Abstract
Business firms and Business corporations enter into thousands of contracts everyday. Making a formal and written contract is very important for business corporations and firms although oral contracts are accepted and recognized by law. There are certain rules on making a valid formal contract. If the business firms do not have knowledge of those contract formation rules and they make contracts in ignorance of those rules, their contracts would be liable to be declared as null and void by the court of law if it is referred to it to determine its validity or to get a remedy for breach of contracts by one of the parties in the contract. In this paper I have not discussed all the elements of a valid contract. I have discussed only one of the fundamental elements of a valid contract that is ‘acceptance’. In a business contract, there must have be an ‘offer’ and an ‘acceptance’, to make a valid contract, if not the contract will not be valid, recognized and enforceable in the court of law. The objective of this paper is to clarify the rules of making a valid ‘acceptance’ which may lead to making a binding contract between the parties.
Highlights
Business firms and Business corporations enter into thousands of contracts everyday
The offer required acceptance by return of post, it was held by the court that there could be an acceptance by any means arriving not later than a letter sent by return, e.g. by telegram or by verbal message
If the offeror states ‘my terms of offer should be accepted unequivocally’ but the offeree says “no, my terms of acceptance should be taken into consideration for making the contract and it will get priority over the offeror’s terms,” and this type of communication continues for several days, a complicated situation arises where it is difficult to determine at what point of time a valid acceptance is made or it may happen that no contract has been at the end
Summary
‘Acceptance’ is one of the fundamental elements for making a binding contract. It is essential to determine when an acceptance is complete and a binding contract emerges. The rule is that he can only effectively revoke the acceptance before it comes to the knowledge of the offeror. It may happen that the letter goes missing on the way through the post office and the offeror does not receive it or he receives it but after a long time has passed In such situations, the acceptance is complete and binding on the offeror it has not come to his knowledge. If the seller is silent, can the offeree say that there has been an effective acceptance by the silence of the offeror and a binding contract has emerged? These questions along with some other important issues related to the acceptance of an offer to make a valid contract are discussed and analyzed in this paper by applying descriptive and analytical research methodology.
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