General Offer and Performance of the Condition under Section 8 of the Indian Contract Act, 1872: Acceptance by Conduct, Part Performance and Revocation of a Unilateral Offer

Where an offer asks for an act rather than a promise, acceptance is made by doing the act. Section 8 says so in terms, and the rule is simple to state. The difficulty lies in working out its consequences. At what point is the condition performed, so that the contract comes into being? May the offeror withdraw after the offeree has started but before he has finished? Is the offer exhausted by the first performer, or does it remain open to everyone who qualifies? And what happens where the act performed is one the performer was already bound to do? This topic takes those questions in order.

1. Section 8 and Acceptance by Performance

Sections 7 and 8, Indian Contract Act, 1872

7. Acceptance must be absolute. In order to convert a proposal into a promise, the acceptance must: (1) be absolute and unqualified; (2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted.

If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but if he fails to do so, he accepts the acceptance.

8. Acceptance by performing conditions, or receiving consideration. Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.

Section 8 does two distinct things, and only the first is commonly noticed. Its first limb makes performance of the conditions an acceptance, which is the foundation of the unilateral contract. Its second limb makes the acceptance of consideration offered with a proposal an acceptance, which covers the case where the offeror sends money or goods along with his proposal: a person who takes the advance payment and keeps it has accepted, whatever he may afterwards say.

1.1 Why prior communication is dispensed with

Ordinarily an acceptance has no effect until it is communicated. Section 8 creates an exception, and the justification is found in the terms of the proposal itself. An offeror who asks the world to find his missing property, or to use his product in a stated way, cannot sensibly expect each person to write in first and announce an intention to try. By the form of his proposal he has impliedly dispensed with prior notification and indicated that performance will suffice. The rule is therefore not a departure from the requirement of assent but an application of it: the offeror has prescribed the manner of acceptance, and performance is that manner.

2. Performance as Acceptance in Practice

📖 Har Bhajan Lal v. Har Charan Lal, AIR 1925 All 539

Facts: The defendant's son had absconded. The defendant issued handbills announcing that whoever found the boy and brought him home would receive a stated reward. The plaintiff found the boy at a railway station, sent a telegram to the defendant, and brought the boy back. The defendant resisted the claim for the reward.

Held: The Allahabad High Court held the plaintiff entitled to the reward. The handbill was a general offer to the world at large, and any person who fulfilled its conditions with knowledge of it accepted the offer by performing them. No separate communication of acceptance was necessary, because the offer by its terms invited performance.

Ratio: A general offer of a reward is accepted by the act of performance by a person who knows of it. The contract is concluded with that person, and the offeror becomes bound to pay.

The decision is the positive counterpart of Lalman Shukla v. Gauri Datt, (1913) 11 All LJ 489, where a servant who traced the missing boy in ignorance of the announced reward recovered nothing. Read together the two cases fix the rule precisely: performance accepts the offer, but only where the performer knew of the offer when he acted. Knowledge is required; the offer need not have been his only motive.

2.1 Performance of an existing obligation

A second ground of the decision in Lalman Shukla deserves separate notice, because it is independent of knowledge. The servant was already bound by his employment to search for the boy. Doing what one is already legally bound to do is not consideration, and so even a person with full knowledge of a reward cannot claim it if the act he performed was one he owed anyway. A police officer cannot claim a reward for recovering stolen property in the course of his duty, though he may claim it for services going beyond that duty.

3. When Is the Condition Performed?

The contract comes into existence when the condition is fully performed, not when performance begins. Until then there is an offer and a partly completed act, and on strict principle there is nothing to bind the offeror. Three situations must be distinguished.

The condition is a single indivisible act. Returning lost property, or supplying information that leads to an arrest. Performance and acceptance coincide, and the contract arises at the moment the act is complete.
The condition is a continuing course of conduct. Using a product as directed for a stated period, or paying instalments until a debt is discharged. Performance is spread over time, and the question of revocation during performance becomes acute.
The condition is the doing of something the offeror must then accept or use. Delivering goods against a standing offer, where each delivery or each order marks a separate transaction.

3.1 Revocation after performance has begun

The strict logic of the unilateral offer is that the offeror may revoke at any time before the act is complete, because until then there has been no acceptance. That logic produces an unjust result where the offeree has begun in reliance on the offer and is close to finishing. The courts have met the difficulty by implying a subsidiary undertaking not to revoke once performance has started.

📖 Errington v. Errington and Woods, [1952] 1 KB 290 (CA)

Facts: A father bought a house in his own name with the aid of a building society mortgage and allowed his son and daughter-in-law to live in it, telling them that if they paid the mortgage instalments the house would be theirs when the mortgage was discharged. They paid the instalments. On the father's death his personal representatives claimed possession before the mortgage had been fully paid off.

