Acceptance of offer

Submitted to:
Mr. Gyan Darshan Bhattarai
Nepal Law Campus
BALLB program, Faculty of Law, Tribhuvan University
Exhibition Road, Kathmandu
Subject: Law of Contract-I

Submitted by:
Rebati Thapa Magar
Sec: B, Roll. No. 66
4th Semester
Nepal Law Campus
Abstract
Contract is an agreement consisting of offer and acceptance, offer is a proposal put forward by the
offeror to the offeree to do or not to do something, accepting proposal is act of providing consent
or assent. An agreement to be enforceable, it must contain various elements which are called
essential elements of a valid contract. Among various elements, one of them is offer and
acceptance. In starting point of the contract, there is offer and acceptance which gives birth to
contractual obligations or right of parties. Purpose of this paper is to provide a insight on concept
of acceptance of offer. Additionally, this paper provides understanding on meaning of acceptance,
rules regarding valid acceptance, communication of acceptance, revocation and termination of
acceptance, legal provision and case laws.

Thus, by the end of the paper, one will have complete knowledge of acceptance of offer and the
study has been made on the basis of empirical method.

Concept of Acceptance of Offer

An unequivocal declaration of consent to the terms put forward by the offeror is called an
acceptance. In simple sense, acceptance means “To accept, To agree, To receive or To do
something with consenting mind or receive with favour or approval. Acceptance is essential
elements for a legally binding agreement. Without acceptance of an offer no contract can come
into existence. When the offeree signifies his assent to the offeror, it is said to be accepted.1 The
offeree's expression of consent to the terms of the offer is known as acceptance. Offers and
acceptances are both essential components of contracts because an offer cannot constitute a
contract without a proper acceptance.
There are different definition of acceptance given by scholar, Indian contract Act and Nepalese
Civil Code which are mentioned below:

Anson defines, Acceptance of an offer is the expression, by words or by conduct, of assent to the
terms of the offer in the manner prescribed or indicated by the offeror2 .

1
SATYA NARAYAN KALIKA, The Law of Contract (Ed.2013), Pairavi Prakashan, P.35-36
2
J. BEATSON, A. BURROWS and J. CARTWRIGHT, Anson’s Law of Contract (Ed.2010), Oxford University Press, P.40
Section 504 (2) of Muluki Civil Code mentions, “Contract shall be deemed to have been concluded
once the person to whom an offer has been made by another person communicates his or her
acceptance thereto”.3

Section 504 (3) of Muluki Civil Code, 2074 defines that “Acceptance means the acceptance given
by the person to whom the offer has been made in the same meaning in which the offer is made”4.

Sec 2 (b) of the Indian Contract Act, 1872 defines “when the person to whom the proposal is made
signifies his assent thereto, the proposal is said to be accepted”5.

Thus, an acceptance refers to an assent or consent in response to offer by offeree with intention to
create legal relationship as sought by offeror in the same manner or modes as proposed in an offer.
It is considered that agreement to the terms of an offer that, provided certain other requirements
are fulfilled, converts the offer into a legally binding contract6.

Rules Regarding Valid Acceptance

An offer, to be valid it must fulfill certain condition just like that, to be a valid acceptance it must
encompass certain condition and such conditions are called rules regarding valid acceptance which
are as follows:

Acceptance may be express and implied 7: Once offer is put forward by the offeror,
acceptance can be given by the offeree either in express or implied form. Express acceptance can
be regarded as one given through writing, words or any other such means. Sec 508(3) of Muluki
Civil Code has mentioned about the implied acceptance.

It must be absolute and Unconditional / Unqualified 8: There must be an absolute

and unconditional acceptance of all the terms of the offer. Even the slightest deviation from the
terms of the offer makes the acceptance invalid9. Sec 510 (F) of Muluki Civil Code, 2074 can be
taken as example of it.

