1. “Acceptance must be absolute, and must correspond with the terms of the offer.” Illustrate.

1. “Acceptance must be absolute, and must correspond with the terms of the offer.” Illustrate.

1.     Introduction

To constitute a contract, there must be an offer by one person to another and an acceptance of that offer by the person to whom it is made. An offer is a promise to do or renounce from doing some specific thing. The party making an offer to another party is called the offeror. The offeree is party to whom the offer is made. On the other hand, Acceptance is defined as the offeree’s expression of assent or agreement to the exact term of offer. To be effective, an acceptance must be unconditional and legally communicated. A purported acceptance that lacks one or more of those elements will generally not bring about a binding contract between the parties.

This essay will illustrate about the importance of acceptance in terms of offer and also the necessary terms of offer.

2.     What is Offer?

An offer is a promise to do or not to do something that is capable of acceptance by another person. Offer may be express or may be implied from the circumstances. It can be made in two ways

  • · By word, spoken or written
  • · By conduct

When an offer is made by stating so in words or in written, it is called an Express offer. When an offer is implied from the conduct of a person, it is called an Implied offer. However, there are some minimum requirements for a sufficient offer. Those are:-

  • · The proposal must visible intent to contract
  • · The proposal must contain the essential and definite terms
  • · The proposed activity must be legal
  • · The proposal must be communicated to the offeree

3.     What is Acceptance?

An offer can be accepted only by the person or persons for whom the offer is intended. An offer made to a particular person can only be accepted by him because he is the only person intended to accept. There are also four major requirements for an acceptance. Those are:-

  • · Must be intent[1]
  • · Mirroring the offer[2]
  • · Performance of acceptance[3]
  • · Communication[4]

4.     Relationship between Offer and Acceptance

There is a strong relationship between offer and acceptance. Offer along and acceptance along are “inactive”, “powerless”. When separate they cannot lead to the formation of a contract. Acceptance must correspond to the offer. If the acceptance does not reflect the offer, then it is said not to be an acceptance but a counter-offer instead. But an offer together with acceptance leads to a contract which is enforceable by the court, provide the other essential elements of contract.

5.     Rules Regarding Acceptance of an Offer

Acceptance of an offer to be legally effective must satisfy some requirements. Without those requirements there is no contract. Those are:-

I. Must be absolute and unqualified: In order to be legally it must be an absolute and unqualified acceptance of all the terms of the offer. If there is any variation, even on an unimportant point, between the terms of the offer and the terms of the acceptance there is no contract.

Illustration: John offered to Nash his car for TK 550000. Nash accepted the offer and tendered TK 450000 and promised to pay the rest of 100000 by monthly installments of TK 20000. Held there was no contract, as there was no unqualified acceptance.

II. Must be given only by the person to whom the offer is made: An offer can be accepted only by the person or persons to whom it is made and with whom it imports an intention to contract. It cannot be accepted by the other person without the consent of the offeror.

Illustration: A sold his business to B without disclosing the fact to his customer. On the other hand, C who had a running account with A sent an order for the supply of goods. B wants C to pay his previous payment. But, C refused to pay the price. It is because that there is no contract between B and C. C never made any offer to B and such C is not liable to pay the price.

III. Must be expressed in some usual manner: If the offeror prescribes no mode of acceptance, the acceptance must be communicated according to some usual and reasonable mode. The usual modes of communication are by word of mouth and by conduct. When acceptance is given by word or written, it is called express acceptance. When acceptance is given by conduct than it is called implied acceptance.

Illustration: 1. Asif offers to buy Arif’s mobile at TK 5000. Arif may accept this offer by stating so orally or by writing a letter to that effect. (Express Acceptance)

Illustration: 2. A company offered TK 20000 to anyone who contracted influenza after using their water daily for 2 weeks. Rashed used the water but nevertheless got influenza. He notified them for his acceptance of the offer. Held, the use of the water by Rashed constituted acceptance of the offer by conduct.

IV.  Mental acceptance or uncommunicated assent does not result in a contract: No contract is formed if the offeree remains silent and does nothing to show that he has accepted the offer. Acceptance must be communicated to the offeror or shown by contract.

Illustration: Hemal offered to buy Nahid’s bike for TK 50000, saying, “if I hear no more about him I shall consider the horse as mine at TK 50000.” Nahid did not reply. Held there was no contract because there was no communication of acceptance.

V. The mode of acceptance: When the promisor prescribes a particular mode of acceptance, the offeree must follow the particular mode of acceptance. If the offeror says, “acceptance to be sent by telegram”, the offeree must send a telegram. If the offeree failed to follow the prescribed mode of acceptance then it’s up to the offeree whether accept it or not.

