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

Gupta Textiles proposes to sell fabric to Iyer and states that Iyer must reply only by registered post. Iyer replies by a plain email accepting unconditionally. Gupta says nothing for a long time. Under the Act, the position is that:

Gupta is treated as having accepted the acceptance. Where the prescribed manner is not followed, the proposer may insist on that manner within a reasonable time after the acceptance is communicated, but if he fails to do so, the contract stands.

  1. AThe acceptance is void because the prescribed manner was not followed
  2. BGupta has accepted the acceptance by failing to insist within a reasonable time on the prescribed mannerCorrect
  3. CIyer's email is a counter-proposal that Gupta must accept
  4. DThe proposal lapses automatically on the email being sent

Explanation

Under Section 7(2), where the prescribed manner is not followed, the proposer may within a reasonable time after the acceptance is communicated insist on the prescribed manner. If he fails to do so, he accepts the acceptance. The acceptance is therefore not void, so the first option is wrong.

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