Communication in Indain Contract

7/29/2019 Communication in Indain Contract

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MBA II Semester III

Legal Aspects of Business (LAB)

Prepared By : Vishal Goel(099240 46460)

2/20/2013 1GTU MBA Sem 3 Batch 10-12 LegalAspects of Business ( LAB )


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ACCEPTANCE



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ACCEPTANCE

It is the act of assenting by the offeree to an offer.

It is the manifestation by the offeree of his willingnessto be bound by the terms of the offer.

An offer when accepted becomes a promise.

When the person to whom a proposal is madesignifies his assent thereto, the proposal is said to beaccepted. A proposal when accepted becomes apromise. The person making the proposal is calledthe Promisor and the person accepting the proposal iscalled the Promisee. [Sec.2(c) ]



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Mode of acceptance

Express or Implied: When communicated by

words, spoken or written. Implied means when it is gathered from

surrounding circumstances or conduct of theparties.

EX-1 X says to Y, Will you purchase my car for Rs. 1,00,000? Then Y says, I am ready to purchase your car for Rs. 1,00,000.

Ex-2 At an auction sale, S is the highest bidder. The auctioneer accepts theofffer by striking the hammer on the table. This is an implied acceptance.

Ex-3 A widow promised to settle some immovable property on her niece if

stayed with her residence. The niece stayed with her in her residence tillher death. Held, the niece was entitled to the property.

Ex-4 A transport company runs buses on different routes to carrypassengers. X, a passenger board the bus. Xs act is an implied acceptanceby X and he is bound to pay the fare.



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Who can Accept In case of Specific Offer: Only by definite person or a

particular group of person to whom it is made.

Ex-1: X sold his business to Y but this fact was not known to an oldcustomer Z. Z placed an order for certain goods to X by name. Y supplied

those goods to Z.Is there any contract between Y and Z?

Ans: There was no contract between y and Z because Z never made any

offer to Y. [ Boulton v. Jones]

In case of General offer: By any person having knowledge ofthe offer by fulfilling the terms of the offer.

Ex-1: A Company advertised that it would pay $ 100 to anyone whocontracts influenza after using the smoke balls of the company according to

the printed directions. Mrs. Carlil used the smoke balls according to theprinted directions bur subsequently she contracted influenza. She filed a

suit for the reward. Was she entitle to recover the reward?

Ans: It was held that she was entitled to recover the reward because she

had accepted the offer by complying with the terms of the offer. [ Carlil v.

Carbolic Smoke Ball Company]2/20/2013 5GTU MBA Sem 3 Batch 10-12 LegalAspects of Business ( LAB )


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LEGAL RULES AS TO ACCEPTANCE

It must be absolute and unqualified.

It must be communicated to the offeror.

It must be according to the mode prescribed or

usual and reasonable mode. It must be given within a reasonable time.

It cannot precede an offer.

Intention on the parts of acceptor to fulfill thepromise.

It can not be implied from silence.



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It must be absolute and unqualified.

Sec-7(1) In order to convert a proposal into promise, theacceptance must be absolute and unqualified.

An offer must be accepted without any reservation, variationor condition

Ex-1: M offered to sell a piece of land to n at $ 280. N acceptedand enclosed $ 80 with a promise to pay by monthlyinstallment of $ 50 each. Is there any contract between them?

Ex-2: X offered to sell two plots of land to Y at a certain price. Yaccepted the offer for one plot. Was his acceptance valid?

Ex-3: A says to B, I offer to sell my car Rs. 50,000. B replies, Iwill purchase it for Rs. 45,000. Is there any acceptance on thepart of B?

2/20/2013 GTU MBA Sem 3 Batch 10-12 LegalAspects of Business ( LAB )

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It must be communicated to the offeror. The acceptance must be signified. ( Mere resolve or Mental

determination by offeree is not sufficient )

It is complete when communicated to the offeror.

Ex- X offered to supply coal to a railway Company. The manager ofthe company accepted the offer and put in the drawer of his tableand forgot all about it. Is there any contract?

Ex-2: A tells b that he intends to marry C, but tells C nothing of hisintention. There is no contract, even if C is willing to marry A.

Ex-3: F offered to buy his nephew horse for $150 saying: IfI hear nomore about it I shall consider the horse is mine at $ 150. The

nephew did not write to F at all, but he told his auctioneer who wasselling his horses not to that particular horse because it had beensold to his uncle. The auctioneer inadvertently sold horse.

