 Good evening, everyone. And amongst us, we have Mr. Justice Suresh C. Gupta, a former judge from Bombay High Court. And since we have been calling a lot of speakers and we have the pan in the audience, we are getting requests that once there is a commercial understanding of the nuances, we should take something forward with him. And Mr. Suresh Gupta, I have been told, I would be very candid that he's an expert in commercial aspects, arbitration aspects and the contract. We had a lot of discussions or we can say brainstorming on the topic so that actually the point can be hammered in the right way. And so much so, in fact, today morning also, Justice Gupta called me up and said that let's narrow down the topic and simplify to the blocks, which as a judge or as a lawyer, as an arbitrator he has failed, that people could understand the topic. That is why it's very look simple, but once who understands will understand professionally as a judge, etc. How relevant this is making of a contract, communication and acceptance of a proposal. Taking you from the topic I said that we had a communication, and we are kind of justice Gupta was kind enough to accept our proposal. And while we take this session forward, he will make us understand whether it will also constitute a contract that our communication and acceptance to make us understand how its contract is made. That will be that is on a lighter way. And being a weekend we are enamored by the fact that everybody has joined. And thank you sir for accepting our invite, and it's such a pleasure and we'd also like to thank this Russian Dalvi was a connecting point to connect with him. Thank you sir. Good evening everybody. First, let me begin by complimenting because he and his team for these wonderful events which they have been holding. And I've gone through the earlier episodes and it's wonderful work that they have done. So friends, today we are embarking on a new and interesting journey into the very first and basic law, forming the branch of commercial mercantile law, namely the law of contract. Let me ask you what is at the core of any mercantile law. It is enforcement of a promise. What does the plaintiff tell the court? He says, sir, the defendant made a promise. I looked for its fulfillment. I was ready to perform my part. But the defendant never made it good. So please enforce it by directing him to either perform his promise or compensate me for its own performance. That is precisely what a mercantile plaintiff ordinarily tells the court. So our today's discussion concerns how a promise is made, how it becomes binding, or in other words, how does a contract come into being? We are making just a beginning and that too at the very beginning. Let me put it this way. Our contract act, which is one of the oldest mercantile laws in India, explains all this, what we are going to hear today in eight pithily worded provisions, sections 2 to 9. We shall be today taking a quick review of these provisions. This review is basically designed for common folks as well as students of law. So it will be my endeavor to keep to the basics and explains things as simply as I could. Friends, the contract act opens with a provision called interpretation clause contained in section 2. It explains what a contract is. At the heart of any contract is an agreement as you will agree. Though an agreement mind you by itself is not a contract, we shall see how. But first, what is an agreement? How is it made? And what is it composed of? The contract act is a 150 year old enactment made as far back as in 1872. So the definition of contract and of the agreement being one of the most basic concepts. One should have thought that these are long settles signed and sealed, sealed and delivered as they say in law. Yet the subject of what a contract, what is a contract or an agreement still engages the court's mind as late as in 2017. The Supreme Court in Vedanta Limited's case has something to say about this definition. It said every transaction to be recognized as a contract must, in its ultimate analysis, resolve itself into a proposal and its absolute and unqualified acceptance. So the whole thing starts with what is known as a proposal. What does a proposal consist of? In law, it has three components. The first is a person's willingness to do or abstain from doing something. The second is the communication of such willingness. The proposer must signify his willingness to someone else. And the third is the purpose of such communication. It is not enough that he simply signifies his willingness to that other. He must do so with a purpose and that purpose must be to obtain the ascent of that other person to whom the act or abstinence is proposed by him. So when he signifies to another, his willingness to do or abstain from doing anything with a view to obtaining the ascent of that other to such act or abstinence, he is said to make a proposal. So that is what a proposal is. Now as the Supreme Court says, the other necessary component is the acceptance of that proposal by the offering. When a person, the person to whom a proposal is made signifies his ascent there to the proposal is said to be accepted. Now this acceptance has two elements. First, it must come from the person to whom the proposal is made. It can't come from any other person and he must communicate it. Once he does that, the proposal becomes a promise. So