NATIONAL LAW INSTITUTE UNIVERSITY,

BHOPAL

In the partial fulfilment for the requirement of the project on the subject of Law Of
Contracts 1 of
B.A., L.L.B (Hons.), Second
Trimester

Submittted on November 2018

OFFER AND ACCEPTANCE

Submitted to: Submitted by:

Ms Neha Sharma Hrishikesh Prakash Jaiswal

(Assistant Professor for (2018BALLB126)

Law Of Contracts)

Page 1 of 25
 PREFACE

I feel great pleasure in presenting the project under study. I hope that the readers
will find the project interesting and that the project in its present from shall
be well received by all. The project contains a detailed study of Offer and
Acceptance

Every effort is made to keep the project error free. I would

gratefully acknowledge any suggestions to improve the project to make it more
useful.

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 ACKNOWLEDGEMENTS

On completion of this Project it is my present privilege to acknowledge my

profound gratitude and indebtedness towards many people for their valuable
suggestions and constructive criticism. Their precious guidance and
unrelenting support kept me on the right track throughout the project. I
gratefully acknowledge my deepest sense of gratitude to:

Prof. (Dr.) V Vijayakumar , Director, National Law Institute University,

Bhopal for providing us with the infrastructure and the means to make this
project;

Our Contracts teacher, Ms Neha Sharma who provided me this wonderful

opportunity and guided me throughout the project work.

I would also like to thank my batch mates and seniors for their constant help and
guidance which helped me in completing this project.

I’m also thankful to the library and computer staffs of the University for helping us
find and select books from the University library.

Finally, I’m thankful to my family members and friends for the affection
and encouragement with which doing this project became a pleasure.

HRISHIKESH JAISWAL

(2018BALLB126)
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 TABLE OF CONTENTS

1 INTRODUCTION ……………………………………………..……5

2. RESEARCH METHODOLOGY ……………………......……….6

3. TOPICS TO BE STUDIED …………………………………………7

4. OFFER
 DEFINATION……………………………………………………8

 HOW AN OFFER IS MADE…………………………………….8

 ESSENTIAL ELEMENTS OF AN OFFER……………………9

 KINDS OF OFFER………………………………………………13
 LAPSE OF AN OFFER……………………………………..........15

 COMMUNICATION AND REVOCATION OF AN OFFER…17

5 .ACCEPTANCE
 DEFINATION………………………………………………………19
 LEGAL RULES FOR ACCEPTANCE…………………………..19
 GENERAL RULES FOR ACCEPTANCE………………………22
8. CONCLUSION ………………………………………………………24

9. BIBLIOGRAPHY…………………………………………………….25

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 INTRODUCTION

Offer and acceptance analysis is a traditional approach in contract law. The offer and
acceptance formula, developed in the 19th century, identifies a moment of formation
when the parties are of one mind. This classical approach to contract formation has been
modified by developments in the law of estoppel, misleading
conduct, misrepresentation and unjust enrichment. Treitel defines an offer as "an
expression of willingness to contract on certain terms, made with the intention that it
shall become binding as soon as it is accepted by the person to whom it is addressed",
the "offeree".1 An offer is a statement of the terms on which the offeror is willing to be
bound. It is the present contractual intent to be bound by a contract with definite and
certain terms communicated to the offeree.

The expression of an offer may take different forms, such as a letter, newspaper
advertisement, fax, email and even conduct, as long as it communicates the basis on
which the offeror is prepared to contract.

