A contract is, in a nutshell, an agreement that could be enforced by the respective laws, having the jurisdiction of a particular region.
There are at least two parties involved in a contract:
Section (2) of the said Act says that an offer could be a suggestion made to a party by another party. This suggestion could be in the context of either performing an act or refraining from it. In this process, the promiser is the one who makes the offer to the other party, and the promisee is the party to whom the offer is made.
A contract can only enter into force after the acceptance of the offer by both parties. So, let’s say if the offer by A to B is accepted by B, then the offer will be said to have come in force.
There are also some conditions to the exceptions of the offer, and these are as follows:
The exception to any offer should be completely unequivocal.
There should be no condition attached to the said offer.
The acceptance should also be absolutely and qualified.
In a condition where an offer is presented to a particular group, it should only be accepted by the persons of that group, and if it is accepted by any other person, then there will be no significance of that.
There are also some other conditions associated with the acceptance of such an offer:
The acceptance of an offer must be clearly notified to the concerned person.
The concept of communication of acceptance in the contract law is very well laid down in the judgment of Powell v. Lee case.
By reading section 2(b) of the act, we come to know that:
It is only after the concerned person has accepted the contract, the whole proposal is accepted and comes into force.
The basic guideline is that acceptance should be expressed towards the offeror for the advantage of the offeror.
Acceptance might also be implicit or stated
Going by the act, we recall that only after the offer is accepted, the agreement becomes a valid contract that is legally enforceable in the court of law.
Only after the contract is enforced, both the persons get tied into the agreement and not even a second before that. Acceptance could also be made in written or spoken words and can also be conveyed by the representative legally authorized to act on behalf of the person. In many cases of silence can also be taken as the acceptance of the contract. This is called “agreement sub silentio.”
Facts of the case:
Here Mr. Powell is referred to as the plaintiff. He was actually one of the candidates appear to be in the position of headmaster of a school. The manager at that time referred his candidature to the appointing authority, and the appointing authority, in return, release a resolution which sort of appointing him to the said position. At this point, there was no formal acceptance directly to him, and these were only internal dealings at that time. One board member heard the discussion from a distance in which the other board members were discussing that they would finally appoint him as the headmaster of the school. He then proceeded to inform Powell of the same. After getting the intimation, Powell was quite happy that he was being appointed as the headmaster, but later on, the members of the board cancelled his resolution of being appointed as the headmaster, and because of this decision, Powell went on to file a suit for breach of contract against the managers.
· The main contention that came to the court was whether there was an actual breach of contract or not as stated by the plaintiff?
· Section 2(a) of the Indian Contract Act, 1872
· Section 2(b) of the Indian Contract Act, 1872
The court finally ruled that there was, in fact, no breach of contract, and the acceptance was never formally conveyed to Powell. And because of this, he does not have any defence against the manager’s decision of not appointing him to the post of headmaster. The court noted that- in order to constitute a valid acceptance, there has to be some authorised person who conveys the same to the plaintiff. In the absence of this, there cannot be a valid contract, and hence the court noted that a contract was never formed in this case.
Analysis of the Judgement
“Acceptance subject to the contract is no acceptance.“
The main thing to note here is that the acceptance was never formally conveyed to Mr. Powell. So technically, he shouldn’t be engaging in a suit of breach of contract as- to the law; he was never conveyed anything. And when he was conveyed the final decision by the members of the board, it was a rejection. This decision was the only and final decision as it was conveyed to him by a formally authorised person in charge of doing the same. If we take this case in context to the Indian contract act, we will see that the opening to the post of headmaster was only an invitation to offer and when Mr. Powell applied for the same, he basically intimated his offer to be in place of the headmaster. And now it was up to the board of members to either accept the offer and convey their acceptance to him or reject the offer, which they actually did. So there is nothing wrong, legally, with this whole situation, and the judgement of the court is, in fact, in the interest of all the parties involved.