now we have two parties, the promissor and the promissy and what they have between them is a promise. But mind you, we still do not have an agreement. Let alone a contract, further elements are necessary for coming to these stages. The promissor has promised and the promissy has accepted the proposal. But that is no agreement. For an agreement there must be what is known as consideration. It is only when at the desire of the promissor, the promissy or some other person does or abstains from doing something, there arises a consideration. Such consideration may be a matter of past, present or future. At the desire of the promissor, if the promissy either he must have already done nor abstained from doing something which is called past consideration. Or does or abstains from doing something present consideration or must promise to do or abstain from doing something that's a future consideration. So there must be this kind of consideration. So in short, when the promissor offers to do or abstain from doing anything and at his desire, the promissy accepts the offer, willing to do or abstain from doing anything in return, each offers a consideration for the other to act or abstain from acting. And then do we have an agreement? Every promise and every set of promises, forming the consideration for each other is an agreement. So far so good. But what about the contract? When shall we have it? Well, one last element remains and that is the enforceability of the agreement. It is only when the agreement is enforceable by law that it becomes a contract. So we finally have now a definition of contract. An agreement enforceable by law is a contract, very understandable. But how so ever understandable it is, it does give rise to a host of intricate issues. A nightmare I should say for clients and a paradise for lawyers because you would agree. Let us think about it. Offer acceptance and consideration. If all three elements are present, there is an agreement. And if that agreement is enforceable by law, we have a contract simple, but not so very simple. Take the case of Colonel MacPherson. A Colonel in British India, he owned a bungalow in Markara known as Morvern Lodge. When Appanna was interested in buying it, he asked a Colonel's manager to send a cable to the Colonel and convey his offer of rupees 4000 for the bungalow. Mind you, this was in the year 1944, so 4000 was a huge sum. So the manager sent a cable saying, have inquiries, Burkara bungalow is for sale, wire lowest figure. There was no reply from the Colonel, but Appanna was insistent. He now directly wrote to the Colonel that he was prepared to purchase the bungalow for rupees 5000. And if that was acceptable, the Colonel should inform him to which bank he should send his check and he would do so. Again, no response from the Colonel. Appanna still would not give in. He jacked his offer to rupees 6000. This time, another manager sent a cable conveying Appanna's new offer. This time, there was a reply from the Colonel, a terse one won't accept less than rupees 10000. Appanna immediately accepted what he called a counter offer from the Colonel. He wrote, I hereby confirm here is 10000. But before the deal could be done, the manager received further higher offers from others, the highest being rupees 11000. He then cabled the Colonel, hold offer for more than bungalow rupees 11000, strongly recommend acceptance. And the Colonel accepted this new offer. The purchaser paid the amount and occupied the bungalow. Appanna went to court. According to him, there was offer, acceptance and consideration in his case, and therefore a concluded contract. He sought its specific performance. The official commissioner's court accepted the plaintiff's case and awarded him compensation. In appeal, the Supreme Court said no. There was after all no concluded contract. When the Colonel sent his cable saying nothing less than rupees 10000. What he sent was not an offer which could have been accepted. What he did was he merely invited an offer. What thereafter flowed from Appanna was an offer, an offer of rupees 10000, an offer which the Colonel never accepted. What the Colonel cable conveyed in his cable, in other words, was not an offer, but an invitation to offer. I am not interested in selling the bungalow for anything less than 10000. If you have anything below this, don't bother me. Make an offer only if it is minimum rupees 10000, that 10000 or more, that is what the Colonel meant. And Appanna never made that offer. So there was no question of acceptance and therefore no contract. So you see each of the elements that make up a contract does give rise to its own peculiar issues. First of all, how is communication of a proposal or an acceptance to be made? Is there any formality involved? Does the acceptance have to be expressed or can it also be implied? What if the recipient of the communication simply stays silent? And when is the communication complete? All this has been dealt with by the two following sections, sections three and four of the contract. Sections three specifies what a communication is and section four describes when it is complete. A proposal or acceptance may be made. The words used are deemed to be made by an actor or mission by which a person making it intense to communicate it or rather, which has the effect of communicating it. So it is from the point of view of the recipient, whether it