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:
Mrs. Visa lakshi
ASSISTANT PROFESSOR
Dr. RMLNLU

SUBMITTED BY :
ADITYA JOSHI, Aditya Joshi
B.A.LL.B. (A) II SEM.
R. NOs. 13,14

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ACKNOWLEDGEMENT
I 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.

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TENTATIVE CHAPTERISATION
1. Introduction 4
2. Principle. 6
3. Acceptance...7
Absolute.7
Conditional not acceptable. 8
Counter proposal.... 10
Acceptance of counter proposal.....11
4. Mirror rule.12
5. Conclusion..13
6. Bibliography 14

INTRODUCTION:
Definition of Acceptance:

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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 1Any 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.
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
1 (2007) 9 SCC 531
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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:

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The acceptance must be absolute, unqualified and without conditions. 2The 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.3
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.4
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
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
4 Bishnu padu haldar v. chandi prasad
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substance only a arrangement so is an acceptance stated to be subject to confirmation by

mail,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.
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 UNQUALIFIED
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.
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.
5 Kahn v. jugal Kishore gulab singh, AIR 1930 Lah 114
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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 BINDING
A 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.

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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. 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
6 Haji Mohamed haji jiva v. E. spinner (1900) 24 Bom 510
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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.
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- proposal
An 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. 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.
Again in HYDE v WRENCH8 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
7 AIR 1996 SC 1373
8 (1840) 3 Beav 334
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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.
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- PROPOSAL
Acceptance 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
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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.9
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.

9 Jai gobind singh v. bangal lal singh, AIR 1950 Pat 445
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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.

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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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