3
MULUKI CIVIL CODE (2074), Sec. 504(2)
4
Id. at Sec. 504(3)
5
INDIAN CONTRACT ACT (1872), Sec. 2(b)
6
BIBEK KUMAR PAUDEL, Law of Contract General Principles and Practices (Ed.2069), MM Publication, P.33
7
BIBEK KUMAR PAUDEL, law of Contract General Principles and Provisions (Ed.2069), MM Publication, P.34
8
Id. at para 5
9
Prof.Dr. SHAMBHU PRASAD KHANAL, Law Of Contract (Ed.2015), Pratyush Publication, P. 38
Acceptance must be communicated to offeror10: Once the offer is accepted by
offeree, such acceptance must be communicated to the offeror, mere intention is not sufficient to
constitute acceptance. Sec 508, especially (2) has mentioned about it. We can take the example of
case law, Powell vs Lee11, 1908. However, in Unilateral Contract communication is not necessary
and it is exception of this rule.

Acceptance must be in prescribed or usual mode 12

: If the offeror has required
that the offer be accepted in the specific manner. If no such method is specified, it must be in a
rational way that would be used in regular business operations.

Acceptance by whom (who can accept)13 : Acceptance can only be given by the
person to whom it has been made. No third party may accept the offer without the offeree's
knowledge. However, authorized person can give consent on presented offer. Muluki Civil Code
2074, Sec 504 3(2) deals with it.

Acceptance must be after the knowledge of offer 14

: Offeree must have the
knowledge of offer for instance, in the case of Lalman vs Gauri Dutt15, it was decided that in order
to enter into contract between parties, there should be total understanding of the offer or proposal:
The offeree, the person to whom the offer is made, needs to be fully informed of all the terms and
conditions of the offer.

It must be given within stipulated or reasonable time16: Acceptance shall be

given within prescribed time in offer or within a reasonable time. Muluki Civil Code 2074, Sec
510 (1), (2) can be taken as example of it.

Mere Silence is not acceptance17 : Silence on the proposed offer doesn’t amount to
acceptance. Sec 508 (4) of Muluki Civil Code, 2074 has mentions that, If the offeror makes an

10
BIBEK KUMAR PAUDEL, law of Contract General Principles and Provisions (Ed.2069), MM Publication, P.34
11
Powell v. Lee (1908) 99 LT 284
12
YADAV KUMAR KC, Contract law A Comparative Study (Ed.2016), Pairavi Prakashan, P.56
13
SATYA NARAYAN KALIKA, The Law Of Contract (Ed.2013), Pairavi Prakashan, P.36
14
Id. at para 3
15
Lalman Shukla v. Gauri Dutt (1913) XL ALJR 489 (All.)
16
BIBEK KUMAR PAUDEL, law of Contract General Principles and Provisions (Ed.2069), MM Publication, P.36
17
Id.at para 3
offer having stipulated certain time and specifies that the offer is regarded as accepted if a notice
of its rejection is not sent within such time, and if the offeree does not send a notice of acceptance
of the offer within such time, the offer shall not be deemed to have been accepted.

Acceptance must be given before the offer lapses or revoked18: An

acceptance must be given before the lapses of time or revocation because acceptance null and void
upon the expiration or revocation of the offer.
Acceptance must be given in express form except certain conditions where acceptance given in
implied form are accepted however Muluki Civil Code, 2074 Sec 508 (3) has mentioned three
conditions under which even by conduct of offeree acceptance is regarded as given(Brogden vs
Metropolitan railway)19.

Communication Of Acceptance
Acceptance is the assent given by the offeree to the offeror regarding the offer put forward by him.
Communication of acceptance is the knowledge of the acceptance by the offeree to the offeror.
Without the knowledge of acceptance, a contract cannot be valid. A mere mental acceptance by
the offeree is not a communication of acceptance20.Broadly speaking, acceptance refers to
expressed acceptance. It remains incomplete unless and until the offeror is informed of it.
Communication of acceptance plays a crucial function in turning a proposal into a promise since
it eliminates the potential of reversal of acceptance and establishes an obligation for the parties.

