Acceptance of a conditional offer with a further condition does not resulted in a concluded contract- Supreme Court

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On 5^th January 2021 a bench comprising of Justice Navin Sinha and Justice Indira Banerjee observe that when the acceptor puts in a new condition while accepting the contract already sign by the proposer, the contract is not complete until the proposer accepts that condition, while setting aside the a judgment of High Court.

Noticing that both the Trial Court and the High Court overlooked that whether acceptance of a conditional offer with a further condition result in a concluded contract, irrespective of the offeror accepts the further condition proposed by the acceptor. The court said that the Sec7 of Indian Contract Act, 1872 which emphasizes the 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 acceptance is not made in such manner, the proposer may, within a 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.”

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1 The court cited two cases which were as follows:

2 Related

The court cited two cases which were as follows:

Haridwar Singh vs. Bagun Subrui (1973) 3 SCC 889, in this case it was held that an acceptance with variation is no acceptance. It is simply a counter proposal which must accept fully by the original proposer, before a contract made.
Union of India vs. Bhim Sen Walaiti Ram (1969) 3 SCC 146. In this case it observed that acceptance of an offer maybe either absolute or conditional. If the acceptance is conditional, offer can withdraw at any moment until absolute acceptance has taken place.

The case of Padia Timber Company (P) Ltd. vs. Visakhapatnam Port Trust, 2021 decided on 5^th January, 2021.

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