For the acceptance, the essential requirement is that the parties had each from a
subjective perspective engaged in conduct manifesting their assent. Under this meeting
of the minds theory of contract, a party could resist a claim of breach by proving that he
had not be intended to be bound by the agreement, only if it appeared subjectively that
he had so intended. This is unsatisfactory, as one party has no way to know another's
undisclosed intentions. One party can only act upon what the other party reveals
objectively (Lucy V Zehmer, 196 Va 493 84 S.E. 2d 516) to be his intent. Hence, an
actual meeting of the minds is not required. Indeed, it has been argued that the "meeting
of the minds" idea is entirely a modern error: 19th century judges spoke of "consensus
ad idem" which modern teachers have wrongly translated as "meeting of minds" but
actually means "agreement to the [same] thing2

1
Treitel, GH. The Law of Contract (10th ed.). p. 8
2
R. Austen-Baker, "Gilmore and the Strange Case of the Failure of Contract to Die After All" (2000)
18 Journal of Contract Law 1
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 RESEARCH METHODOLOGY

OBJECTIVES

 To understand how an offer is made

 To study the essential elements of an offer
 To analyze the case laws applicable
 To study the types of offer
 To understand comunication and revocation of the offer and acceptance

STATEMENT OF PROBLEM

To analyze offer and acceptance and its types with the help of case laws

METHODOLOGY

The method used for research work in the present project is the doctrinal method of data
collection.

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 TOPICS TO BE STUDIED

 Defination of offer and acceptance

 Essential of an offer
 Legal rules to a valid offer and acceptance
 Types of offer
 Lapse of offer
 Communication of acceptance and revocation of offer and acceptance

CASE LAWS

 Lalman Shukla (VS) Gauri Dutt. (1913)

 Carlill v Carbolic Smoke Ball Company [1893]
 Harris (VS) Nikerson(1873
 Ramsgate victoria Hotel Company (vs) Monteflore (1886
 Hyde (vs) Wrench (1840
 Boulton v. Jones

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 OFFER
Offer(i.e. Proposal) [section 2(a)]:-When one person signifies to another his
willingness to do or to abstain from doing anything, with a view to obtaining the assent
of that other person either to such act or abstinence, he is said to make a proposal.
To form an agreement, there must be at least two elements – one offer and the other
acceptance. Thus offer is the foundation of any agreement. 3

“When one person signifies to another his willingness –

• to do or to abstain from doing anything,
• with a view to obtaining the assent of that other to such act or abstinence, he is said to
make a proposal.”

The person who makes an offer is called “Offeror” or “Promisor” and the person to
whom the offer is made is called the Offeree” or “Promisee”.
Example
Mr. A says to Mr. B, “Will you purchase my car for Rs.1,00,000?” In this case, Mr. A is
making an offer to Mr. B. Here A is the offeror and B is the offeree.

HOW AN OFFER IS MADE?

An offer can be made by (a) any act or (b) omission of the party proposing by which he
intends to communicate such proposal or which has the effect of communicating it to the
other (Section 3).4 An offer can be made by an act in the following ways:
(a) By words (whether written or oral). The written offer can be made by letters,
telegrams, telex messages, advertisements, etc. The oral offer can be made either in
person or over telephone.
(b) By conduct. The offer may be made by positive acts or signs so that the person
acting or making signs means to say or convey. However silence of a party can in no
case amount to offer by conduct. An offer can also be made by a party by omission (to
do something). This includes such conduct or forbearance on one’s part that the other
person takes it as his willingness or assent.

3
THE INDIAN CONTRACT ACT, 1872 ACT NO. 9 OF 1872,interpretation clause[a]
4
THE INDIAN CONTRACT ACT, 1872 section 3
Page 8 of 25
An offer implied from the conduct of the parties or from the circumstances of the case is
known as implied offer.5
Examples
(1) A proposes, by letter, to sell a house to Bat a certain price. This is an offer by an act
by written words (i.e., letter). This is also an express offer.
(2) A proposes, over telephone, to sell a house to Bat a certain price. This is an offer by
act (by oral words). This is an express offer.
(3) A owns a motor boat for taking people from Bombay to Goa. The boat is in the
waters at the Gateway of India. This is an offer by conduct to take passengers from
Bombay to Goa. He need not speak or call the passengers. The very fact that his motor
boat is in the waters near Gateway of India signifies his willingness to do an act with a
view to obtaining the assent of the other. This is an example of an implied offer.

Specific and General Offer

An offer can be made either:
1. To a definite person or a group of persons, or
2. To the public at large.