According to Anson, Acceptance means, in general, communicated acceptance, which must be

something more than a mere mental assent. A tacit formation of intention is insufficient21. English
law further states that acceptance is typically not complete until it is communicated to the offeror,
even in cases where there is an overt act or statement indicating the intention to accept.

In context of Nepal, Muluki Civil Code 2074, Sec 508 has discussed about communication of
acceptance. In which under,

18
Id. at P. 35
19
Brogden v Metropolitan Railway (1877) 2 App Cas 666
20
Prof.Dr SHAMBHU PRASAD KHANAL, Law Of Contract (Ed.2015), Pratyush Publication, P.41
21
J. BEATSON, A. BURROWS and J. CARTWRIGHT, Anson’s Law of Contract (Ed.2010), Oxford University Press, P.43
 Sub Sec (1) of Sec 508, it has mentioned that Communication of offer is completed when it comes
to the knowledge of offeree.
Sub Sec (2): Communication of acceptance is completed when offeror receives notice of
consent sent by the offeree.
Sub Sec (3): Acceptance by conduct (a) If the offeree comply the terms and condition
prescribed in the offer, (b) If the offeree accept consideration, benefit or services presented in the
offer and (c) If the acceptance is made by any other reasonable manner, Thus there are
aforementioned three conditions under which acceptance is deemed through conducts.
Sub Sec (4): Non communication does not make a valid contract.
An offer should be communicated when it is accepted. Here, we can use the well-known English
case of Brogden VS. Metropolitan Railway, 187222, where it was determined that acceptance was
granted based on the actions (conduct).

Revocation and Termination of Acceptance

Revocation means taking back or withdrawal. Since the general rule is that acceptance is not
complete until it has been communicated to the offeror, it follows that an acceptance can be
revoked at any time before this occurs23. Termination of the offer may come about in a number of
ways: it may be revoked before acceptance, or the offeree may reject the offer. Also, an offer may
lapse by the passage of time or be determined by the death of the offeror or offeree24. Once
acceptance is communicated, it can’t be revoked.
Muluki Civil Code, 2074 Sec 509 mentions that, Offer or Acceptance may be revoked25.
Acceptance can be revoked by offeree through notice: as per Sec 509 (2) of Muluki Civil Code
207426. Revocation of an acceptance can be accomplished by giving notification. Acceptance is
deemed revoked if both the notification of revocation and the notice of acceptance are sent to the
offeror simultaneously.

22
Brogden v Metropolitan Railway (1877) 2 App Cas 666
23
J. BEATSON, A. BURROWS and J. CARTWRIGHT, Anson’s Law of Contract (Ed.2010), Oxford University Press, P.53
24
Id. at P 2
25
MULUKI CIVIL CODE (2074), Sec 509
26
Id. at Sub sec (2) 509
By death or insanity of acceptor (offeree)27: An acceptance can be lapsed either by death or
insanity of an acceptor. If an acceptor is died or become insane before communication of
acceptance, acceptance is lapsed28. Sec 508 (e) can be taken as example of this.
By non fulfilment of condition29: If the offeror specifies in the proposal itself any conditions that
must be met in order for the acceptor to accept the offer, then the acceptor is required to comply
with them. The acceptance will be rescinded if the acceptor fails to meet any of these requirements.

By lapse of time30: If the offeror has specify time limit and in case if offeree doesn’t communicate
the acceptance in such time limitation then acceptance is deemed to be terminated. If offeree alters
the terms of the proposal then it amounts to counter offer not acceptance as mentioned in Sec 509
Sub sec (5) of Muluki Civil Code,2074.

Legal Provision Regarding Acceptance

Muluki Civil Code, 2074, (Chapter 2) Sec 504, 508 and 509 has various provisions regarding
Acceptance. We can summarize respective provisions in following way:

Sec 504: A contract is considered concluded when the person who made an offer communicates
their acceptance, creating a binding legal relationship between the parties. "Acceptance" refers to
the same meaning as the offer.

