Principle Acceptance should be made while the offer is still subsisting The offeror is free to ...........

Indian Contract Act (ICA)1872 Formation of Contract

Principle: Acceptance should be made while the offer is still subsisting. The offeror is free to retract his offer at any time before his offer gets accepted by the offeree. Once the offer is withdrawn or is lapsed. it is not open to be accepted so as to give rise to a contract. Similarly. if a time is prescribed within which the offer is to be accepted, then, the offer must be accepted within the prescribed time. And. if no time is prescribed, then. the acceptance must be made within a reasonable time.

What is a reasonable time„, is a question of fact which is to be determined by taking into account all the relevant facts and surrounding circumstances.

Facts: ‘X’ makes an offer to ‘Y’ to sell his equipment for ? 1,000.00. No time is specified for the acceptance. ‘Y’ sends his reply two years after receiving the offer. Which of the following derivations is CORRECT?

There arises a contract between ‘X’ and ‘Y’ to sell/buy the equipment in question for Rs 1,000.00

There does not arise any contract between ‘X’ and ‘Y’ to sell/buy the equipment in question for Rs 1,000.00

‘X’ is bound by his offer and hence cannot reject the acceptance made by ‘Y’

There arises a promise by ‘Y’ to buy the equipment

Explanation:

Here we have to interpret “reasonable time”.
An acceptance made after two years cannot be reasonable time by any standards especially if it is a contract to simply sell equipment and that too the amount involved is only Rs 1000.
Hence, option 2 is the correct answer.