How does communication of an offer differ from communication of acceptance?

Question: How does communication of an offer differ from communication of acceptance? Support your answer by reference to leading cases. [MPJS 2010]

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Answer

Section 4 of The Indian Contract Act,1872 lays down the provision as to when communication is said to be complete.

The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

For example: A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter.

The communication of an acceptance is complete,— as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer.

For example: B accepts A’s proposal by a letter sent by post. The communication of the acceptance is complete, as against A when the letter is posted; as against B, when the letter is received by A.

In general, an offer is effective when, and not until, it is communicated to the offeree. It follows that there can in general be no acceptance in ignorance of an offer. Since, an offer and acceptance would together lead to a promise that later leads to a binding contract, a lot of care is required before accepting an offer.

If the bogey of acceptance is put out, the entire train would derail. Thus all the legal requirements of an “Acceptance” need to be fulfilled for a contract to be born.

The communication of the acceptance is a must and that too for the original offer. If the offer is subsequently changed, the changed offer should be accepted. Unless that happens, the binding contract won’t arise.

In the case of Binani Metals Ltd. v. Union Of India [II (2005) BC 246], the court has observed that: A valid, binding and concluded contract would come into existence only if the offer made by the tenderer is accepted. As acceptance of an offer is a final and unequivocal expression of an assent to the terms of an offer. The objective test of an agreement applies to an acceptance no less than to an offer. Where the offer is made in alternative terms, the acceptance must make it clear as to which set of terms the assent is directed.

A communication may fail to take effect as an acceptance because it tends to vary the terms of the offer. Such a reply is not an acceptance, but it may, on the contrary, be a counter offer which the original offer can then accept or reject.

Thus, to conclude, if an acceptance is given with prerequisites to be fulfilled, the parties cannot be termed to be at ad- idem, hence, there can be no complete contract. So, if the acceptance is conditional, the offeror can always withdraw the offer at any time.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

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