DR. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY LUCKNOW LAW OF CONTRACTS Final draft on: Acceptance must be absolute, examine in the light of mirror rule

SUBMITTED TO: SUBMITTED BY :Mrs. Visa lakshi ADITYA JOSHI, Aditya Joshi ASSISTANT PROFESSOR B.A.LL.B. (A) II SEM.Dr. RMLNLU R. NOs. 13,14

ACKNOWLEDGEMENTI express my gratitude and deep regards to my teacher for the subject Mrs. Visalakshi for giving me such a challenging topic and also for his exemplary guidance, monitoring and constant encouragement throughout the course of this thesis.I also take this opportunity to express a deep sense of gratitude to my seniors in the college for their cordial support, valuable information and guidance, which helped me in completing this task through various stages.I am obliged to the staff members of the Madhu Limaye Library, for the timely and valuable information provided by them in their respective fields. I am grateful for their cooperation during the period of my assignment.Lastly, I thank almighty, my family and friends for their constant encouragement without which this assignment would not have been possible.

TENTATIVE CHAPTERISATION1. Introduction 42. Principle. 63. Acceptance...7 Absolute.7 Conditional not acceptable. 8 Counter proposal.... 10 Acceptance of counter proposal.....114. Mirror rule.125. Conclusion..136. Bibliography 14

INTRODUCTION:Definition of Acceptance:Under Section 2(b) acceptance as follows:When the 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.( thus acceptance is the assent given to a proposal, and it has the effect of converting the proposal into promise.)Section 7: Acceptance must be absolute:- In order to convert a proposal into a promise the acceptance must(1) Be absolute and unqualified(2) Be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted , and the proposer may within reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance.

Under sec. 7(1), an acceptance must be absolute and unqualified in order to convert a proposal into a promise. Section 7(2) prescribes that the acceptance must be made in a reasonable manner. If the proposer has prescribed a manner of acceptance, the acceptance must be made in that manner, if not so made, there is a contract only if the proposer, accepts the acceptance.Per Sir Jenkins CJ in Food Corporation of India v Ram Kesh Yadav[footnoteRef:1]Any departure from the terms of the offer or any qualification vitiates the acceptance unless it is agreed to by the person rom whom the offer comes. In other words, an acceptance with a variation is no acceptance; it is simply a counter proposal, which must be accepted by the original promisor before a contract is made. Unless there is an absolute and unqualified acceptance , the stage of negotiations has not yet passed, and no legal obligation is imposed. The plaintiffs first acceptance with new terms was in fact a counter offer which implied the rejection of the original offer. [1: (2007) 9 SCC 531]

The facts of the case are as follows:Food Corporation of India (for short 'FCI'), introduced a scheme for granting compassionate appointment to dependants of departmental workers, who died while in service or who were retired by FCI on medical grounds, vide Circular dated 2.2.1977. By a subsequent circular dated 3.7.1996, the said benefit of compassionate appointment was extended to dependants of departmental workers who sought voluntary retirement on medical grounds at their own request, subject to the conditions stipulated in the said circular. The conditions, in brief, are :a) The worker should seek voluntary retirement on medical grounds before completing the age of 55 years.b) Such request should be accompanied by a medical certificate issued by an Authorised Medical Officer, subject to verification by FCI. c) The benefit of compassionate appointment shall be given only to a male dependant, (of the age group between 18 years and 30 years), that too in the handling labour category, subject to an authorised Medical Officer confirming the medical fitness of such dependant to handle/carry bags of big size.d) The application for compassionate appointment shall be made in the prescribed form, within three months from the date of retirement.e) Compassionate appointment will be given only in deserving cases, that is, where there is no earning member in the family of the retired worker, or where it is found that the financial benefits which are available to the worker on retirement will not be sufficient to meet the needs for running the family.In the above case the appeal was dismissed. But neither the retired employee nor his son will, however, be entitled to claim any monetary or other benefits on the ground of delay in issuing the offer of appointment. The appellant is given two months' time from today to appoint first respondent as per High Court's order. Parties to bear their respective costs.Before accepting an offer the plaintiff introduced certain terms like free Bombay harbor and interest, which were not there in the original offer. This, the defendant refused to accept. Subsequently the plaintiff communicated his acceptance of the original offer, but the defendant did not assent to this. Plaintiffs action for breach of contract was dismissed.

