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

Mehra Foods sends Joshi a proposal to supply 500 kg of spices. Joshi, intending to accept, simply decides in his mind to accept and does nothing else. Meanwhile Mehra Foods sells the spices elsewhere. Which view is consistent with the Indian Contract Act, 1872?

No contract exists. Acceptance is communicated only by an act or omission by which the acceptor intends to communicate it or which has that effect. Joshi's undisclosed mental decision is neither, so the proposal was never accepted and Mehra Foods was free to sell elsewhere.

  1. AA contract exists because Joshi's intention to accept was genuine
  2. BA contract exists because Mehra Foods remained silent
  3. CNo contract exists because acceptance requires an act or omission intended to communicate it, or having that effectCorrect
  4. DA contract exists but is voidable at Joshi's option

Explanation

Communication of acceptance is deemed made by any act or omission of the accepting party by which he intends to communicate it or which has the effect of communicating it. A mere mental decision does neither. So there is no acceptance, and no contract. Mehra Foods' silence cannot supply it.

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