What is Acceptance

According to the Indian Contract Act, 1872, an offer is deemed to be completed only when it is followed by an acceptance from the party/parties to whom the offer has been made. Let’s make it more clear through acceptance meaning, examples, conditions and rules of acceptance.

Acceptance Meaning

As per the Indian Contract Act 1872, Section 2 (b), acceptance is defined as “When the person to whom the proposal has been made signifies his assent thereto, the offer is said to be accepted. Thus the proposal when accepted becomes a promise.”

When an offeree (person to whom the offer is made) gives his unconditional consent to the offer made to him by the offeror, it is considered as an acceptance given by the offeree. Acceptance is important for an offer to be considered complete and to become a promise. Let’s give you an example of the same.

Example: A makes an offer to B for buying his house for 50 lakh. B agrees to this offer. This is called acceptance of the offer.

An offer before acceptance does not create any legal obligations between the parties but once the offer is accepted, it becomes a promise and it is irrevocable. This means that after acceptance is given by the offeree, it creates legal obligations between the concerned parties, with respect to the offer made. Once acceptance is given and communicated, it cannot be withdrawn or revoked. However, the offer can be revoked before acceptance is given.

Types of Acceptance

  • Expressed Acceptance

When acceptance is given by the offeree in a written or oral form, it is considered as an expressed acceptance of the offer.

Example: A makes an offer in person orally to B for buying his house for 50 lakh. B sends an email to A, giving his acceptance to the offer. This is an expressed acceptance.

  • Implied Acceptance

If the acceptance is conveyed through the conduct/behaviour/any other mannerism of the offeree, it is called an implied acceptance.

Example: A buys some products in the supermarket. This is an implied acceptance of A to pay the price that the supermarket is asking for the products. 

Conditional acceptance is also known as qualified acceptance. In this case, the offeree agrees to give his acceptance to the offer only if certain changes are made to the terms and conditions of the offer. This acceptance now becomes a counteroffer which must be then accepted by the offeror for it to become a promise. 

Example: A agrees to make the payment to B for the renovation of his house if the work is completed on the due date. 

  • Conditional Acceptance

Rules Regarding Valid Acceptance

1. Acceptance Can Only be Given by the Offeree

Acceptance of an offer can only be given by the person to whom the offer has been made. Self-acceptance meaning states that the acceptance given by the offeree only is considered valid. A third party cannot accept the offer without the knowledge of the offeree. If the offeree has authorized an agent to give the acceptance on his behalf, then the acceptance is considered valid.

Case Law: Powell vs Lee

In this case, the plaintiff had applied for the job as a headmaster and one of the school managers acted without authority, conveying to him that he has been appointed. Later, the managers decided to appoint someone else on the post. The plaintiff sued the school for a breach of contract but the verdict for the case stated that there was no contract as the manager did not have the authority to give acceptance.

2. Acceptance Must be Communicated

Acceptance must always be communicated to the offeror for the proposal or offer to become a binding contract. Before giving his acceptance, the offeree must be aware of the fact that an offer has been made to him. Acceptance cannot be communicated without the knowledge of the offer. The intent to give acceptance is not considered valid in case it is required for the acceptance to be communicated clearly. 

Example: A sends an offer letter to B for buying his house for 50 lakh. B signs the offer but does not send the letter back. In this case, acceptance has not been communicated. Hence, it is not valid.

3. Acceptance Must be Given in the Prescribed Mode

Acceptance must be given in the prescribed/specified manner that has been stated in the offer. In case a specific mode has not been mentioned, acceptance must be made in a reasonable manner that is used in the normal course of business. In cases where a specified form of giving acceptance is not stated, silence is not considered a form of acceptance.

FAQs (Frequently Asked Questions)

Q1. What is the Postal Exception to the Rules of Communication of Acceptance?

Ans: In case of acceptance sent by post, it comes into effect as soon as the letter is posted and not when it is received by the offeror. In this exception, acceptance becomes valid even before it has been communicated to the offeror. Acceptance sent by post will also be considered valid even if the letter does not reach the offeror after it has been posted.  The postal rule is applicable only in cases where it has been specified that acceptance must be sent by post.

Q2. Can Conditional Acceptance be Considered Valid?

Ans: Acceptance given by the offeree must be unqualified and unconditional. If the offeree changes the terms of the offer, it becomes a counter-offer rather than an acceptance.

Case Law: Union of India vs Bahulal

In this case, X offered to sell his property to Y for 10 thousand rupees. Y offered to pay eight thousand rupees for the property. Since the acceptance given by Y is not unqualified, it will not be considered a valid acceptance.

Q3. What is a Reasonable Time to Communicate Acceptance?

Ans: Acceptance must be given within the stipulated time stated in the offer. If no such time is mentioned in the offer, acceptance must be given within a reasonable time or before the offer expires. In such cases, a reasonable time will depend on the nature of the offer and similar circumstances. Though silence is not considered an acceptance of the offer, there is an exception to this rule with respect to time. Non-acceptance of the offer must be communicated within 3 weeks of the date from which the offer is made or else silence shall be considered as acceptance.