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

Mehta Traders sends Sharma Exports a proposal to sell 200 bags of rice at ₹2,000 per bag and says it must be accepted by a reply letter. Sharma replies by email, which Mehta receives, and says nothing about the mode. Mehta stays silent for several weeks and then claims there is no contract because the prescribed mode was not followed. Under the Act, what is the position?

Mehta is bound. Where a proposal prescribes a manner of acceptance and the acceptor uses another, the proposer may insist on the prescribed manner within a reasonable time after the acceptance is communicated. If he does not, he is taken to have accepted the acceptance.

  1. ANo contract, because the mode prescribed was not followed and cannot be waived
  2. BThe contract is void because email is not a usual manner
  3. CThe acceptance is valid only after Sharma sends a letter as well
  4. DMehta, having failed to insist within a reasonable time after communication, accepts the acceptanceCorrect

Explanation

Under Section 7(2), if the acceptance is not in the prescribed manner, the proposer may within a reasonable time after it is communicated insist on the prescribed manner. If he fails to do so, he accepts the acceptance. Mehta stayed silent for weeks, so he is bound.

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