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

Nisha sends Omkar a proposal to supply 100 sacks of rice at Rs 2,000 per sack. Omkar replies, 'I accept, but the price must be Rs 1,900 per sack.' Nisha refuses. Omkar then says, 'Fine, I accept your original offer at Rs 2,000.' Which statement is correct?

Omkar's first reply was a counter-offer because acceptance must be absolute and unqualified. A counter-offer rejects and ends the original proposal, so his later acceptance at Rs 2,000 is only a new offer that Nisha is free to accept or refuse.

  1. AOmkar's first reply was a valid acceptance, so a contract exists at Rs 2,000
  2. BOmkar's first reply was a counter-offer that ended the original offer, so his later acceptance does not form a contract unless Nisha agreesCorrect
  3. COmkar's first reply was a mere invitation to treat
  4. DThe original offer continued, so Omkar's later acceptance creates a contract automatically

Explanation

An acceptance must be absolute and unqualified. Adding a different price is a counter-offer, which rejects and terminates the original offer. Omkar's later acceptance of Rs 2,000 is only a fresh offer, which Nisha may accept or refuse. Option D wrongly assumes the original offer survived.

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