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CMA Foundation · Fundamentals of Business Laws and Business Communication · Essential Elements of a Contract, Offer and Acceptance

Dev Pharma sends a proposal with a ₹500 cash deposit enclosed as a reciprocal-promise consideration, and a supplier, Sethi, keeps the ₹500 and uses it. According to the Indian Contract Act, 1872, which statement is correct?

Sethi's acceptance of the ₹500 offered along with the proposal is itself an acceptance of the proposal. The Act says that accepting consideration for a reciprocal promise offered with a proposal, like performing its conditions, amounts to acceptance, so no separate written communication is required.

  1. ASethi's acceptance of the consideration offered with the proposal amounts to acceptance of the proposalCorrect
  2. BSethi's use of the money is not acceptance unless he also writes to Dev Pharma
  3. CA proposal can be accepted only by written words
  4. DAcceptance by receiving consideration is valid only if the proposal is revoked later

Explanation

The Act states that performing the conditions of a proposal, or accepting any consideration for a reciprocal promise offered with a proposal, is an acceptance of the proposal. So Sethi's acceptance of the money is itself acceptance by conduct. Written confirmation is not required.

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