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Acceptance – CA Foundation Business Law

Introduction

Acceptance is the ultimate key to make a promise. This promise leads us to a valid contract. So it is clear that acceptance is a vital element for a valid contract. But what acceptance means? Let’s understand the meaning of acceptance and legal rules regarding valid acceptance. (Acceptance – CA Foundation Business Law)

Meaning of Acceptance

Section 2(b) of the Indian Contract Act 1872, When the person to whom the proposal is made signifies his assent thereto, proposal is said to be accepted. The proposal, when accepted, becomes a promise

So it is clear from the definition that the person to whom the offer is given, gives his consent on such offer, this consent is known as acceptance. For Example, Rancho gives an offer to Raju to buy his car. If Raju accepts the offer of Rancho, it will be called that Raju has given his acceptance.

Further, the offeree must have knowledge of the offer while accepting it. Any offer cannot be considered accepted if the offeree was unaware of the offer while making acceptance.

For Example, Mohan sent a letter to Sita that if she loves her she will come to the park in the evening. He sent the letter to Sita but was not delivered to her due to the wrong address. In the evening Mohan saw Sita in the park. This will not be considered as acceptance as Sita was not aware of the proposal.

Legal rules regarding a valid Acceptance

Only accepting any offer is not enough to make a valid contract. The offeree must need to follow some rules which make an offer valid. So now let’s understand the legal rules or essentials of a valid acceptance.

1. An offer can be accepted by the offeree

The offer can only be accepted by the offeree i.e. the person to whom the offer was made. Further, in the case of a General offer, the offeree is the public therefore any person from the public can accept the offer. For Example, Ram gives an offer to Shyam to buy his watch. The wife of Shyam sent acceptance on the behalf of Shyam. This acceptance is not valid as only the offeree i.e. Shyam can accept the offer.

2. Acceptance must be absolute and unqualifi­ed

The offeree must accept the offer without any condition or modification. This means the acceptance must in the same manner as asked by the offeree. Any addition of any condition or modification will rise to counter offer which will eliminate the original offer. For Example, if in the above example Shyam gives his acceptance adding a condition that in return Ram also needs to buy his watch. This acceptance is not valid.

3. The acceptance must be communicated

An acceptance must be communicated to the offeror. Further, it must be communicated in the mode or form prescribed in the offer or any other suitable mode if the offer doesn’t specify any form or mode. For the completion of acceptance on the part of the offeree, the offeror must get to know about the acceptance.

Assume Ram sent an email to Shyam asking that would he like to maintain accounts of his business. Shyam accepted the proposal and sent it to Ram but the email was not sent due to some technical error. Here the acceptance will not be considered as not sent of Ram.

4. Acceptance must be in prescribed mode

The acceptance must be given in the mode prescribed in the offer. If the acceptance is given in any mode other than mentioned in the offer, the offeror has the right to accept or reject the offer. For example, Ananya makes an offer to Siddharth for joining her business. Further, she asked him to send his acceptance by mail. Siddharth accepted the proposal but communicated through WhatsApp. Here Ananya can accept or reject the offer as she likes.

5. Time

The offer must be accepted in the time specified in the offer. If no time is specified then it must be accepted in a reasonable time. There is no clarification in the Act regarding a reasonable time. But in the general sense, it must before lapsing the offer. For example, Ram offers Shyam to start a new business. Ram asked Shyam to accept the offer within 15 days. Here Shyam must give his acceptance in 15 days. Acceptance given after 15 days will not be considered as valid.

6. Mere Silence is not acceptance

Mere silence or failure to answer cannot be considered as acceptance unless the situation makes it obvious to be considered as an implied acceptance.

For example, Ram went to a shop for buying groceries. The Shopkeeper asked him to buy the new crockery set also. Ram said nothing. The shopkeeper packed that crockery with other items and Ram took it home. Here the silence of Ram will be considered as an acceptance further he also given implied acceptance by bringing the crockery at home.

7. Implied acceptance

Acceptance can also be given by conduct or action instead of words. This acceptance is equally valid same as written or verbal acceptance.

For example, Ram went to a food Shop where he came to know about a challenge given by the shop owner that anyone who will finish his largest pizza, will be rewarded by Rs. 5000. Ram purchased and finished the whole pizza. Here even Ram said nothing to the shop owner but he accepted the proposal by finishing the whole pizza hence he is entitled to reward.

Conclusion

Hence we have seen that only accepting the proposal is not enough but it must be accepted as according to the offer and further communicated to the offeror in the mode or form required in the offer.

Acceptance – CA Foundation Business Law

CA Foundation Paper-2 Business Law- The Indian Contract Act 1872-Unit-1 Nature of Contract

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