Essential elements of an offer:-

(1) There must be two parties.
(2) The offer must be communicated to the offeree.
(3) The offer must show the willingness of offeror. Mere telling the plan is not offer.
(4) The offer must be made with a view to obtaining the assent of the offeree.
(5) A statement made jokingly does not amount to an offer.
(6) An offer may involve a positive act or abstinence by the offeree.
(7) Mere expression of willingness does not constitute an offer.
A tells B’ that be desires to marry by the end of 2008, if does not constitute an offer
of marriage by A’ to B’ A further adds will you marry me. Then it become offer.6

Legal Rules as to valid offer:-

5 THE INDIAN CONTRACT ACT,1872 Paperback – 2015 by Narendra kumar

6 Pollock & Mulla - The Indian Contract Act, 1872 page 110-112

Page 9 of 25
Offer must be communicated to the offeree: The offer is completed only when it has
been communicated to the offeree. Until the offer is communicated, it cannot be
accepted. Thus, an offer accepted without its knowledge, does not confer any legal rights
on the acceptor.7
Example: LALMAN SHUKLA (VS) GAURI DATT. (1913)
Facts: ‘S’ sent his servant, ‘L’ to trace his missing nephew. He then announced that
anybody who finds the nephew would be entitled to a certain reward. ‘L’ traced the boy
in ignorance of his announcement. Subsequently, when he came to know of his reward,
he claimed it.
Judgment: He was not entitled for the reward.8

2. The offer must be certain definite and not vague unambiguous and certain.
Example:
A offered to sell to B. ‘a hundred tons of oil’. The offer is uncertain as there is nothing to
show what kind of oil is intended to be sold.

3. The offer must be capable of creating legal relation. A social invitation is not
create legal relation. A social invitation, even if it is accepted does not create legal
relationship because it is not so intended to create legal relationship. Therefore, an offer
must be such as would result in a valid contract when it is accepted.
Example:
A invited B to a dinner and B accepted the invitation. It is a mere social invitation. And
A will not be liable if he fails to provide dinner to B.

4. Offer may be express and implied

The offer may be express or implied; An offer may be express as well as implied. An
offer which is expressed by words, written or spoken, is called an express offer. The
offer which is expressed by conduct, is called an implied offer [Section 9].
5. Communication of complete offer
Example:
A offered to sell his pen to B for Rs.1,000. B replied, “I am ready to pay Rs.950”. On
A’s refusal to sell at this price, B agreed to pay Rs.1,000. held, there was not contract at
the acceptance to buy it for Rs.950 was a counter offer, i.e. rejection of the offer of A.

7
THE INDIAN CONTRACT ACT, 1872 SECTION 4
8
Indiancaselaw.com/lalman Shukla vs gauri dutt
Page 10 of 25
Subsequent acceptance to pay Rs.1,000 is a fresh offer from B to which A was not
bound go give his acceptance.
6. Counter offer –A counter offer amounts to rejection of the original offer
7. Cross offer do not conclude a contract
8. An offer must not thrust the burden of acceptance on the offeree.
Example:
A made a contract with B and promised that if he was satisfied as a customer he would
favorably consider his case for the renewal of the contract. The promise is too vague to
create a legal relationship.
The acceptance cannot be presumed from silence.
Acceptance is valid only if it is communicated to the offeror.
9. Offer must be distinguished from invitation to offer.
Example:
Menu card of restaurant is an invitation to put an offer.
Example ;
Price – tags attached with the goods displayed in any showroom or supermarket is also
an invitation to proposal. If the salesman or the cashier does not accept the price, the or
the cashier does not accept the price, the interested buyer cannot compel him to sell, if
he wants to buy it, he must make a proposal. 9
Example:
Job or tender advertisement inviting applications for a job or inviting tenders is an
invitation to an offer.
Example: An advertisement for auction sale is merely an invitation to make an offer and
not an offer for sale. Therefore, an advertisement of an auction can be withdrawn
without any notice. The persons going to the auction cannot claim for loss of time and
expenses if the advertisement for auction is withdrawn.

