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Brogden v/s Metropolitian Railway Co.1877

What Is Acceptance?

Acceptance refers to a buyer's promise or act of indicating his willingness to be bound by the terms and conditions stipulated in a seller's offer in contract law. Acceptance is a requirement for a legally binding agreement. There is no deal if there is no acceptance. Acceptance can be expressed, implied, or conditional.

Formal contracts can be too time consuming for a busy schedule when it comes to business dealings. Instead, these types of acceptance have been adopted as contracts by buyers, contractors, and merchants. However, in the event of a disagreement, it's always a good idea to sign a formal contract. For a successful contract, there must be a valid offer followed by the offer being accepted.

According to Section 2(B) of the Indian Contract Act, 1872, when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.

The promisor extends an open invitation to the promisee to accept the undertaking's terms and conditions, which, once accepted by the promisee, binds both parties and turns the proposal into a promise. As a result, the difference between an offer (proposal) and a promise is whether or not the offer is accepted (proposal).

Essentials Of Valid Acceptance:

The acceptance of a proposal must be communicated to the promisor in order for it to become a contract. If no specific form has been prescribed, the communication must take place in any form that would be appropriate in the normal course of business.

Furthermore, the offeree must have been aware that an offer had been made when he accepted the proposal. He won't be able to accept the offer if he doesn't know about it.

Brogden V Metro Railway Company (1877)
Equivalent Citation:  (1877) 2 Appcas 666, Hl (E)  - Date Of The Judgement:18 July 1877
Bench: Lord Chancellor Cairns, Lord Hatherley, Lord Selborne, Lord Blackburn, Lord Gordon - Court: Judicial Committee Of The House Of Lords

Facts Of The Case:
The complainants, Brogden, were providers of coal to the respondent, Metropolitan Railway. They finished transactions with respect to the coal regularly for various years, on a casual premise and are not bothered of making any final and formal Contract between the complainant and the respondent. Later both the parties decided that it would be best if a final and formal contract is to be composed between them for their future transactions.

The Metropolitan Railway made a draft agreement and sent this to Brogden to review and make any necessary changes. The complainant made some minor revisions to this draft and filled in certain spaces that were left and also mentioned the name of the Arbitrator for the purpose of Dispute resolution. He sent this revised draft back to the defendant.

Metropolitan Railway recorded that final draft, yet they never imparted their acknowledgment of this corrected agreement to the complainant. Business deals continued to be made during this time, and Brogden continued to supply coal to the Metropolitan Railway by new terms and conditions agreed by both the parties in the Agreement. But then all of a sudden, some dispute arose, and the Complainant argued that there had been no final and formal Contract executed between the parties.

Issues Raised:
  1. Whether there was any binding Contract between both the Parties?
  2. Whether the written Agreement executed between both the Parties was valid?

Laws Relating To The Case:
Section 3, Section 4 and Section 8 of the Indian Contract Act, 1872

The House of Lords held that there was a formal and valid contract between both the parties that is Brogden and the Metropolitan Railway company. The drafted contract that was amended and further filled by Brodgen constituted a counter offer, which was accepted by the conduct and performance of the parties.

The costs concurred in the drafted contract were paid and coal was supplied. Though the communication of the acceptance was done by the parties. Although they tend to mutually perform according to all the clauses mentioned in the Contract. Considering these circumstances, the House of Lords held that performing the clauses mentioned under the Contract without any objections was enough to reflect the acceptance of the Contract by both the parties.

This case is one of the leading case which explains and clarifies the concept of communication of acceptance as it an essential of a valid contract. The communication of acceptance is necessary in order to perform any contract (except general offer). The communication must take place between the offeror and offeree.

But here in this case the House of Lords clearly held that the non-Communication of acceptance cannot be a reason to declare a contract invalid rather if both the parties without any communication performs and adhere to the terms and clauses mentioned under the contract then it will be termed as a valid and formal contract between the parties.

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