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.
- 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. 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. A case which held that mere
silence is not acceptance is Felthouse v. Bindley
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. 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. 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 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.
He who remains silent does certainly does not speak, but nevertheless it is
true that he does not deny. 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.
- Indian Contract Act 1872, Section 2(b)
- Bhagwandas Goverdhandas Kedia vs M/S. Girdharilal Parshottamdas, 1966
AIR 543, 1966 SCR (1) 656
- (1862) 11 Cb (NS) 869;  EWHC CP J35; 142 ER 1037
- 99 LT 284
- Indian Contract Act, 1872, Section 8
- AIR 1952 Cal 691, 56 CWN 418
- Silence as Acceptance in the Formation of Contracts. (1920). Harvard Law
Review, 33(4), 595-598.