10. Offeror should have an intention to obtain the consent of the offeree. A offer to
do (or) not to do something must be made with a view to obtaining the assent of the
other party addressed and it should not made merely with a view to disclosing the
intention of making an offer.

11. Offer may be specific (or) general:An offer is said to be specific when it is made to
a definite

9
Sanjiva Rows : The Indian Contract Act, 1872 and Tenders with Latest Case laws, 13th Updated
Page 11 of 25
person, such an offer is accepted only by the person to whom it is made. On the other
hand general offer is one which is made to a public at large and maybe accepted by
anyone who fulfills the requisite conditions.
Example: Carlill v Carbolic Smoke Ball Company [1893]10

Facts:

In this case the plaintiff bought a medical preparation called ‘The Carbolic Smoke Ball’

on the basis that the defendants advertised that they would pay ￡100 to any person who

contracted influenza after using the smoke ball in the prescribed manner and for a
specified period. Further, the defendants stated that ‘to show their sincerity’ they had

deposited￡1,000 with the Alliance Bank. The plaintiff bought one of the smoke balls

and used it in the manner prescribed and promptly caught influenza! She sued for the ￡

100. The defendants contended that there was no agreement between them and used
considerable ingenuity in promoting this contention. One of the defences used was that it
was not possible to make an offer to the whole world since this would enable the whole
world to accept the offer, which was clearly beyond the realms of commercial reality.

Held:

The Court of Appeal had no difficulty in rejecting this defence. Bowen LJ stated the
position very clearly as follows:
It was also said that the contract is made with the whole world – that
is, with everybody and you cannot contract with everybody. It is not a
contract made with all the world. There is the fallacy of the argument.
It is an offer made to all the world; and why should not an offer be
made to all the world which is to ripen into a contract with anybody
who comes forward and performs the condition? . . . Although the
offer is made to the world, the contract is made with that limited
portion of the public who come forward and perform the condition on
the faith of the advertisement.

10
Simpson, A. W. B. (1985). "Quackery and Contract Law: The Case of the Carbolic Smoke
Ball". Journal of Legal Studies. 14 (2): 345–389. doi:10.1086/467776. JSTOR 724433.
Page 12 of 25
The defendants also contended that the plaintiff had not accepted their offer and
therefore there was no consensus ad idem and thus no agreement. This defence, which
was rejected, exposes the fact that offers may arise in two forms, either bilateral or
unilateral. A bilateral offer arises where one party promises to do something in return for
a promise made by the offeree. Both parties are agreeing to do something in return for
some reciprocal promise from the other. An example of such an offer would be if A

promises to sell their car in return for B promising to pay ￡5,000. The vast majority of

offers are of this type

KINDS OF OFFER
Express Implied Specific General Cross Counter Standing
offer offer offer offer offer offer Open and
Continuous
offer

I. Express offer -When the offeror expressly communication the offer the offer is said
to be an express offer the express communication of the offer may be made by Spoken
word orWritten word

II. Implied offer –when the offer is not communicate expressly. An offer may be
implied from:-
The conduct of the parties or the circumstances of the case

III. Specific:-It means an offer made to

(a) a particular person or
(b) a group of person: It can be accepted only by that person to whom it is made
communication of acceptance is necessary in case of specific offer.

IV. General offer: -It means on offer which is made to the public in general.
• General offer can be accepted by anyone.
• If offeree fulfills the term and condition which is given in offer then offer is
accepted.
• Communication of acceptance is not necessary is case of general offer
Example

Page 13 of 25
Company advertised that a reward of Rs.100 would be given to any person who would
suffer from influenza after using the medicine (Smoke balls) made by the company
according to the printed directions. One lady, Mrs, Carlill, purchased and used the
medicine according to the printed
Directions of the company but suffered from influenza, She filed a suit to recover the
reward of Rs.100. The court held that there was a contract as she had accepted a general
offer by using the medicine in the prescribed manner and as such as entitled to recover
the reward from the company.
Carlill v Carbilic Smoke Ball Co. 1893

