Assignment on business law ACCEPTANCE

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Content-

Definition of Indian Contract Act 1872 Definition of Acceptance Types of Acceptance Communication of Acceptance Revocation of Acceptance. Conclusion Bibliography

CONTRACT 2|Page

Indian Contract Act 1872 is the main source of law regulating contract in Indian law, as subsequently amended. It determines the circumstances in which promise made by the parties to a contract shall be legally binding on them. The Indian Contract Act 1872 sections 1-75 came into force on 1 September 1872. It is not a complete and exhaustive law on all types of contracts. We enter into contracts so many times in a day that contract has become an indispensable part of our life. When you purchase milk or newspaper in the morning or go to movie in the evening, you are entering into a contract. Indian Contract Act really codifies the way we enter into a contract, execute a contract, and implement provisions of a contract and effects of breach of a contract. Basically, a person is free to contract on any terms he chooses. The Contract Act consists of limiting factors subject to which contract may be entered into, executed and breach enforced. It only provides a framework of rules and regulations which govern formation and performance of contract. The rights and duties of parties and terms of agreement are decided by the contracting parties themselves. The court of law acts to enforce agreement, in case of non-performance.
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Contract Act provides that any usage or custom or trade or any incident of contract is not affected as long as it is not inconsistent with provisions of the Act. In other words, provision of Contract Act will prevail over any usage or custom or trade. However, any usage, custom or trade will be valid as long as it is not inconsistent with provisions of Contract Act. The Act extends to the whole of India except the State of Jammu and Kashmir; and came into effect on 1-9-1872.

Acceptance
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Section 1

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when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. An express act or implication by conduct that manifests assent to the terms of an offer in a manner invited or required by the offer so that a binding contract is formed. The exercise of power conferred by an offer by performance of some act. The act of a person to whom something is offered or tendered by another, whereby the offeree demonstrates through an act invited by the offer an intention of retaining the subject of the offer. In the law of contracts, acceptance is one person's compliance with the terms of an offer made by another. Acceptance occurs in the law of insurance when an insurer agrees to receive a person's application for insurance and to issue a policy protecting the person against certain risks, such as fire or theft. When a person who is offered a gift by someone keeps the gift, this indicates his or her acceptance of it. Acceptance also occurs when a bank pays a check written by a customer who has a checking account with that bank. In business dealings between merchants, which is governed by the law of sales, a buyer demonstrates his or her acceptance of goods that are not exactly what he or she had ordered from the seller by telling the seller that he or she will keep the goods even though they are not what was ordered; by failing to reject the goods; or by doing something to the goods inconsistent with the seller's ownership of them, such as selling the goods to consumers of the buyer's store.

Acceptance is a final and unqualified expression of assent to the terms of an offer. The objective test of agreement applies to an acceptance no less than to an offer. On this test, a mere acknowledgement of an offer would not be an acceptance. If a contract is to be made, the intention of the offeree to accept must be expressed without leaving room for doubt as t the fact of acceptance, or as to the coincidence of the terms of the acceptance with those of the offer. Thus acceptance is the assent given to a proposal, and it has the effect of converting the proposal into promise.

Types of Acceptance An acceptance may be conditional, express, or implied.

Conditional Acceptance2

Section 2(b)

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A conditional acceptance, sometimes called a qualified acceptance, occurs when a person to whom an offer has been made tells the offeror that he or she is willing to agree to the offer provided that some changes are made in its terms or that some condition or event occurs. This type of acceptance operates as a counteroffer. A counteroffer must be accepted by the original offeror before a contract can be established between the parties. Another type of conditional acceptance occurs when a drawee promises to pay a draft upon the fulfillment of a condition, such as a shipment of goods reaching its destination on the date specified in the contract. Express Acceptance An express acceptance occurs when a person clearly and explicitly agrees to an offer or agrees to pay a draft that is presented for payment.

Implied AcceptanceAn implied acceptance is one that is not directly stated but is demonstrated by any acts indicating a person's assent to the proposed bargain. An implied acceptance occurs when a shopper selects an item in a supermarket and pays the cashier for it. The shopper's conduct indicates that he or she has agreed to the supermarket owner's offer to sell the item for the price stated on it.

