Page 20 - DMGT407Corporate and Business Laws

Unit 1: Laws of the Contract

acceptance is no acceptance. A mere mental acceptance means that the offeree is assenting Notes
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.
6. Effect of silence of the offeree or his failure to reply. The acceptance of an offer cannot be
implied from the silence of the offeree or his failure to reply.

Example: A offered by a letter to buy his nephew’s T.V. set for ` 3,000, saying, “If I hear
no more from you, I shall consider the T.V. set is mine at ` 3,000”. The nephew did not reply at
all, but he told an auctioneer who was selling his T.V. set, not to sell that particular T.V. set as he
had sold it to his uncle. By mistake, the auctioneer sold the set. A sued the auctioneer for
conversion. Held, A could not succeed as his nephew had not communicated acceptance and
therefore there was no contract. However, if the offeree has by his previous conduct indicated
that his silence means that he accepts then the acceptance of the offer can be implied from the
silence of the offeree. Further, in the case of a general offer it is not necessary to communicate the
acceptance if it is made by acting upon the terms of the offer.
7. Acceptance must be according to the mode prescribed [s.7]. Where the offeror prescribes a
particular mode of acceptance then the acceptor should follow that mode. In case no mode
of acceptance is prescribed by the offeror, then the acceptance must be according to some
usual and reasonable mode. If the offeror prescribes a manner in which the offer is to be
accepted and the acceptance is not made in such manner, the offeror may, within a reasonable
time, after the acceptance is communicated to him, insist that his offer shall be accepted in
the prescribed mode and not otherwise, but if he fails to do so he is deemed to have agreed
to the acceptance.

Example: A sends an offer to B through post in the usual course. B should make the
acceptance in the “usual and reasonable manner” as no mode of acceptance is prescribed. He
may accept the offer by sending a letter through post in the ordinary course within a reasonable
time. However, if A had asked for an acceptance by telegram then B should accept the offer by
telegram. In case B accepts the offer by a letter then A may insist that the acceptance should be in
the prescribed mode. But if A (the offeror) does not insist within a reasonable time that the
acceptance be in the prescribed mode, then he is bound by the acceptance though not made in the
prescribed mode.

8. An agreement to agree in the future (futuristic agreements). Law does not allow making of
an agreement to agree in the future. The parties must agree on terms of the agreement. The
terms of the agreement must be either definite or capable of being made definite without
further agreement of the parties.

Self Assessment

Fill in the blanks:
9. When in place of accepting the terms of an offer as they are, the offeree accepts the same
subject to certain conditions or qualifications, he is said to make a ……………….offer.

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