V. Cross offer:- When two parties exchange identical offers in ignorance at the time of
each other’s offer the offer’s are called cross offer.Two cross offer does not conclude a
contract. Two offer are said to be cross offer if
1. They are made by the same parties to one another
2. Each offer made in ignorance of the offer made by the
3. The terms and conditions contained in both the offers’ are same.11
Example : A offers by a letter to sell 100 tons of steel at Rs.1,000 per ton. On the same
day, B also writes to A offering to buy 100 tons of steel at Rs.1,000 per ton. When does
a contract come into existence: -A contract comes into existence when any of the parties,
accept the cross offer made by the other party.

VI Counter offer :-when the offeree give qualified acceptance of the offer subject to
modified and variations in the terms of original offer. Counter offer amounts to rejection
of the original offer.
Legal effect of counter offer:-
(1) Rejection of original offer
(2) The original offer is lapsed
(3) A counter offer results a new offer.
In other words an offer made by the offeree in return of the original offer is called as a
counter offer.
Example:
A offered to sell his pen to B for Rs.1,000. B replied, “ I am ready to pay Rs.950.” On
A’s refusal to sell at this price, B agreed to pay Rs.1,000. Held, there was not contract as
the acceptance to buy it for Rs.950 was a counter offer, i.e. rejection of the offer of A.

11
Business and labour law –offer and acceptance by Muhammad Naveed and Imran khan
Page 14 of 25
Subsequent acceptance to pay Rs.1,000 is a fresh offer from B to which A was not
bound to give his acceptance

VII Standing, open and continuous offer:-An offer is allowed to remain open for
acceptance over a period of timeis known as standing, open orcontinually offer. Tender
for supply of goods is a kind of standing offer.
Example:
When we ask the newspaper vendor to supply the newspaper daily. In such case, we do
not repeat our offer daily and the newspaper vendor supplies the newspaper to us daily.
The offers of such types are called Standing Offer.12

LAPSE OF AN OFFER

An offer should be accepted before it lapses (i.e. comes to an end). Section 16, of the
Indian contract act, 1872 deals with various modes of revocation of offer. According to
it, an offer is revoked/lapses (or) comes to an end underfollowing circumstances. An
offer may come to an end in any of the following ways stated in Section 6 of the Indian
Contract Act:

1. By communication of notice of revocation: An offer may come to an end by

communication of notice of revocation by the offeror. It may be noted that an offer can
be revoked only before its acceptance is complete for the offeror. In other words, an
offeror can revoke his offer at any time before he becomes before bound by it. Thus, the
communication of revocation of offer should reach the offeree before the acceptance is
communicated. 13
Example: HARRIS (VS) NIKERSON (1873).14
Facts
An auctioneer advertised that certain goods would be sold at a certain location on a
certain date. The plaintiff went to the sale but all the lots he was interested in had been
withdrawn. He sued the auctioneer for his loss of time and expenses.

12 The Principles of Law of Contract Paperback 2018

by R C Srivastava (Author), Ashutosh Pathak (Author)page 24-28
13
communication of revocation by Harris Lewis JSTOR/CONTRACTS
14
LawTeacher. November 2013. Harris v Nickerson - Summary. [online]. Available from:
https://www.lawteacher.net/cases/harris-v-nickerson.php?vref=1 [Accessed 24 November 2018].
Page 15 of 25
Held:

It was held that the claim must fail as the advertisement of the auction was merely a
declaration of intent to hold a sale and did not amount to an offer capable of being
accepted and thus forming the basis of a binding contract, that is, that the advertisement
merely amounted to an invitation to treat.