PRINCIPLE:The acceptance must be absolute, unqualified and without conditions.[footnoteRef:2]The offer and acceptance must correspond. This is sometimes called the mirror rule, i.e., the acceptance must match with the terms of the offer. When there is a variation between the offer and acceptance even in respect of any material term, acceptance cannot be said to be absolute and it does not result in the formation of a legal contract.[footnoteRef:3] [2: Nirod Chandra roy v. kirtya nanda singh, AIR 1922 pat 24] [3: Union of india v. uttam singh Duggal, AIR 1972 Del 110 at 115]

The question is of interpretation in each such case whether a particular communication is to be understood as a real ad absolute acceptance, or as introducing a condition or qualification which makes it only a stage in the course of negotiation, capable of leading, but not necessarily leading, to a concluded contract; and this may often involve the construction of various documents which have passed between the parties to find out the extent of the agreement. In order to decide whether there is an absolute and unqualified agreement between the parties to a contract, the entire negotiations and correspondence should be considered. An absolute and unqualified acceptance may, even when there is no express intimation from the offeree, be inferred from the conduct of the offeree.[footnoteRef:4] [4: Bishnu padu haldar v. chandi prasad]

The intention of the offeree to accept must be expressed with such certainty as to leave no doubt that the terms offered by the offeror are assented to. A mere acknowledgment of an offer, or a reply that the offeree intends to place an order does not amount to an acceptance seeking clarification of an offer neither amounts to the acceptance of the offer not to the making of a counter offer. A reply that ,I am making the necessary arrangement to a counter- proposal was not an acceptance. In commercial transactions, the mere acts of indulgence are not apt to create rights. The question whether the terms added to the proprosal are intended to b part of the contract, or are merely in the nature of inquiries, will depend in each individual case upon the words used and the intention of the parties.It would be no acceptance if it attempts to vary the terms of the offer, whether the variation relates to the subject matter of the proposed contract or the time of performance or the place of performance, or otherwise. An attempted acceptance would not operate as such if it is made subject to some condition, or includes new or different terms. An acceptance does not convert a proposal into a promise If it leaves one of the essential conditions to the discretion of a third person, it is qualified by conditions, or it is in substance only a arrangement so is an acceptance stated to be subject to confirmation by mail,[footnoteRef:5] or is expressly made subject to the payment accompanying the proposal being found in order. An acceptance which at the same time exempts the acceptor of any obligation is not an acceptance capable of creating a binding contract. An offer meant to be accepted by offerees jointly must be accepted by all the offerees. [5: Kahn v. jugal Kishore gulab singh, AIR 1930 Lah 114 ]

