Corporate Laws
BBA(FIA)
Lecture 4
Dr. Nidhi Kesari
Acceptance
Acceptance Sec 2(b):
“When a 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.”
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Requirements for a Valid Acceptance
1. Acceptance may be express or implied: words or conduct
2. Acceptance must be given only by the person to whom it is made
Boulton vs. Jones
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Case Discussion
Case: Boulton vs. Jones
Facts of the Case:
Jones was a customer of S and ordered some goods. Boulton had taken
over the business of S, supplied the goods to Jones, without informing him
that the business had changed hands. When Jones came to know that the
goods were supplied not by S but by Boulton, he refused to pay for the
same. A suit was brought by Boulton against Jones for the price of the
goods.
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Case Discussion
Case: Boulton vs. Jones
Facts of the Case:
Jones was a customer of S and ordered some goods. Boulton had taken
over the business of S, supplied the goods to Jones, without informing him
that the business had changed hands. When Jones came to know that the
goods were supplied not by S but by Boulton, he refused to pay for the
same. A suit was brought by Boulton against Jones for the price of the
goods.
Decision:
It was held that Jones was not liable to pay, since Boulton knew that the
offer was not addressed to him.
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Requirements for a Valid Acceptance Contd.
3. Acceptance must be given within a reasonable time in a proper mode
before the offer lapses or revoked
Mentioned by offeror
Usual and reasonable manner
Deviated mode of acceptance: within reasonable time offeror
should insist to be accepted in prescribed manner
Ramsgate Victoria Hotel Co. Ltd. Vs. Montefoire
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Case Discussion
Case: Ramsgate Victoria Hotel Co. Ltd. vs. Montefoire
Facts of the Case:
Mr. Montefoire applied for shares in the company on June 8. Company did
not write to him allotting the shares until Nov. 23. He refused to accept the
shares which led to the dispute.
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Case Discussion
Case: Ramsgate Victoria Hotel Co. Ltd. vs. Montefoire
Facts of the Case:
Mr. Montefoire applied for shares in the company on June 8. Company did
not write to him allotting the shares until Nov. 23. He refused to accept the
shares which led to the dispute.
Decision:
It was held that he was not bound to accept the shares as his offer lapsed
owing to the delay by the company in notifying its acceptance.
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Requirements for a Valid Acceptance Contd.
4. Acceptance must succeed the offer
Performance of the conditions of an offer in ignorance of the offer
is not valid acceptance
5. Two identical cross offers cannot form an agreement
6. Offer once rejected cannot be accepted
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Requirements for a valid Acceptance Contd.
7. Acceptance must be absolute and unqualified
Counter offer: A counter offer puts an end to the original offer and
cannot be revived by subsequent acceptance.
• Hyde vs. Wrench
Conditional/Partial Acceptance
• Proposal does not bind the offeror unless he agrees to the
qualified acceptance
• Proposal does bind the offeror if by his subsequent conduct he
indicates that he has accepted the qualifications set up (waiver
of qualification)
Provisional acceptance: subject to final approval does not
ordinary bind either party until final approval is given. Meanwhile
the offeror can revoke his offer.
• Somasundharam Pillai vs. Government of Madras
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Case Discussion
Case: Hyde vs. Wrench
Facts of the Case:
Wrench offered to sell his farm for £1,000 to Hyde. Hyde offered £950,
making a Counter offer, and after examining the offer Wrench refused to
accept.
Later, Hyde agreed to buy the farm for £1000 but Wrench refused to sell
the farm to him. Hyde sued for breach of contract.
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Case Discussion
Case: Hyde vs. Wrench
Facts of the Case:
Wrench offered to sell his farm for £1,000 to Hyde. Hyde offered £950,
making a Counter offer, and after examining the offer Wrench refused to
accept.
Later, Hyde agreed to buy the farm for £1000 but Wrench refused to sell
the farm to him. Hyde sued for breach of contract.
Decision:
Counter offer amounted to rejection of the original offer and it was not
possible to revive original offer. Hence, there was no contract between the
parties.
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Requirements for a Valid Acceptance Contd.
7. Acceptance must be absolute and unqualified
Counter offer: A counter offer puts an end to the original offer and
cannot be revived by subsequent acceptance.
• Hyde vs. Wrench
Conditional/Partial Acceptance
• Proposal does not bind the offeror unless he agrees to the
qualified acceptance
• Proposal does bind the offeror if by his subsequent conduct he
indicates that he has accepted the qualifications set up (waiver
of qualification)
Provisional acceptance: subject to final approval does not ordinary
bind either party until final approval is given. Meanwhile the offeror
can revoke his offer.
• Somasundharam Pillai vs. Government of Madras
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Case Discussion
Case: Somasundharam Pillai vs. Government of Madras
Facts of the Case:
A forest crop was put to public auction for sale with a reserve price. Pillai’s
bid was the highest but it was much below the reserve price. His bid was
provisionally accepted by the actioner subject to confirmation by the
divisional forest officer. One of the conditions of the auction sale was that
the bid could not be withdrawn between the date of provisional acceptance
and final confirmation by the divisional forest officer. No confirmation was
received after lapse of long time. Pillai revoked his bid. Subsequently the
divisional forest officer sent confirmation, despite revocation by Pillai.
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Case Discussion
Case: Somasundharam Pillai vs. Government of Madras
Facts of the Case:
A forest crop was put to public auction for sale with a reserve price. Pillai’s
bid was the highest but it was much below the reserve price. His bid was
provisionally accepted by the actioner subject to confirmation by the
divisional forest officer. One of the conditions of the auction sale was that
the bid could not be withdrawn between the date of provisional acceptance
and final confirmation by the divisional forest officer. No confirmation was
received after lapse of long time. Pillai revoked his bid. Subsequently the
divisional forest officer sent confirmation, despite revocation by Pillai.
Decision:
It was held that the bidder was entitled to withdraw his bid even where it
is a condition of the auction sale that a bid which has been provisionally
accepted cannot be withdrawn.
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Requirements for a Valid Acceptance Contd.
8. Acceptance must be communicated to the offeror
By speech, writing, conduct
By silence: offeror cannot prescribe silence as a mode of
acceptance
Mental acceptance: is no acceptance
To offeror only
From authorised person only – eg. Principal
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Requirements for a Valid Acceptance Contd.
9. Communication of Acceptance:
Communication of an acceptance for Postal medium
• Sec 4 “The communication of an acceptance is complete:
• As against the proposer, when it is put in course of transmission
to him, so as to be out of the power of the acceptor.
• As against the acceptor, when it comes to the knowledge of the
proposer.”
• Letter must be properly addressed, stamped, actually mailed.
• Contract is deemed to have been made on the date of mailing the
letter of acceptance and at the place where acceptance is made
(acceptor’s place).
Contracts through telephone or telex
• Contract is completed when acceptance is received by the offeror
and at the place where acceptance is received.
(offeror’s place).
Phone dead: no contract
• Disturbance in line: no contract unless repeated again
Face to face: Place of contract is where they are at that time.
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Delay or loss during transit
1. Delay or loss of offer during transit: No offer made
2. Delay or loss of acceptance during transit
Contract emerges
Acceptor has to prove: correct address, postage stamp, actually
posted
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THANK YOU
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