Held: The Court of Appeal held that the father's promise was a unilateral contract, a promise of the house in return for the act of paying the instalments. The promise could not be revoked once the couple had entered on performance, and it would cease to bind only if they left the act incomplete and unperformed. They were entitled to remain so long as they continued to pay.

Ratio: A unilateral offer becomes irrevocable once the offeree has embarked on performance, though the offeror is not bound to pay until performance is complete. The offeree is under no obligation to finish, and the offer lapses if he abandons the act.

The position is therefore asymmetrical, and deliberately so. Once performance begins the offeror is bound not to withdraw, while the offeree remains free to stop at any time. That asymmetry is defensible because the offeree gave no promise; he was invited to act, and having acted in part he is entitled to be allowed to finish.

4. Standing Offers and Repeated Performance

Where a general or open offer contemplates performance more than once, each performance is a separate acceptance and creates a separate contract. The commonest commercial instance is the tender to supply goods as and when required.

📖 Great Northern Railway Co. v. Witham, (1873) LR 9 CP 16

Facts: In answer to an advertisement inviting tenders, the defendant tendered to supply the railway company with such quantities of iron articles as it might order during a twelve-month period, at fixed prices. The tender was accepted. The defendant made several deliveries against orders and then refused to execute a further order placed within the period.

Held: The court held that the tender operated as a standing offer, which was converted into a series of contracts as and when orders were placed. The defendant was bound to fulfil the order already given, and was liable for refusing it. He was, however, entitled to revoke the standing offer as to future orders, since the company had given no consideration for keeping it open.

Ratio: An accepted tender for supply as required is a continuing offer. Each order is an acceptance creating a binding contract for that quantity, but the tenderer may withdraw the standing offer as to orders not yet placed.

⚠ A general offer is not always exhausted by the first performer

Whether the offer can be accepted once or many times is a question of construction, not a rule of law. An offer of a reward for the return of a particular lost article is exhausted the moment one person returns it, because the condition can be satisfied only once. An offer promising a sum to anyone who uses a product and nevertheless suffers a stated consequence is capable of acceptance by every person who qualifies, and the offeror is liable to each of them. The offeror who wishes to limit his exposure must say so in the offer, by capping the number of claims or the period during which the offer is open.

Performance is the acceptance, but only by someone who knew of the offer

5. The Second Limb: Acceptance of Consideration

The concluding words of Section 8 provide that the acceptance of any consideration for a reciprocal promise offered with a proposal is itself an acceptance of the proposal. The situation covered is that of an offeror who sends the consideration along with his offer: advance payment for goods, earnest money with a proposal to purchase, or the first instalment of a price. A person who receives and retains what was sent has accepted the proposal by that act, and cannot afterwards contend that he never signified assent. The limb is a useful reminder that acceptance under the Act is about conduct signifying assent, and not about words.

6. The Position Stated Shortly

Section 8 makes performance of the conditions of a proposal an acceptance, and also makes the acceptance of consideration offered with a proposal an acceptance.
Prior communication of acceptance is dispensed with because the offeror, by the form of his proposal, has prescribed performance as the manner of acceptance.
Har Bhajan Lal: a general offer of reward is accepted by performance by a person who knows of it, and no separate communication is needed.
Lalman Shukla remains the limit: performance in ignorance of the offer is not acceptance, and performance of a pre-existing legal duty is not consideration.
The contract arises on complete performance of the condition, not on the commencement of performance.
Errington v. Errington: the offeror may not revoke once the offeree has entered on performance, though the offeree is free to abandon it.
Great Northern Railway v. Witham: an accepted tender for supply as required is a standing offer; each order is a separate acceptance, and the standing offer may be withdrawn as to future orders.
Whether a general offer is exhausted by the first performer or remains open to all who qualify is a question of construction of the offer.

7. Related Topics and Provisions

Topic or provision	Connection
Offer to the World at Large, and the Lapse of an Offer	The doctrinal basis of the general offer and the time within which it may be accepted
Offer or Proposal under Section 2(a): Essentials and Kinds of Offer	General offers and standing offers among the kinds of offer
Offer vs Invitation to Offer, Lapse and Revocation	Tenders, auctions and the mechanics of revocation under Sections 5 and 6
Types of Contracts	Unilateral contracts as a category
Section 2(b), Indian Contract Act	Acceptance requires the offeree to signify assent
Section 7, Indian Contract Act	Prescribed manner of acceptance and the proviso
Section 8, Indian Contract Act	Acceptance by performing conditions or receiving consideration
Section 2(d), Indian Contract Act	Why performance of an existing obligation is not consideration
Section 5, Indian Contract Act	Revocation of proposals, and its limits in unilateral offers