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CA Foundation · Business Laws · The Indian Contract Act, 1872

Nisha offers to sell her car to Omkar for Rs 4,00,000. Omkar replies, 'I accept, but I will pay Rs 3,80,000.' Nisha refuses. Omkar then says, 'Fine, I will pay Rs 4,00,000.' Which statement is correct?

Omkar's first reply was a counter-offer because it changed the price, and a counter-offer rejects and ends the original offer. His later agreement to pay Rs 4,00,000 is a fresh offer, so no contract exists unless Nisha accepts it.

  1. AOmkar's first reply was a counter-offer that ended the original offer, so his later acceptance does not form a contract unless Nisha accepts itCorrect
  2. BOmkar's first reply was only a request for information, so the original offer still stood and a contract arises on his later acceptance
  3. CA contract arose at Rs 4,00,000 as soon as Omkar said 'I accept'
  4. DA contract arose at Rs 3,80,000 because Omkar's reply was an acceptance of the offer

Explanation

An acceptance must be absolute and unqualified. Changing the price made Omkar's reply a counter-offer, which rejects and destroys the original offer. His later willingness to pay Rs 4,00,000 is a fresh offer, and Nisha must accept it for a contract to arise.

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