2. By lapse of time; Where time is fixed for the acceptance of the offer, and it is not
accepted within the fixed time, the offer comes to an end automatically on the expiry of
fixed time. Where no time for acceptance is prescribed, the offer has to be accepted
within reasonable time. The offer lapses if It is not accepted within that time. The
term‘reasonable time’ will depend upon the facts and circumstances of each case.
Example: Ramsgate victoria Hotel Company (vs) Monteflore (1886)15
Facts :On June 8th ‘M’ offered to take shares in ‘R’ Company. He received a letter of
acceptance on November 23 rd. . He refused to take shares.
Judgment:‘M’ was entitled to refuse his offer has lapsed as the reasonable period which
it could be accepted and elapsed.

3. By failure to accept condition precedent: Where, the offer requires that some
condition must, be fulfilled before the acceptance of the offer, the offer lapses, if it is
accepted without fulfilling the condition.

4. By the death or insanity of the offeror: Where, the offeror dies or becomes, insane,
the offer comes to an end if the fact of his death or insanity comes to the knowledge of
the acceptor before he makes his acceptance. But if the offer is accepted in ignorance of
the fact of death or insanity of the offeror, the acceptance is valid. This will result in a
valid contract, and legal representatives of the deceased offeror shall be bound by the
contract.
On the death of offeree before acceptance, the offer also comes to an end by operation of
law. 16

15
LawTeacher. November 2013. Ramsgate Victoria Hotel v Montefiore - 1866. [online]. Available from:
https://www.lawteacher.net/cases/ramsgate-hotel-v-montefiore.php?vref=1 [Accessed 24 November
2018].
16
Understanding laws –contracts by Garima Tiwari[Jabalpur]page 69-70
Page 16 of 25
5. By counter – offer by the offeree: Where, a counter – offer is made by the offeree,
and then the original offer automatically comes to an end, as the counter – offer amounts
to rejections of the original offer.
Example: Hyde (vs) Wrench (1840)17
Facts:

The defendant offered to sell his farm for ￡1,000. The plaintiff at first made a counter

offer of ￡950, but two days later agreed to pay ￡1,000 and attempted to accept the

original offer. The defendant refused to complete the sale and the plaintiff brought an
action against him for a decree of specific performance.

Held:

It was held that no contract existed since by his letter offering ￡950 the plaintiff had

made a counter-offer, the effect of which was to reject and destroy the original offer, so
that the latter was therefore not available for him to accept two days later.

6. By not accepting the offer, according to the prescribed or usual mode: Where
some manner of acceptance is prescribed in the offer, the offeror can revoke the offer if
it is not accepted according to the prescribed manner.

7. By rejection of offer by the offeree: Where, the offeree rejects the offer, the offer
comes to an end. Once the offeree rejects the offer, he cannot revive the offer by
subsequently attempting to accept it.The rejection of offer may be express or implied.

8. By change in law: Sometimes, there is a changein law which makes the offer illegal
or incapable of performance. In such cases also, the offer comes to an end.

COMMUNICATION OF OFFER AND REVOCATION OF OFFER:

An offer, its acceptance
and their revocation (withdrawal) to be complete when it must be communicated to the
offeree. The

17
Beale, Hugh; Arthur Hartkamp; Hein Kotz; Denis Tallon (2002). Cases, Materials and Texts on
Contract Law. Hart Publishing
Page 17 of 25
following are the rules regarding communication of offer and revocation of offer:
(a) Communication of offer:
i) The communication of an offer is complete when it comes to the knowledge of the
person
to whom it is made.
ii) An offer may be communicated either by words spoken (or) written (or) it may be
inferred
from the conduct of the parties.
iii) When an offer/proposal is made by post, its communication will be complete when
the
letter containing the proposal reaches the person to whom it is made.
(b) Revocation of offer:A proposal/offer may be revoked at anytime before the
communication of its
acceptance is complete as against the proposer, but not afterwards.18

18
Scott robet E –Contract theory and limtations of the contract law
Page 18 of 25
 ACCEPTANCE

Acceptance 2(b):-When the person to whom the proposal is made, signifies his assent
there to , the proposal is said to be accepted. On the acceptance of the proposal, the
proposer is called the promisor/offeror and the acceptor is called the promise/offeree.19
Examples
A trader receives an order from a customer and executes the order by sending the goods.
The customer’s order for goods constitutes the offer which was accepted by the trader by
sending the goods. It is a case of acceptance by conduct. Here the trader is accepting the
offer by the performance of the act.