Illustration: Nazmul offers to buy a certain quantity of brick from Hasan at a certain price and asks Hasan to send a telegram if he accepts. Hasan writes a letter accepting the offer. Nazmul may insist on a telegram from Hasan; but if Nazmul does not so insist, the acceptance is good.

VI.  Must be given within a reasonable time and before the offer lapses: If the offeror prescribes a time, the acceptance must be given within the time. If no is prescribes then the acceptance must be given within reasonable time.

Illustration: Shovon applied for certain share in a company in March but allotment was made in October and he refused to accept the allotted shares. It was held that Shovon could refuse to take shares because the reasonable period during which the offer could be accepted had elapsed.

VII. Must be communicated by the acceptor: For the acceptance to be valid, it must not only be made by the offeror but must also be communicated by, or with the authority of, the offeree to the offeror.

Illustration: Zamil was a candidate for the post of operation manager of a company. The management of the company passed a resolution selecting him for the post. A member of management informed Zamil that he had been selected, Zamil received no other intimation. Subsequently, resolution was cancelled and Zamil was not appointed for the post. He sues against the management. The court held that in the absence of an authorized communication from the management there was no contract.

VIII.                     Must succeed the offer: Acceptance must be given after receiving the offer. It should not precede the offer.

Illustration: In a company shares were allotted to a person who had not applied for them. Subsequently he applied for shares being unaware of the previous allotment. It was held that the allotment of shares previous to the application was invalid.

IX.  Rejected offers can be accepted only if renewed: Offer once rejected cannot be accepted again unless a fresh offer is made. If the terms and conditions changed then those offer can be accepted.

X.     Offer lapses by the death or insanity of the offeror or the offeree before acceptance: If the offeror dies or become insane before acceptance, the offer lapses provided that the fact of his death or insanity comes to the knowledge of the acceptor before acceptance. An offeree’s death or insanity before accepting the offer puts an end to the offer and his heirs cannot accept the offer for him.

6.     Conclusion

After analyzing all the fact it’s quite clear that without the acceptance no contract can be made. To make a meaningful contract, there must be an offer by one person to another and an acceptance of that offer by the person to whom it is made. As we have already seen, acceptance is the moment of contract. Acceptance determines when a contract comes into being. In some cases it may also be necessary to determine where a contract comes into being. The place of acceptance may answer this. We see that an acceptance must be in response to an offer – in other words you cannot accept if you did not know of the offer. This rule does not sit very easily with the objective test which is supposed not to look into the minds of the parties. We also see that there are very precise rules about how the acceptance must correspond with the offer – in other words there cannot be any discrepancy between what is offered and what is accepted. We also see that acceptance must generally be communicated. This is a matter of common sense but we have already seen that communication is not absolutely essential. It is not necessary in the case of unilateral contracts. Acceptance of an offer creates a legally binding contract provided that any persisting prerequisites are satisfied. An offer may be accepted any means, however if the offer specifies the means by which it must be accepted, then only that method will suffice to perfect the formation of the contract.

BIBLIOGRAPHY

1.      Roger E. Meiners’s  (1994)“The Legal Environment of Business” , 5th Edition

2.      Edward J. Conry’s (1986)“The Legal Environment of Business”

3.       M C Kuchhal’s (2007) “Mercantile Law”, 6th Edition

4.       Arun Kumar Sen’s (2006) “Commercial Law and Industrial Law”, 26th Edition

5.       Business Law CIMA

6.       http://chestofbooks.com/business/law/American-Commercial-Law-Series/Chapter-3-Offer-And-Acceptance-1-What-Constitutes-A-Nec.html

7.       http://en.wikipedia.org/wiki/Offer_and_acceptance

8.       http://law.anu.edu.au/colin/Lectures/off_acc.htm

9.       http://www.gillhams.com/dictionary/538.cfm

10.   http://www.legalnorms.com/offer-and-acceptance.php

11.   http://www.google.com

12.   http://en.wikipedia.org

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[1] Acceptance must be given only by the person to whom the offer is made. It indicates an intention to accept the offer.

[2] The acceptance must match the terms and condition of the offer.

[3] Acceptance must satisfy the necessary requirements that are related to the manner of acceptance.

[4] For an acceptance to be valid, it must not only be made by the offeree but must also be communicated by the authority of the offeree to the offeror.

5See, Edward J. Conry, ‘The Legal Environment of Business’ P-203