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Mere Silence Is Not Acceptance

Introduction To Acceptance And Mere Silence
A contract is made of many elements which each part playing a very important role in the completion of it. In the Indian Contract Act, 1872 all of the elements are clearly defined. A contract is nothing but an agreement which can be enforced by the law. An agreement is also formed of a promise with a lawful consideration for both the parties. Similarly, a promise comprises of its own parts, offer and acceptance.

This is where the whole idea begins. An offer is made by one individual or a group (called offeror) to another individual or a group (called offeree) in order to seek an acceptance from the other party. If an offer is accepted by valid means, the proposal becomes a promise.

All this process sounds like an easy path to follow, but sometimes it can be confusing. The problems arise a lot in the first stage itself, i.e. Making an offer and its acceptance. Common among them is difference of minds. A legal maxim ‘Consensus ad idem’ means the meeting of minds, is one of the main principles behind offer and acceptance. Therefore, acceptance should be absolute and unqualified just like the offer.

Mere silence under Indian law, which has its roots in the English law, is not considered as a valid acceptance. However, acceptance can be either expressed or implied. The confusion regarding whether an acceptance can be done on mere silence basis is clear under the Indian contract law which remains as invalid but the question of an act done in silence may amount to as acceptance or mere silence is the base of the acceptance itself. This makes way for anomalies in the interpretation leading to ambiguities. Therefore, it is subjected to deliberation which the research will try to further pertain on.

Research Questions
  • What is given for the mere silence as acceptance in the Indian Contract Act, 1872 and previous judgements?
  • Are there any exceptions where silence can be a valid acceptance?

The Concept Of Mere Silence As Acceptance

Acceptance under Section 2(b) of the Indian Contract Act, 1872 is defined as:
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.[1] Thus, we can say that an acceptance is an assent to any offer and it can convert a proposal into a promise.

From this definition of acceptance, we can easily derive that for it to be valid, acceptance must be communicated to the offeror. The assent to the proposal should be signified in a reasonable manner.

Shah J. (afterwards CJ) stated:
An agreement does not result from a mere state of mind: intent to accept an offer or even a mental resolve to accept an order does not give rise to a contract. There must be some external manifestation of that intent by speech, writing or other act.[2] A case which held that mere silence is not acceptance is Felthouse v. Bindley (1862)[3].

In this case, Paul Felthouse, talked to his nephew John Felthouse, about buying his horse. He then sent a letter to John stating that if he doesn’t communicate anything about the horse further, it would mean in the acceptance of the proposal and the horse would be Paul’s property thereafter. The nephew didn’t reply to this letter and was busy in auction.

But he specifically told Mr. Bindley who was the auctioneer, to not to sell the horse. Mr. Bindley anyway sold the horse in the auction and then was sued by Paul Felthouse. Mr. Bindley presented a defense that no acceptance was given by John Felthouse and therefore there was no contract. The court held the case in Mr. Bindley’s favor and said that mere silence does not amount to acceptance and just mentally accepting it is not enough.

This case also gives out two other propositions. Firstly, the communication of acceptance must be with the offeror himself or the person he has authorized for the same. Second, we learn that an offer cannot impose upon the offeree the burden of refusal. This means that when an offer is proposed, the offeror cannot say that if no reply came within a given time, then the offer is bound to be accepted. An offeree’s silence cannot amount to acceptance, once again.

Another principle involved in acceptance is that it should be given by the offeree himself and not any third party. An acceptance by an unauthorized person is not valid. This was given in the case Powell v Lee.[4] An example of this can be, a person hearing that he got a job by someone in the company he applied for, but not in the employing committee. This would be just as if overhearing and not a formal offer for job.

When Can Silence Be A Valid Acceptance

From the earlier stated definition of acceptance, it is clear that an acceptance should be signified. It can be done in various ways. It can be either Expressed acceptance or an Implied one. Expressed acceptance consists of spoken words, written assent, for ex. Emails and letters. On the other hand, Implied acceptance is a bit more complicated. It is basically an act which shows one party’s assent to the proposal by doing such an act which can clearly depict the consent of it.

There is also another way called Acceptance by Conduct. When someone acts in accordance with the terms in the offer it is a valid form of acceptance. Under Section 8, it is mentioned – Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.[5] It can be said that this is an acceptance by performance. Just the performance of the conditions of the proposal and providing and accepting the consideration asked for in a reciprocal proposal is enough acceptance on the part of the offeree.

This can be studied from the decision of the Calcutta High Court in Hindustan Coop Insurance Society v. Shyam Sunder[6] case. In this case, the proposer of the agreement, on the request of the organizer of the company agreed to insure his life. The company sent their doctor for his medical check-up and after which he was found to be first class.

Then he was told by the organizer that if he submitted the form and the half-yearly premium immediately, his insurance policy would be made by them instantly. The proposer did the same and handed the form and cheque for the premium to the organizer promptly. The company encashed the cheque of the proposer, who died after a few days. The dependents of the deceased then sued the company for their compensation.

The court held that the encashment of the cheque by the company was an acceptance on their part and therefore, no communication was required for it. This is an implied acceptance. Thus, the company was liable to pay the compensation.

In certain cases, communication of acceptance is not necessary. The person proposing the offer may just lay down a prescribed manner and all that the offeree has to do is abide by it and complete its terms. For example, if a notice is put out for a missing person and a person who finds her would get certain amount of cash as a prize. Now, anyone who finds her do not have to give an acceptance to the offeror first and can straight away do the required.

Acceptance should always be in a prescribed manner or if nothing is prescribed it should be in a reasonable and usual form. Also, the acceptance must be absolute and unqualified which means that an acceptance cannot be conditional. These are some conditions for a valid acceptance.

Conclusion
He who remains silent does certainly does not speak, but nevertheless it is true that he does not deny.[7] This truism is a topic of a lot of confusion in our law. Generally, in our law, silence is not considered as an acceptance but there are definitely some exceptions everywhere.

Theoretically, acceptance is an expression of mind either in active or passive conduct of the offeree. Loose theories of estoppel and moral duties are not necessary. It totally depends on the mode and way of communication if any and the conduct of the offeree whether or not it amounts to acceptance.

As, we have a codified system of justice, the old case laws and judgements matter a lot in the guidance of the new laws. But the facts differ from case to case and so do the judgement.

End-Notes:
  1. Indian Contract Act 1872, Section 2(b)
  2. Bhagwandas Goverdhandas Kedia vs M/S. Girdharilal Parshottamdas, 1966 AIR 543, 1966 SCR (1) 656
  3. (1862) 11 Cb (NS) 869; [1862] EWHC CP J35; 142 ER 1037
  4. 99 LT 284
  5. Indian Contract Act, 1872, Section 8
  6. AIR 1952 Cal 691, 56 CWN 418
  7. Silence as Acceptance in the Formation of Contracts. (1920). Harvard Law Review, 33(4), 595-598.

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