In exceptional circumstances, there may be an unconditional acceptance in terms o fa proposal which in fact the parties do not understand in the same sense, and which neither party is estopped from understanding in his own sense. Here the acceptance is merely apparent and no contract in formed.ACCEPTANCE: ABSOLUTE AND UNQUALIFIEDWhere the acceptance is not qualification , the contract is completed by acceptance. Parties become bound by its terms, and on breach, for damages or compensation. When an offer is accepted without any condition, the contract is formed on the formed on the offer so accepted. The offeree cannot be heard to say later that the acceptance was subjected to a condition which ought to have formed part of the acceptance. Any such term incorporated into the formal document issued later will not bind on the parties.When the proposal of any payment is subject to any payment is subject to any condition, the payment has to be accepted with the condition imposed and it is not permissible in law to accept the payment and ignore the condition. The payment has to be accepted with the condition or not at all. It is always open to a person to elect to accept or not to accept with the condition. The offeree cannot be heard to say that though he accepted the proposal, he was not bound by the condition.The plaintiff tendered to buy from the defendant 3500 tonnes of cake at Rs 31 per ton and also deposited Rs 5000/- as security. The acceptance of the tender and the deposit of security money constituted a concluded contract. Further, the plaintiff was held to have accepted all the terms of the sale. A tender issued by the Government for sale of 244 tons of iron scrap, approx.., was filled by a purchaser and accepted by the Government. This was held to be valid unconditional contract, implying that purchaser will pay more if the weight exceeded the quality tendered for and get a refund if the quality is less. A shareholder of a company informed the desire to purchase shares under her right of preemption. The contract was formed then, and did not depend on payment of price, which was a question of performance.The acceptance of the conditional offer is an acceptance of the offer and the condition attached thereto. The acceptance of the offer by a person of a named sum in full payment of the claim operates as a discharge of the claim. The claimant cannot accept the amount and repudiate its being payment in full discharge or claim it as payment of another claim. Therefore, acceptance of a cheque issued by the railway in full and final discharge of liability cannot be accepted and cashed without the liability standing discharged.An acceptance binds the parties to all the terms and conditions. A housing society was bound to pay enhanced price for the land allotted to it by a development authority, as it had accepted the allotment on the terms of offer made earlier, and on its failure to do so, was liable to have the earnest money forfeited. Where the brochure of a land development authority clearly mentioned that the cost was estimated, and that allottees will have to pay actual cost at enhanced rates as applicable in the future , the allotteesare bound to pay enhanced rates. Such allottees cannot reopen the contract and demand part of the price or the instalments paid by them. The arbitration clause in the tender form binds the parties to the agreement.If by action on the part of the acceptor, the proposer cannot be restored to his former position, then the acceptor cannot be permitted to say that his acceptance should be treated as other than according to the original proposal. But in the absence of estoppel being applicable, a conditional acceptance cannot become absolute acceptance.An apparently conditional acceptance may nevertheless be interpreted as an absolute one. The other of the new contract may be annexed to an absolute acceptance so that here is a concluded contract whether the new offer is accepted or not. An acceptance on condition coupled with an admission that the condition has been satisfied, may be unconditional. Nor do the mere use of the words to be agreed in the acceptance prevent it from being binding.ACCEPTANCE CONDITIONAL AND NOT BINDINGA valid acceptance of proposal must be absolute and unconditional. It must extend to all the terms of a proposal. If the purported acceptance is conditional or qualified, it does not create contractual relationship. It becomes a counter- proposal , which may become a contract on the terms offered by the offeree if the proposer accepts it. Such an acceptance would revoke the offer, and the contract cannot be revived on original terms by withdrawing the conditional acceptance. A bid can be revoked by notice if it has been accepted provisionally or with conditions.An absolute acceptance of an offer does not make a binding contract if it does not extend to all the terms under negotiation or it is merely a provisional arrangement subject to a further agreement to be executed between the parties.Where the plaintiff in his tender offered to purchase and remove 1500 MT of damaged food grains declared fit for cattle or poultry, but the defendant conveyed acceptance in respect of the higher quantity of 6200 MT of damaged paddy, it was held that such acceptance of offer was neither absolute nor unconditional and therefore there was no binding contract. A company requested the port authorities for lease of certain area in the western side of the port and the port trust indicated readiness to give lesser and different area on certain conditions. There was no concluded contract. Where an acceptance sent to a tenderer stated three conditions for his compliance, there was no contract if conditions were not complied within the time stipulated in the conditions.The plaintiffs goods were lost due to the negligence of the railways, which sent cheques with a form stating that the plaintiff received them in full and final settlement of the claim. The plaintiff had made clear to the railways that they would be accepting cheques only as part payment. In the suit for recovery of the balance claim, the railways claimed that the amounts were received in full and final settlement in terms of the form , which had been accepted by the plaintiff by encashing the cheque. It was held, applying s.7 that the acceptance by the plaintiff of the cheques was not absolute and unqualified. The original offer of the tenderer clearly contained the term that no security deposit would be made. The original offer of the tenderer clearly contained the term that no security deposit would be made. The Director General of Supplies and Disposals stipulated in clear terms that a sum of Rs 75000 be deposited as security deposit. The tenderer in a telegram extended the period for acceptance of the original offer that no security deposit shall be made. It was held that there was no unconditional acceptance of the counter-offer made by the Director General of Supplies and Disposals and hence no contract was concluded between the parties.Where an offer was made for the purchase of certain goods which were to be ordered out from Europe, an acceptance free Bombay Harbour and interst, being a term not contained in the offer, was held to be no acceptance within the meaning of the section.[footnoteRef:6] Where a cheque for an amount was received by the defendant subject to finalization of the lease deed as per the terms and conditions indicated by the defendant, it was held that no concluded contract came into existence and the plaintiff was entitled to the refund of the amount with interest. Where an agreement for sale was subject to ratification by the co-heirs, such ratification was condition precedent for formation of the contract. A reply of I am making the necessary arrangement to a counter proposal, was not an acceptance. [6: Haji Mohamed haji jiva v. E. spinner (1900) 24 Bom 510]

