ESSENTIALS OF A VALID ACCEPTANCE
In order that acceptance of an offer can result in a contract, the acceptance must satisfy the followingrequirements: —
1. Acceptance should be communicated by the offeree to the offeror.
2. Acceptance should be absolute and unqualified.
3. Acceptance should be made in some usual and reasonable manner, unless the proposal prescribes the manner of acceptance.
4. Acceptance should be made while the offer is still subsisting.
ACCEPTANCE SHOULD BE COMMUNICATED
According to section 2(b) when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. It means that the offeree must signify his assent, or communicate the acceptance.
Further, according to section 3, The communication of acceptance is deemed to be made by any act or omission of the party accepting, by which he intends to communicate such acceptance, or which has the effect ofcommunicating it.
When the parties are face to face communication could be oral. When they are at a distant place communication could be made by post, by telegram, by a message on phone, through a messenger, or in any other reasonablemanner.
Sometimes the conduct of a person might indicate his assent. For example, when a passenger boards a bus andtravels thereby, he impliedly assents to pay the necessary fare.
For a valid contract the acceptance must be communicated and moreover, such communication should be madeto the offer or.
This point may be explained by referring to the case of FELTHOUSE V. BINDLEY. (1863) 7 L.T. 835.]
Felthouse wrote a letter to his nephew offering to buy his horse for £ 30-15 sh. In the letter containing the offer itwas also mentioned : "If I hear no more about the horse I shall consider the same to be mine at £ 30-15 sh.
"The nephew did not reply this letter. He, however, told his auctioneer, Bindley, that he wanted to reserve thishorse for his uncle and, therefore, desired that the horse be not sold by the auctioneer.
The auctioneer (Bindley) disposed of the horse by mistake.
Felthouse sued Bindley for the tort of conversion on the plea that Felthouse had become the owner of the horsewhich Bindley had disposed of.
It was held that since the nephew had not communicated the acceptance to Felthouse, no contract had arisen in this case, and therefore, Felthouse had not become the owner of the horse and as such his action for conversion failed.
This case also explains that the intention of the nephew to accept the offer of his uncle, or the communicationof his intention to the auctioneer, was not enough to create the contract.
Another point explained by this case is that the offeror cannot impose upon the offeree a duty to reply, andtherefore, an offeror cannot say that failure to reply will be deemed to be the acceptance of the offer.
The offeree has a right to make the offer lapse by not being accepted within the prescribed time or the reasonable time, as the case may be. Mere silence cannot be regarded as acceptance of the offer.
COMMUNICATION MUST BE MADE BY THE OFFEREE OR HIS AUTHORISED AGENT (ONLY OFFEREE CAN ACCEPTTHE OFFER)
In order that the acceptance can be treated as valid, it is necessary that the same must be communicated to theofferor either by the offeree, or by some duly authorised person on his behalf.If the communication is made by an unauthorised person, it does not result in a contract.
POWELL V. LEE, [(1908) 99 L.T. 284.]
Powell was one of the candidates for the post of headmaster of a school. The Board of Managers passed aresolution selecting him for the post. No communication about this decision was made to Powell by the Board.
One of the members of the Board who had not been authorised to communicate this decision, acting in hisindividual capacity, informed Powell about his selection for the post.
Subsequently, the Board of Managers met again and decided to cancel the appointment of Powell and appointanother candidate Parker, in Powell's place.
Powell sued Lee, the Chairman of the Board of Managers, for the breach of contract.
It was held that since the resolution passed by the Board was not communicated to Powell by the Board, or anyauthorised person on its behalf, it could not give rise to a contract. Powell's action, therefore, failed.
Similar was also the decision in the case of C. Jayasree v. Commissioner, M.C.H. [A.I.R. 1995 A.P. 312.]
COMMUNICATION OF ACCEPTANCE NOT NEEDED IN ACCEPTANCE BY CONDUCT
As a general rule no contract can arise unless and until the acceptance has been communicated to the offeror.In exceptional cases the terms of the offer may be such that they waive the requirement of communication of acceptance.
In such cases a certain kind of conduct on the part of the offeree may be treated sufficient to create a contract. If that is so, the contract could be created even without communication of acceptance.
According to Sec. 8, "Performance of the conditions of a proposal is an acceptance of the proposal.
" CARLIIL V. CARBOLIC SMOKE BALL CO. [(1893) 1 Q.B. 256.]
In this case the defendants were the manufacturers of a product known as "Carbolic Smoke Ball". This was a medical preparation and was meant to be used as preventive remedy against influenza. In the advertisement of their product they stated that they would award £ 100 to any one who, after having used the Smoke Ball threetimes a day for two weeks, in accordance with their printed directions, contracted influenza.
The plaintiff (Mrs. Carlill) relying on the advertisement purchased the Smoke Ball and used it in accordance with the stated directions. She still caught influenza. In her action to claim the reward of £ 100 one of the defencespleaded was that she had not communicated her acceptance of the offer and, therefore, there was no contract.
It was held that when the offeror, while making the offer, expressly or impliedly, indicated that there is no need ofintimating the acceptance and only performance of the conditions of offer would be enough, acting upon the stated conditions results in a contract. She was held entitled to claim the reward announced by the defendants.
Bowen L.J. stated the position on this point as under"as an ordinary rule of law, an acceptance of an offer ought to be notified to the person who makes the offer in order that the two minds may come together. But as notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice to himself if he thinks it desirable to do so.
L.I.C. of India v. R. Vasireddy A.I.R. 1984 S.C. 1014.
In above case, the question arising before the Supreme Court was, whether receipt and retention of the insurance premium and the delay in replying to the proposal could be treated as the acceptance thereof.
In this case the deceased filed a proposal of insurance on his life for Rs.50,000 on 27.12.60. He issued two cheques for Rs. 300 and Rs. 220 respectively, which were get encashed by the L.I.C. by 11.1.1961.
The deceased died the next day, le„ on 12.1.1961. In an action by the widow of the deceased to claim the amount, the L.I.C. contended that the contract of insurance had yet to be completed.
It was averred that since the proposal had yet to be accepted by the Divisional Manager, according to the prescribed procedure in such cases, the amount of the two cheques had been kept only in deposit in the suspense account and had not been credited towards the premium account, and therefore, the L.I.C. was not bound to pay the insured sum Rs. 50,000.
The contention of the L.I.C. was accepted by the Supreme Court and since the contract had not yet been concluded, the L.I.C. was not liable to pay the sum claimed.
It was observed Though in certain human relationship silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance as prima facie, acceptance must be communicated to the offeror."
L.I.C. V. BRAZINHA D' SOUZA, A.I.R. 1995 Bom. 223.
It has been held that mere acceptance of the insurance premium and issuance of the receipt does not mean acceptance of the proposal. If the premium amount is kept in suspense account until compliance with certain formalities, there is no concluded contract so as to make L.I.C. liable in respect of such a proposal.