Has F right of action against the auctioneer ?



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It must be according to the mode prescribed or

usual and reasonable mode. Ex-1 X of Agra send a letter by post to Y of Delhi

offering to sell his car for Rs. 1,00,00 and alsowrites send your acceptance by telegram. ysends his acceptance by an ordinary letter. Is it avalid acceptance?

Ans: X can reject such acceptance on the groundthat it was not accepted in the prescribedmanner.

But if he does not inform y within reasonabletime, he shall be deemed to have accepted suchacceptance and a valid contract will be formedbetween X and Y.



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It must be given within a reasonable time.

If any time limit is prescribed, acceptance mustbe given within than time.

If no time limit is there, acceptance must bewithin a reasonable time- depends upon factsand circumstances of the case.

Ex-1: An offer to buy shares of a company wasmade in June but the acceptance wascommunicated in November, it was held that the

offeror was not bound by the acceptance becausethe acceptance was not given within a reasonabletime.



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It cannot precede an offer.

If the acceptance precedes an offer, it is not a valid

acceptance and does not result in a contract

In a company shares were allotted to a person who

had not applied for them. Subsequently when heapplied for shares, he was unaware of the previous

allotment. The allotment of shares previous to the

applicant is invalid



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Intention on the parts of acceptor

to fulfill the promise.



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It can not be implied from silence.

The acceptance can not be implied from the silence

of the Offeree or his failure to answer. Unless the Offeree has his previous conduct

indicated that his silence means that he accepts.

Ex-1 A wrote to B, I offer you my car for Rs. 10,000.

If I dont hear from you in seven days, I shall assume

that you accept. b did not reply at all. There is no

contract.



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By Whom Acceptance must be communicated by the Offeree himself

or by the person who has authority to accept.

Ex: P applied for the post of a headmaster in a school. The

managing committee passed a resolution approving P to the

post but this decision was not communicated to P. But onemember of the committee in his individual capacity and

without any authority informed P about the decision.

Subsequently, the managing committee cancelled its

resolution and appointed someone else. P filed a suite forbreach of contract. Was P liable to maintain his suite?



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To Whom

Acceptance must be communicated to theofferer himself.

Ex: F offered by a letter to buy his nephew horse for$150 saying: If I hear no more about it I shallconsider the horse is mine at $ 150. The nephew didnot write to F at all, but he told his auctioneer whowas selling his horses not to that particular horsebecause it had been sold to his uncle. The auctioneerinadvertently sold horse. [ Felthouse v. Bindley]

Has F any right of action against thehis nephew?



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Before Lapse of Offer

Acceptance must be given before the offers

lapses or withdrawn.

Ex: X offered by a letter to sell his car for Rs.1,00,000.Subsequently X,withdrew his offer by a

telegram which was duly received by Y. After the

receipt of telegram, Y sent his acceptance to X.

In this case, the acceptance is valid or not. Ans: Acceptance is not valid because it was made

after the effective offer has been withdrew.



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Communication of Offer,

Acceptance And Revocation

1. Mode of Communication ( Sec. 3 )

2. When is communication complete ( Sec. 4 )

3. Time for revocation of offer and acceptance

( sec. 5)4. Loss of letter of acceptance on postal transit

5. Contracts over telephone or telex or oral

communication



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Communication of offer X of Agra send offered to buy his nephew horse for $150

saying: If I hear no more about it I shall consider thehorse is mine at $ 150. The nephew did not write to F atall, but he told his auctioneer who was selling his horsesnot to that particular horse because it had been sold tohis uncle. The auctioneer inadvertently sold horse.

Has F right of action against the auctioneer ?

A proposes by a letter to sell a house to B at acertain price.the letter is posted on 10th July. It

reaches B on 12th

July. The communication of offer is complete when B

receives the letter i.e. 12th July.



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Communication of Acceptances

As against the proposer- when it is put into a

course of transmission to him, so as to be out ofthe power of the acceptor.

As against the acceptor when it comes to theknowledge of the proposer.

In previous example by a letter sent by post on13th july instant. The letter reaches A on 15th July.The communication of the acceptance is completeas against A when letter is posted ( 13th, asagainst B when the letter is received by A on 15th



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A letter by post to Y of Delhi offering to sell his car

for Rs. 2,00,000. The letter is posted on 1st Januaryand the letter reaches Y on 7th January. Y sends his

acceptance by post on 10th January but X receives

this letter of acceptance on 15th January.