COMMUNICATION OF ACCEPTANCE. 5|Page

1. Acceptance by external manifestation or overt actThe definition clearly requires that the assent should be signified. It may be signified or expressed by an act or omission by which the party accepting intends to communicate his assent or which has the effect of communicating it. An agreement does not result from a mere state of mind. Intent to accept an offer or even a mental resolve to accept an offer does not give rise to a contract. There must be some external manifestation of that intent by speech, writing or other act. Brogden Vs metropolitan Railway Co.3 B was supply the coal to a railway company without any formal agreement. B suggested that a formal agreement should be drawn up. The agent of both parties mat and draft an agreement. There were some blank which sent to B's approval. The agent of the company put that agreement in the draws of B, and it kept there. B kept up his supply of coals but on the new terms. A dispute having arisen B refused t be bound by the agreement. The conduct of the company's agent in keeping the agreement in his drawer was an evidence of the fact that he had mentally accepted it. But had not express his mental determination and retention of the agreement was not a sufficient acceptance. It was held that- when the course of dealing was accepted and acted upon in the supply of coal it means the acceptance is there.

2. Acceptance by ConductConduct is an action in terms of the offer. All cases of general offers, which are a kind of unilateral contract demand some act in return for the promise to pay. Section 8 provides that Performance of all conditions of a proposal of the acceptance of any consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the proposal. Hindustan Cooperative Insurance Company Vs Shyan Sunder4Brief FactAfter an oral understanding to insure and the completion of medical examination and , the company informed the proposer that if he submitted the proposal form and half yearly premium, his proposal would be accepted. The proposer submitted the proposal form and the half yearly premium cheque. The company encash the cheque but not replied to him. Calcutta High Court held that- Mere mental assent to an offer does not conclude a contract. The offeror may however, indicate the mode of communicating acceptance either expressly or by implication. The encash of premium cheque shows the act of acceptance.

3. Communication to offeror himself3 4

(1877) 2 App. Cas. 666 AIR 1952 Cal 691, 56 CWN 418

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Acceptance must be communicated to the offeror himself. A communication to any other person is as ineffectual as if no communications has been made. Felthouse V Bindley5- court held that-acceptance of an offer made should be communicated to the offeror himself or to the person he has authorized to receive the acceptance. A communication to a stranger will not do 4. Communication to acceptor himselfThe communication of acceptance should be from a person who has the authority to accept it. Information received by a unauthorized person is ineffective. 5. When Communication of Acceptance not necessaryIn case of general offer to public at large, acceptance is not necessary. Carlill Vs Carbolic Smoke Ball Co6 Brief Facts- Carbolic some ball co, offered by advertisement to pay 100 to any one who suffered by influenza after having used the ball according to printed direction. It was added that 1000 deposited in the Alliance Bank showing our sincerity in the matter. The plaintiff used the smoke ball according to the direction but she nevertheless subsequently suffered from influenza. She was held liable to entailed for the amount. But the co refused to give the amount to Carlill, by saying thatThere was no intention to enter into a legal relation as it was simply a puffing advertisement. It was not made for one person in particular, and the plaintiff had not expressed his intention to accept it. Judgment- it was the general offer, and the sanity of the contract was amount deposited in the bank. 6. Mode of Communication Acceptance must be in a prescribed MannerAcceptance has to be made in a manner prescribed or indicated by the offeror. An acceptance given in any other manner may not be effective, particularly where the offeror clearly insists that the acceptance shall be made in the prescribed manner. 7. Acceptance must be absoluteThe acceptance must be absolute or unqualified, there should be no conditions attached to it.

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Provisional acceptance-

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(1862) EWHC CPJ 35

[1893] 1 Q.B. 256

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Some time an acceptance made subject to final approval, this kind of acceptance is provisional acceptance, which does not bind either party until the final approval is given.

*Revocation of Acceptance According to English law an acceptance once made is irrevocable. Anson- acceptance is to offer what a lighted match is to a train of gunpowder. Both do something which cannot be undone. In Indian law- once the other hand, acceptance is generally revocable, before it reaches to the offeree. A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. Illustrations

A proposes, by a letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post. A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards. B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards.

Revocation how madeMode of revocation Section 61. Communication of notice of revocation by the proposer to the other party. 2. Laps of time prescribed in such proposal, if time is not prescribed then the laps of the reasonable time, with out the communication of acceptance. 3. Failure of the acceptor to fulfill the agreement conditions.

4. Death or insanity of the proposer, which comes to the knowledge of acceptor before the acceptance of proposal.

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CONCLUSION

This assignment on Acceptance has proved to be a great learning about the Indian Contract Act.1872. During the time I was preparing this assignment I came across several terms and facts, and I was amazed to see how a contract works, and the significance of acceptance in contract. The different illustrations also gave me a better understanding of the law of acceptance. I really enjoyed working on this assignment as it gave me a broad picture of the law framework of India.

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Bibliography

1. http://www.articlesbase.com/law-articles/acceptance-section-3-under-indian-contract-act-1872-

3367696.html.

2. http://legal-dictionary.thefreedictionary.com/acceptance.

3. http://www.netlawman.co.in/acts/indian-contract-act.php.

4. http://www.dateyvs.com/gener03.htm.

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