Who can Accept?

In the case of a specific offer, it can be accepted only by that person to whom it is
made.The rule of law is that if A wants to enter into a contract with B, then C cannot
substitutehimself for Bwithout A’s consent.
Example
Boulton v. Jones20
. The facts of this case were as follows: B, who was a manager withX, purchased his
business. J, to whom, X owed a debt, placed an order with X for the supply of certain
goods. B supplied the goods even though the order was not addressed to him. J refused
to pay B for the goods because he, by entering into contract with X, intended to set-off
his debt against X.
Held : The offer was made to X and it was not in the power of B to have accepted the
same. In the case of a general offer, it can be accepted by anyone by complying with the
terms of the offer.
Example
Carlill v.Carbolic Smoke Ball Co.*

Legal Rules for the Acceptance: 21

1. Acceptance must be absolute and unqualified:

19
THE INDIAN CONTRACT ACT, 1872 ACT NO. 9 OF 18721
20
Boultan vs Jones 857) 2 H and N 564, [1857] EngR 935, (1857) 157 ER 232
21
Korobikin Russell –status quo bias and defend contract rules page 10
Page 19 of 25
• An acceptance to be valid it must be absolute and unqualified and in accordance with
the
exact terms of the offer.
• An acceptance with a variation, slight, is no acceptance, and may amount to a mere
counter-offer (i.e.., original may or may not accept
Example:A offers to sell his house to B for Rs. two lakhs. B accepts the offer and
promises to pay the price in four installments. This isnotpay the acceptance as the
acceptance is with variation inthe terms of the offer.

2. Acceptance must be communicated: Mere mental acceptance is no acceptance, But

there is no requirement of communication of acceptance of general offer.
• For a valid acceptance, acceptance must not only be made by the offeree but it must
also be communicated by the offeree to the offeror.
• Communication of the acceptance must be expressed or implied.
• A mere mental acceptance is no acceptance.
Example The manager of Railway Company received a draft agreement relating to the
supply of coal. The manager marked the draft with the words “Approved” and put the
same in the drawer of his table and forgot all about it. Held, there was no contract
between the parties as the acceptance was not communicated. It may however, be
pointed out that the Court construed a conduct to parties as railway company was
accepting the supplies of coal from time to time.

3. Manner of acceptance
General rule say that it must be as per the manner prescribed by offeror. If no mode is
prescribed in which it can beaccepted, then it must be in some usual and reasonable
manner.
• Communication of the acceptance must be expressed or implied.
• A mere mental acceptance is no acceptance.

4. If there is deviation in communication of an acceptance of offer, offeror may

reject such acceptance by sending notice within reasonable time. If the offeror doesn’t
send notice or rejection, he accepted acceptance of offer.
Example:A offers B and indicates that the acceptance be given by telegram. B sends his
acceptance by ordinary post. It is a valid acceptance unless A insists for acceptance in
the prescribed manner.

Page 20 of 25
5. Acceptance of offer must be made by offeror.
Example: A applied for the headmastership of a school. He was selected by the
appointing authority but the decision was not communicated to him.However, one of
members in his individual capacity informed him about the selection. Subsequently, the
appointing authority cancelled its decision.A sued the school for breach of contract. The
Court rejected the A’s action and held that there was no notice of acceptance.
“Information by unauthorized person is as insufficient as overhearing from behind the
door”.

6) Acceptance must be expressed (or) implied:

• An acceptance may be given either by words (or) by conduct.
• An acceptance which is expressed by words (i.e.., spoken or written) is called
‘expressed acceptance’.
• An acceptance which is inferred by conduct of the person (or) by circumstances of the
case is called an ‘implied or tacit acceptance’.
.