In this case the legal position relating to the

communication of offer and acceptance is.?



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When does an offer come to an end ?

Revocation or lapse of offer.1. By communication of notice of revocation

2. By lapse of time. [Sec. 6 (2) ]

3. By non-fulfillment by the Offeree of a conditionprecedent to acceptance [ Sec. 6(3) ]

4. If a counter-offer is made.

5. If offer is not accepted according to the modeprescribed.

6. If the law is changed.



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By death or insanity of the offerer.

An offer lapses by the death or insanity of the

offerer

If the fact of his death or insanity comes to the

knowledge of the acceptor before he makes

his acceptance



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By Failure to accept Condition Precedent

( Standard)

Ex-: X offered to sell his car to Y for Rs.

1,00,000 subject to the condition that Y

should pay an advance of Rs. 20,000 before a

certain date. Y accepted the offer but did notsend an advance of Rs. 20,000. Is this a valid

Acceptance by Y?

Ans: An offer has lapsed because the advance

was not paid.



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Time limit within which offer can be revoked

Sec-5: A proposal may be revoked at any time before the

communication of its acceptance is complete as against theproposer, but not afterwards.

Ex: X of Agra offers by a letter dated 1st January sent by

post to sell his car to y of Delhi for Rs. 1 lakhs. Y accepts the

offer on 7th January at 1 P.M by letter sent by post.\

X may revoke his offer at any time before 1 p.m. on 7th

January. But not afterwards.



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Time limit within which Acceptance can be

revoked

Sec-5: A acceptance may be revoked at any time before thecommunication of its acceptance is complete as against the

acceptor, but not afterwards.

Ex: X of Agra offers by a letter dated 1st January sent by post to sell

his car to y of Delhi for Rs. 1 lakh. Y accepts the offer on 7th January at1 P.M by letter sent by post.

X may revoke his offer at any time before 1 p.m. on 7th January. But

not afterwards

X receives the letter of acceptance on 15th Januaryat 3 p.m.

Y may revoke his acceptance at any time before 3

p.m on 15th January.2/20/2013 25GTU MBA Sem 3 Batch 10-12 Legal

Aspects of Business ( LAB )


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By Subsequently illegally or Destruction of Subject Matter

of the Offer:

Ex-1: X of Delhi offered supply of 100 tons of sugar to Y at

Mumbai on a certain date. Before this offer is accepted by

Y, the central Government issued an order prohibiting theinter-state movement of sugar. Here, Xs offer has come to

an end.

Ex-2: X of Delhi offered to sell his car to Y of Agra for Rs.

1,00,000. Before the offer is accepted by Y, the car is

destroyed by fire. Here Xs offer has come to an end.



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Limitations of offer revoked

At any time before its acceptance is complete.

Revocation takes effect only whencommunicated to the offeree.

If offer is open for a certain period, offeror canrevoke it before the expiration of that period-

- if the offer has in the meantime not been

accepted.-if there is no consideration for keeping the

offer open.



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Practical Question and Answers



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Q-1: X made an offer to buy shares of Y Ltd. On 10th

Jan. 1997 but the allotment was made on 10th July

1997. Is X bound by the acceptance?

Q-2: X offered to sell two plots of land to Y at acertain price. Y accepted the offer for one plot. Is

there a valid contract?



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Q-3: X of Aligarh sends a letter by post to Y of Haryana to sell his car forRs.1,00,000. This letter is posted on 1st Jan. and reaches Y on 7th Jan.. Y sendshis acceptance by post on 10th Jan. but X receives this letter of acceptance on15th Jan. Answer each of the following questions.

a. When the communication of acceptance of the offer complete?

b. When is the communication of acceptance complete asagainst the offerer?

c. When is the communication of acceptance complete asagainst the acceptor?

d. If Y sends a telegram on 8th Jan. revoking his offer, and thistelegram reaches Y before the letter of acceptance is posted.

Is revocation of offer is valid?e. If Y sends a telegram on 14th Jan. revoking his acceptance and

this telegram reaches X before the letter of acceptance isreceived by X. Is revocation of acceptance is valid?

2/20/2013 30GTU MBA Sem 3 Batch 10-12 LegalA t f B i ( LAB )

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Communication in Indain Contract