Definition and essentials of valid Acceptance

In one minute

Acceptance is the offeree's "yes" to an offer. When an offer is accepted, it becomes a promise (section 2(b)).

The "yes" must be absolute and unqualified. It must be communicated, given in the right way, and given while the offer is open. The person accepting must also know of the offer.

A "yes, but" is not acceptance. It is a new offer. This single rule decides many exam problems and many real deals.

Legal provision

• Section 2(b): "When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise."
• Section 7: to turn a proposal into a promise, the acceptance must be absolute and unqualified. It must also be expressed in some usual and reasonable manner, unless the proposal prescribes the manner.
• Section 8: performing the conditions of a proposal, or accepting any consideration offered with it, is an acceptance.
• Section 9: if acceptance is made in words, the promise is express. If it is made in any other way, the promise is implied.
• Section 6: a proposal that has been revoked can no longer be accepted.

Meaning and definition

Acceptance is the signifying (showing) of assent by the person to whom the proposal is made. The moment it is validly made, the proposal becomes a promise. The person who made the proposal is the promisor, and the person who accepted is the promisee (section 2(c)).

The law sets strict rules for acceptance because the offeror is bound by it. The offeror must know exactly what has been agreed. A reply that changes the terms does not give the offeror that certainty, so the law treats it as a fresh offer.

1. 1. Is the offer still open? (section 6)No: a lapsed, revoked or rejected offer cannot be accepted.
2. 2. Does the offeree know of the offer?No: doing the act by chance is not acceptance.
3. 3. Is the reply absolute and unqualified? (section 7(1))No: it is a counter-offer. The original offer is gone.
4. 4. Is it in the prescribed or a usual and reasonable manner? (section 7(2))No: the proposer may insist on the prescribed manner within a reasonable time.
5. 5. Was it communicated to the offeror, or made by performance? (sections 3, 8)No: silence or a private decision is not acceptance.
6. 6. ResultA valid acceptance. The proposal becomes a promise (section 2(b)).

Detailed explanation

Each requirement of a valid acceptance is explained below with an example.

1. It must be absolute and unqualified

Section 7(1) requires that the acceptance match the offer exactly. A reply that adds a condition or changes a term is a counter-offer (a new offer made in reply). A counter-offer rejects the original offer, which then cannot be accepted. Hyde v. Wrench is the classic case.

2. It must be communicated to the offeror

A decision to accept that is kept in the mind is not acceptance (section 3). The acceptor must do something that shows assent to the offeror. The offeror cannot make silence the mode of acceptance, as Felthouse v. Bindley shows.

3. It must follow the prescribed mode, if any

Under section 7(2), the acceptance must be in a usual and reasonable manner unless the proposal prescribes one. If the proposal prescribes a manner and the acceptance is made differently, the proposer may insist on the prescribed manner within a reasonable time after hearing of the acceptance. If the proposer does not insist, the proposer is taken to have accepted the acceptance.

4. It must be given while the offer is open

An offer ends by revocation, by lapse of time, by failure of a condition, or by the death or insanity of the proposer (section 6). A later acceptance accepts nothing. The same is true if the offeree has already rejected the offer. The ways an offer ends are explained in the note on revocation.

5. The acceptor must know of the offer

Assent can only be given to something known. A person who does what an offer asks, without knowing of it, has not accepted it. This was decided in Lalman Shukla v. Gauri Dutt.

6. It cannot come before the offer

There must be something to accept. A "yes" given before the offer is made is of no effect.

7. It must be made by the right person

A specific offer can be accepted only by the person to whom it is made. A general offer can be accepted by anyone who performs its conditions.

Acceptance by conduct and implied acceptance

• Acceptance by performance (section 8). Performing the conditions of a proposal is an acceptance. This is how a general offer is accepted. Carlill v. Carbolic Smoke Ball Co. held that Mrs Carlill accepted by using the smoke ball as directed. She did not need to tell the company.
• Acceptance of consideration (section 8). Accepting any consideration offered with a proposal is also an acceptance.
• Express and implied acceptance (section 9). Acceptance in words is express. Acceptance by any other conduct is implied.

Don't confuse: acceptance and counter-offer

Students often write that a reply with a small change is still an acceptance. It is not. The table shows the difference.

Point	Acceptance	Counter-offer
Terms	Matches the offer exactly	Changes or adds a term
Effect on original offer	Turns it into a promise	Rejects it, so it ends
Result	Agreement at once	A new offer awaiting acceptance
Section	2(b), 7(1)	Follows from 7(1) and case law

Common mistakes

• Calling "yes, but at a lower price" an acceptance.
• Saying the offeror can fix silence as the mode of acceptance.
• Forgetting that a general offer needs no communication of acceptance, only performance.
• Missing the knowledge rule. Doing the act is not enough if the person did not know of the offer.

Apply it

Leading case laws

• Hyde v. Wrench (1840)

  Facts. Wrench offered his farm for 1,000 pounds. Hyde offered 950 pounds, and Wrench refused. Hyde then wrote that he agreed to pay 1,000 pounds, and Wrench did not respond. Hyde sued for specific performance.

  Principle. The offer of 950 pounds rejected the original offer. The later agreement was only a new offer.

  Why it matters. It is the standard authority that a counter-offer ends the original offer.

• Felthouse v. Bindley (1862)

  Facts. An uncle offered his nephew 30 pounds 15 shillings for a horse and wrote that he would consider it his if he heard no more. The nephew did not reply, and the auctioneer sold the horse.

  Principle. The uncle could not impose a sale on the nephew by making silence an acceptance.

  Why it matters. It supports the rule that silence is not acceptance.

• Lalman Shukla v. Gauri Dutt (1913)

  Facts. Gauri Dutt sent his servant Lalman Shukla to look for his missing nephew. After Lalman left, Gauri Dutt announced a reward of Rs 501. Lalman found the boy, learned of the reward later, and sued.

  Principle. Lalman did not know of the offer when he acted, so he could not be said to have accepted it.

  Why it matters. It fixes the rule that the acceptor must know of the offer.

• Carlill v. Carbolic Smoke Ball Co. (1893)

  Facts. A company advertised a reward of 100 pounds for anyone who used its smoke ball as directed and still caught influenza. Mrs Carlill used the ball, caught influenza, and sued.

  Principle. Using the ball as directed was acceptance of a general offer. No separate notice was needed.

  Why it matters. It is the standard case on acceptance by performance under section 8.

How to write this answer in the exam

Key points to remember

• An accepted proposal becomes a promise (section 2(b)).
• Acceptance must be absolute and unqualified (section 7(1)).
• A counter-offer rejects the original offer (Hyde v. Wrench).
• Silence is not acceptance (Felthouse v. Bindley).
• The acceptor must know of the offer (Lalman Shukla v. Gauri Dutt).
• Performing the conditions is an acceptance (section 8).

Quick self-test

Related topics

• Definition and essentials of a valid Contract
• Definition and essentials of a valid Offer
• Communication of Offer and Acceptance
• Revocation of Offer and Acceptance through various modes including electronic medium