Sec 508 (offer and acceptance deemed to be completed)31: The act of giving acceptance is
complete when the offeror receives the forwarded acceptance from the offeree, and the offeror
knows the offeree has accepted the offer. Even without direct expression, if the offeree complies
with terms, accepts the advantage or service, or indicates acceptance, the offer is accepted.

Sec 509 (offer or acceptance may be revoked)32; The offeror can revoke an offer through a
notice, but if the offeree has already received the notice of acceptance before receiving the
revocation notice, the offer cannot be revoked. The person who rejected the offer can resend it

27
SATYA NARAYAN KALIKA, Law of Contract (Ed.2013), Pairavi Prakashan, P.40
28
BIBEK KUMAR PAUDEL, Law of Contract (Ed.2069), MM Publication, P.37
29
SATYA NARAYAN KALIKA, Law of Contract (Ed.2013), Pairavi Prakashan, P.40
30
Id. at P3
31
MULUKI CIVIL CODE (2074), Sec 508
32
Id. at. Sec 509
again. The contract is not considered concluded if the notice of refusal or acceptance reaches first,
and if the notice of refusal reaches first. If the notices are sent simultaneously, the contract is not
concluded. If the offeree sends an acceptance with conditions, they are considered a counter
offer33.

In context of India, Section 2 (b) and Chapter 2 of Indian Contract Act, 1872 has various
provisions regarding acceptance34.

Art. 1118 of French Civil Code. –An acceptance is the manifestation of the will of the offeree to
be bound on the terms of the offer. As long as the acceptance has not reached the offeror, it may
be withdrawn freely provided that the withdrawal reaches the offeror before the acceptance.35

§ 2-206. Offer and Acceptance in Formation of Contract (Universal Uniform Code): An offer
to make a contract is considered inviting acceptance in any reasonable manner. An order to buy
goods for prompt shipment is also considered inviting acceptance. However, non-conforming
goods do not constitute acceptance if the seller informs the buyer. If the requested performance is
a reasonable mode of acceptance, the offeror may treat it as lapsed36.

Case Laws
Felthouse V. Bindley37: It was held that there was no contract for the horse between the complainant
and his nephew. There had not been an acceptance of the offer; silence did not amount to
acceptance and an obligation cannot be imposed by another. Any acceptance of an offer must be
communicated clearly. Although the nephew had intended to sell the horse to the complainant and
showed this interest, there was no contract of sale. Thus, the nephew’s failure to respond to the
complainant did not amount to an acceptance of his offer38.

33
MULUKI CIVIL CODE (2074),
34
INDIAN CONTRACT ACT (1872), Sec. 2(b)
35
FRENCH CIVIL CODE(2016), Art 1118, available at "https://www.trans-lex.org/601101"
36
§ 2-206. Offer and Acceptance in Formation of Contract, available at https://www.law.cornell.edu/ucc/2/2-206
37
Felthouse v Bindley [1862] EWHC CP J35
38
LawTeacher. November 2013. Felthouse v Bindley - (1862). [online]. Available from:
https://www.lawteacher.net/cases/felthouse-v-bindley.php?vref=1 [Accessed 19 March 2024].
Indra Bahadur Rai V. Mangalimaya Kusle39: In the following case, Plaintiff Indra bahadur Rai
had filed a lawsuit demanding the passing of documents (likhat) in accordance of contract.
However, court denied stating that there wasn’t contract between the parties as there was no
signature of plaintiff, and contract was incomplete as offeree hadn’t give acceptance to the
proposal. and more importantly the documents which plaintiff had claimed to be contract wasn’t a
real contract.

39
Indra Bahadur Rai V. Mangalimaya Kusle, NKP 2066, D.N. 8268
Conclusion
One of the essential elements in the formation of a contract and a requirement for a legally binding
agreement is acceptance, which can be simply defined as consenting to, accepting, or receiving
something. An offer and an acceptance are necessary for a contract to be enforceable. Thus,
acceptance can be defined and as per the aforementioned rule it shall be given and shall be
communicated properly to the offeror. Except certain exceptions, in all kinds of contract
acceptance shall be communicated.