7. Time limit for acceptance

• If the offer prescribes the time limit, it must be accepted within specified time.
• If the offer does not prescribe the time limit, it must be accepted within reasonable
time.
Example:A applied (offered) for shares in a company in early June. The allotment
(Acceptance) was made in late November. A refused to take the shares. Held, A was
entitled to do so as the reasonable time for acceptance had elapsed.

8. Acceptance of offer may be expressly (by words spoken or written); or impliedly

(by acceptance of consideration); or by performance of conditions (e.g.in case of a
general offer)

9. Mere silence is not acceptance of the offer

Example A offers to B to buy his house for Rs.5 lakhs and writes “If I hear no more
about it within a week, I shall presume the house is mine for Rs.5 lakhs. “B does not
respond. Here, no contract is concluded between A and B.

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10. However, following are the two exceptions to the above rule. It means silence
amounts as acceptance of offer.
• Where offeree agrees that non – refusal by him within specified time shall amount to
acceptance of offer.
• When there is custom or usage of trade which specified that silence shall amount to
acceptance.

11. Acceptance subject to the contract is no acceptance

If the acceptance has been given ‘subject to the contract” or subject to approval by
certain persons, it has not effect at all. Such an acceptance will not create binding
contract until a formal contract is prepared and signed by all the parties.

General Rules as to Communication of Acceptance22

1. In case of acceptance by post

Where the acceptance is given by post, the communication of acceptance is complete as
against the proposer when the letter of acceptance is posted. Thus, mere posting of letter
of acceptance is sufficient to conclude a contract. However, the letter must be properly
addressed and stamped.

2. Delayed or no delivery of letter

Where the letter of acceptance is posted by the acceptor but it never reaches the offeror,
or it is delayed in transit, it will not affect the validity of acceptance. The offerer is
bound by the acceptance.

3. Acceptance by telephones telex ortax

If the communication of an acceptance is made by telephone, tele-printer, telex, fax
machines, etc, it completes when the acceptance is received by the offeror. The contract
is concluded as soon as the offeror receives not hears the acceptance.

4. The place of Contract

In case of acceptance by the post, the place where the letter is posted is the place of
contract. Where the acceptance is given by instantaneous means of communication

22
Economic analysis of the law of contract by Posner and Eric
Page 22 of 25
(telephone, fax, tele-printer, telex etc.), the contract is made at the place where the
acceptance is received,

5. The time of Contract

In case of acceptance by post, the time of posting the letter of acceptance to the time of
contract. But in case of acceptance by instantaneous means of communication, the time
of contract is the time when the offeror gets the communication, the time of contract is
the time when offeror gets the communication of acceptance.

6. Communication of acceptance in case of an agent.

Where the offer has been made through an agent, the communication of acceptance is
completed when the acceptance is given either to the agent or to the principal. In such a
case, if the agent fails to convey the acceptance received from offeree, still the principal
is bound by the acceptance.

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CONCLUSION

Page 24 of 25
 BIBLIOGRAPHY

BOOKS
 THE INDIAN CONTRACT ACT, 1872
 Pollock & Mulla - The Indian Contract Act,
 Sanjiva Rows : The Indian Contract Act, 1872 and Tenders with Latest Case
laws
 The Principles of Law of Contract Paperback 2018
 Understanding laws –contracts
 Contract theory and limtations of the contract law
 status quo bias and defend contract rules

ARTICLES AND JOURNALS

 Simpson, A. W. B. (1985). "Quackery and Contract Law: The Case of the

Carbolic Smoke Ball". Journal of Legal Studies. 14 (2): 345–
389. doi:10.1086/467776. JSTOR 724433
 communication of revocation by Harris Lewis JSTOR/CONTRACTS
 Beale, Hugh; Arthur Hartkamp; Hein Kotz; Denis Tallon (2002). Cases,
Materials and Texts on Contract Law. Hart Publishing
 Economic analysis of the law of contract by Posner and Eric

WEBSITES
 www. Indiancaselaw.com
 www. Wikipedia.org
 https://www.lawteacher.net/cases

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