Where the proposal contains a condition, the offeree is not bound to accept at all. An auction purchaser of evacuee property repudiated his liability on the ground that the area of the property auctioned was less than the area represented at the time of sale. The authorities did not accept his proposal that he was prepared to accept the property if price were proportionately reduced. The sale was cancelled and the property was resold at a higher price. The auction purchaser could not that his sale should not have been cancelled. When a party makes a composite offer, each part being dependant upon the other, another party cannot, by accepting a part of the offer, compel the other to confine its dispute to the accepted part.Counter- proposalAn acceptance with a variation in terms of the proposal or with a qualification is a counter-proposal, which must be accepted by the original offeror before a contract is made. Thus where a bank did not sanction the full amount of the loan applied for, and the borrower proceeded to sign documents od loan, there was a contract for repayment of the loan sanctioned. It is a counter proposal where the acceptance contains conditions, or refers to future negotiations for finalization of more terms, or require compliance of further requirements. When accepted , I becomes a contract on the terms of the counter proposal.In U.P Rajkiya Nigam Ltd. Vs Indure Pvt. Ltd.[footnoteRef:7], there was an offer in the form of tender by A to B. B accepts the offer with material alterations in the offer. However, there was no further communication thereafter from A to B. the question arose as to whether silence by A amounted to acceptance of the counter-offer by conduct. It was held that when was a counter- offer it meant that there was no consensus ad idem as to material terms of the contract. No concluded contract had, therefore, come into existence between A and B. [7: AIR 1996 SC 1373]

Again in HYDE v WRENCH[footnoteRef:8] an offer to sell a farm for 1000 euros was rejected by the plaintiff, who offered 950 euros for it. This was turned down by the offeror an down by the offeror and then the plaintiff agreed to pay 1000 euros. But, the defendant again refused to sell. Held that the plaintiffs offer was a counter proposal and it put an end to the offer previously made by the defendant, thus there was not competent for the plaintiff to revive the defendants offer, by giving an acceptance of it. [8: (1840) 3 Beav 334]

