal rights until it is accepted.
1. Meaning of Acceptance
Section 2(b) of the Indian Contract Act, 1872 defines acceptance as:
“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.”
The Transformation
Once an offer is accepted, it undergoes a chemical change. It becomes a Promise and, subsequently, an agreement.
- Formula: $\text{Proposal} + \text{Acceptance} = \text{Promise}$
- Irrevocability: Once accepted, the offer cannot be withdrawn. It is like firing a bullet; once executed, the consequences (legal obligations) follow.
2. Legal Rules for Valid Acceptance
For an acceptance to convert an offer into a binding contract, it must follow strict rules:
1. Acceptance must be Absolute and Unqualified (Section 7)
The acceptance must be a “Mirror Image” of the offer. You must accept the offer exactly as it is, without any changes.
- Example: A offers to sell his car for ₹5 Lakhs. B says, “I accept, but I will pay ₹4.5 Lakhs.”
- Result: This is NOT acceptance. It is a Counter-Offer. The original offer is destroyed.
- Case Law: Hyde v. Wrench (1840) (Counter-offer rejects the original offer).
2. Acceptance must be Communicated
Mental acceptance is not enough. You must tell the offeror.
- Case Law: Brogden v. Metropolitan Railway Co. (A draft agreement was signed and put in a drawer but never sent. Held: No contract).
3. Mere Silence is NOT Acceptance
The offeror cannot say, “If I don’t hear from you, I will assume you accepted.” The offeree has no burden to speak.
- Landmark Case:Felthouse v. Bindley (1862)
- Facts: An uncle wrote to his nephew, “If I hear no more, I consider the horse mine.” The nephew didn’t reply but told the auctioneer to keep the horse aside. The auctioneer sold it by mistake.
- Held: The uncle could not sue because the nephew’s silence did not amount to acceptance communicated to the uncle.
4. Acceptance must be in the Prescribed Mode
If the offeror says “Reply by email,” you cannot reply by post. If no mode is prescribed, it must be done in a usual and reasonable manner.
5. Acceptance must be given within a Reasonable Time
If the offer has a deadline, acceptance must be before that. If no deadline, it must be within a “reasonable time” (depends on the facts).
6. Acceptance must be by the Party to whom the Offer is made
If A makes an offer to B, C cannot accept it (unless it is a General Offer).
3. Communication of Acceptance (Section 4)
In the era of letters and emails, timing matters. When is the contract actually formed? The Act lays down specific timelines in Section 4:
A. Communication is Complete AGAINST the Proposer (Offeror)
- When: As soon as the acceptor puts the letter of acceptance in the post (or hits ‘send’ on email), so that it is out of his power to withdraw it.
- Implication: The Offeror is bound the moment the letter is posted, even if it is lost in transit.
B. Communication is Complete AGAINST the Acceptor
- When: When the letter of acceptance actually reaches the Proposer.
- Implication: The Acceptor can revoke his acceptance before the letter reaches the Proposer, but not after.
Modern Rule (Instant Communication): For telephone, telex, or face-to-face conversation, the contract is complete only when the acceptance is clearly heard and understood by the offeror (Entores Ltd. v. Miles Far East Corp).
4. Acceptance vs. Invitation to Offer (Clarification)
Note: This is often a point of confusion. The standard comparison is “Offer vs. Invitation to Offer,” but here is how “Acceptance” relates to the concept.
Often, what looks like an acceptance is actually a Counter-Offer or a fresh Invitation to Offer.
| Feature | Valid Acceptance | Conditional Acceptance |
| Legal Effect | Creates a Contract immediately. | Rejects original offer; acts as a New Offer. |
| Response | “Yes, I agree to everything.” | “Yes, but only if…” |
| Status | Ends negotiations. | Restarts negotiations. |
- Scenario: You see a dress in a shop (Invitation to Offer). You say, “I will buy this for ₹500” (Offer).
- Valid Acceptance: Shopkeeper says, “Okay, sold.” (Contract formed).
- Not Acceptance: Shopkeeper says, “No, price is ₹600.” (This is a Counter-Offer).
Key Takeaway for Exams
The most common trap in exam questions is a “Conditional Acceptance”. Always remember: If there is an “IF” or “BUT” in the reply, it is NOT an acceptance.