Page 26 - DMGT102_MERCANTILE_LAWS_I

Mercantile Laws-I

Notes Meaning of the phrase “acceptance must be absolute and unqualifi ed”. Acceptance must be
according to the exact terms of the offer. An acceptance with a variation however slight is no
acceptance and may amount to a mere counter offer which the original offeror may or may not
accept. A, a furniture maker, offers to sell B, a dining table for ` 2,000. B replied, “I can pay ` 1,800
for it”. The offer of A is rejected by B as the acceptance is qualified. However, B subsequently

changes his mind and is prepared to pay ` 2,000. This also will be treated as a counter offer and
it is up to A to accept the same or not.

Example:
(i) A offered to sell his land to B for ` 50,000. B replied purporting to accept and enclosed
` 10,000 promising to pay the balance of ` 40,000 by monthly installments of ` 5,000 each.
Held, that B could not enforce acceptance because his acceptance was not unqualifi ed.
(ii) A offers to sell his house to B for ` 5,00,000. B replies, “I am prepared to buy your house for
` 5,00,000 provided you purchase my Maruti Car for ` 2,00,000”. There is no acceptance on
the part of B.
However, if some conditions are implied as a part of the contract and the offeree accepts the offer
subject to those conditions the acceptance will be treated as valid.

Example: A, a real estate company, offers to sell a flat to B and B agrees to purchase it
subject to the title to the flat being approved by B’s solicitor. The acceptance by B is absolute and

not qualified as it is presumed that A has a title to the property and it was not necessary for A to
mention anything about the title.
Acceptance of an offer “subject to a contract” or “Subject to a formal contract”, or ‘Subject to a
contract to be approved by solicitors” – The significance of these words is that the parties do not

intend to be bound and are not bound until a formal contract is prepared and signed by them.
The acceptor may agree to all the terms of the offer and yet decline to be bound until formal
agreement is drawn up.

Example:
(i) C accepted E’s offer to sell four items of antique furniture for ` 44,000 subject to a proper
contract to be prepared by the vendor’s solicitors. A contract was prepared by C’s solicitors
and approved by E’s solicitors but E refused to sign it. Held, there was no contract as the
agreement was only conditional [Chillingworth v. Esche (1924) 1 Ch.97].
(ii) E bought a flat from a real estate company “subject to a contract”. The terms of the formal

contract were agreed and each party signed his part. E posted his part but the company did
not post its part as it changed its mind in the meantime. Held, that there was no binding
contract between the parties [Eccles v. Bryant (1948) Ch. 93].
A mere mental acceptance is no acceptance. Acceptance must be communicated to the offeror.
The communication of acceptance may be express or implied. A mere mental acceptance is no
acceptance. A mere mental acceptance means that the offeree is assenting to an offer in his mind
only and therefore there is no communication of acceptance to the offeror.

Example: A, a supplier, sent a draft agreement relating to the supply of coal and coke to
the manager of a railway company for his acceptance. The manager wrote the word ‘approved’
on the same and put the draft in the drawer of his table intending to send it to the company’s
solicitors for a formal contract to be drawn up. By an oversight, the draft agreement remained in
the drawer. Held, there was no contract as the manager had not communicated his acceptance to
the proposer.

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