It is important to note that if after rejecting the counter offer, the offeror repeats his original offer which then is accepted by the offeree, a contract is deemed to have arises in terms of the counter offer, and not in terms of original offer. Still further, acceptance should be of the whole of the offer. A partial acceptance (accepting favourable terms only) is another kind of counter proposal.A mere inquiry into the terms of a proposal is not he same thing as a counter-proposal. To seek an explanation of the terms is something different from introducing new terms. Further, if an acceptance carries a condition subsequent, it may not have the effect of a counter offer. Thus, where an acceptance said: terms accepted, remit cash down Rs. 25,000 by Feb. 5, otherwise acceptance subject to withdrawal. This was not a counter offer, but an acceptance with a warning that if the money was not sent in time the contact would be deemed to have been broken.ACCEPTANCE OF COUNTER- PROPOSALAcceptance of a counter-offer creates a binding contract. A vendor did not accept the buyers proposal but made a counter-proposal for a higher price with a condition for an advance. The buyer sent the advance along with the letter of acceptance. There was a concluded contract. In such cases, the acceptance with the qualification is in its nature a counter-proposal, which, if accepted by the proposer, would constitute an agreement. A letter accepting only the general conditions and not the special conditions given with the invitation to tender, is not an acceptance, but a counter-offer is made proposing changes in respect of only some of the terms of the proposal, and these are accepted the original offer stands accepted subject to modification made by the counter-offer.The sellers gave the buyers quotations for the sale of their machine tools and the terms and conditions included two clauses.(a) a price variation clause providing price ruiling on the date of delivery; and (b) the terms and conditions in that letter to prevail over terms and conditions in the buyers orders. The buyers placed an order with terms and conditions materially different from that of the sellers with no price variation clause. At the foot of the order, there was a tear- off acknowledgement of receipt of order with the words we accept your order on the terms and conditions stated thereon. When the goods were ready and delivered, the price had gone up and the sellers demanded higher price. The buyers paid the price quoted and the sellers brought an action for the balance. The trial court upheld the claim but the court of appeal, basing its decision on the analysis of offer and acceptance reversed the judgment for the reasons; first, that the buyers order was a counter-offer, and the sellers by completing and sending the tear-off acknowledgment had accepted the counter-offer and could not claim the increase in price; and secondly, that the document had to be read as a whole and the tear-off acknowledgment was the decisive document.MIRROR RULE:There has been a growing judicial awareness of the danger that a very strict application of the requirement of certainty of the terms could result in the striking down of agreements intended by business community to have a binding force, and the Courts have been reluctant in striking down an agreement on which the parties have already acted.An acceptance, apparently conditional , is valid if a new term in the acceptance merely makes express that which was implied in the offer or the proposed contract. Similarly, an unconditional acceptance of the original offer or the formation of the contract thereupon is not affected by the collateral term annexed to that acceptance. An acceptance will have legal effect if the new terms are trivial, or the acceptance is accompanied with a protest or a grumble, or it requests the offeror for better terms. An acceptance which is in form conditional may also be considered in fact absolute , on the ground that the parties did not really envisage the incorporation in the contract of any terms other than those already agreed. An offer was accepted when the acceptance used the words subject to the usual conditions of acceptance. It was held that there was a binding contract, as these words were on the facts quite meaningless; the offeree had not in mind that any further terms were to be agreed, but was using a high-sounding phrase to which he attached no particular meaning.[footnoteRef:9] [9: Jai gobind singh v. bangal lal singh, AIR 1950 Pat 445]

The rule that an acceptance must be absolute and unqualified does not mean that the offer and acceptance must match completely. An acceptance which contains statement which do not intend to vary the terms of the offer or to add new terms is valid even if it does not correspond with the offer. All that is required is that it must not introduce a new term or a different term, nor should it leave any material term yet to be agreed. immaterial or minor differences or variances between the offer and acceptance will not prevent the formation of the contact. An acceptance of tender was held to conclude the contract even though the formal contract remained to be signed and some terms were still being negotiated between the parties.

CONCLUSION:From above research paper we can conclude that the acceptance should be like mirror i.e the proposee should accept the terms laid by the proposer in a contract, there should be no change in the terms and conditions of the agreement. According to the section 7 of the Indian Contract Act, 1872 acceptance must be absolute and to examine the absoluteness of the acceptance the offeree and offeror must agree upon the same terms even if it does not correspond with the agreement, what is required is that no one should introduce a new term in the agreement which was agreed upon. If the new terms are trivial there will be no effect on the validity of the contract.Where the acceptance is not qualification , the contract is completed by acceptance. Parties become bound by its terms, and on breach, for damages or compensation. When an offer is accepted without any condition, the contract is formed on the formed on the offer so accepted. The offeree cannot be heard to say later that the acceptance was subjected to a condition which ought to have formed part of the acceptance. Any such term incorporated into the formal document issued later will not bind on the parties. All that is required is that it must not introduce a new term or a different term, nor should it leave any material term yet to be agreed. immaterial or minor differences or variances between the offer and acceptance will not prevent the formation of the contact.So we can say that if in contract any new terms is added by anyone offeree or offeror which affects the agreement or performance of agreement than the new term will be void. So the offeree must accept the terms which are laid down by the offeror to him, he must not accept or perform anything strange to the agreement. In simpe words we can say that when we look in a mirror the things inside the mirror look same as outside, so the acceptance must appear same without any conditions and unqualified otherwise it will not be an acceptance.

BIBLIOGARPHY: Pollock and mulla on Indian Contract Act. The Indian Contract Act, 1872- Avtar singh Web sources-(a) Scc online(b) Manupatra Articles from magzines.

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