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

Priya sends Gupta a proposal to sell her scooter for ₹40,000. Gupta replies, "I accept, but I will pay ₹36,000." What is the legal effect of Gupta's reply?

Gupta's reply is not an acceptance. The law requires acceptance to be absolute and unqualified before a proposal becomes a promise. By offering ₹36,000 instead of ₹40,000 he changes the terms, so no contract is formed on the original proposal.

  1. AIt is a valid acceptance, and the price is renegotiated automatically
  2. BIt is not an acceptance because it is not absolute and unqualifiedCorrect
  3. CIt is a valid acceptance, but only if Priya stays silent
  4. DIt is a valid acceptance that Priya can enforce for ₹40,000

Explanation

To convert a proposal into a promise, acceptance must be absolute and unqualified. Gupta's reply changes the price, so it adds a condition and does not accept the proposal. The options that treat it as a valid acceptance ignore this requirement.

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