has the effect of communicating it. But the communication, this communication may be made in different ways. It can either be by a written or spoken word or even for that matter a signaled word. Sometimes a word may not even be required at all. If you hail a taxi by waving at it, what are you doing? You are communicating your proposal and what is that proposal? Your proposal is to take a ride at a rate to be determined according to the taxi meter. And if the taxi driver allows you to hitch a ride by admitting you inside his vehicle, he communicates his acceptance. No words are exchanged and yet a contract has been formed. But mind you that the words are not necessary does not however mean that mere silence of one party to the offer may amount to its acceptance. Why is it so? Because the law does not cast any duty on the person to whom the proposal is made to even reply to that proposal. And hence, acceptance cannot be inferred from the offer is mere silence or inaction. The reason obviously is that silence and inaction by their very nature are equivocal and there can be more than one reason or the offer to be silent or inactive. There must be in other words a more trustworthy, a more certain way of communicating acceptance. Here again, there is an interesting footnote. So the general rule is that silence or inaction cannot be construed as an acceptance. Under certain circumstances, the offer is silence coupled with this conduct which takes the form of a positive act may constitute an acceptance. This is what the law calls an agreement sub silent show. The case of Bharat Petroleum Corporation Limited versus Great Eastern Shipping Company is a very well known authority on such agreement. By a charter party, Bharat Petroleum had hired vessels from Great Eastern for two years. This period was extended on the same terms and conditions as the original charter party. Sometime before the end of this extended period, oil companies including Bharat Petroleum, they sought permission of the Ministry of Petroleum for a further extension of their charter parties, the ministry declined. So the oil companies floated a fresh tender for carriage of petroleum products along the Indian coast for a fresh period of one year that is after the originally extended period of the original charter party. In response, Great Eastern submitted its bid. But before the bids could be finalized, one of the bidders went to the high court questioning the evaluation process. That petition was disposed off with the court directing the tender evaluation committee to fix the charter higher rates and further directing that no contract for the proposed fresh period of one year need to be entered. Since the new tender period was about to expire by the time the high court took up this case finally. But in the meantime, Great Eastern's vessels all the time continued to be chartered by Bharat Petroleum. In this period, Great Eastern had communicated its willingness to any agreed new rate if it was fair and reasonable for one year and on the same terms and conditions and provided all nine of its vessels which were then under hire were continued to be used. There were some proposals counter proposals but nothing came of them for about two months there was no communication the vessels however continued to be chartered. Sometime later, an arrangement, a provisional arrangement was proposed by Bharat Petroleum at 80% of the charter rate as an ad hoc hire Great Eastern didn't accept that the vessels however continued to be on charter. The matter then finally went to arbitration. The arbitral tribunal concluded that they had no jurisdiction to decide the reference. Since what was invoked by Bharat Petroleum was the old arbitration clause which was part of the original charter party which had come to an end. The disputes on the other hand had arisen subsequently and for this subsequent period and altogether different arrangement was in place. And in this arrangement there was no arbitration clause simple. The Great Eastern challenged this decision. A single judge of the High Court set aside the award. The matter went in appeal before the Supreme Court. The short question before the court was whether on the expiry of the extended period of the original charter hire, the original charter party had come to an end and with it, the arbitration agreement had perished. The Supreme Court said it was no doubt true that the general rule was that an offer was not accepted by mere silence on the part of the offering. But the court said here after the extended period came to an end and bids received pursuant to a fresh invitation with pending evaluation. The Great Eastern had informed Bharat Petroleum that they were agreeable to apply new rates for use of the vessels provided all nine vessels were used and on existing terms and conditions of the charter party till the tenders were decided. So, though there was no agreement between the parties to that effect, nevertheless the court said Bharat Petroleum continued to use the vessels which were on hire with them under the original signed charter. And this conduct on the part of the parties in the court's view when in particular Bharat Petroleum silence on Great Eastern's communications coupled with the fact that they continue to use the vessels manifestly went to show that except for the charter rate. There was no other dispute between the parties. Bharat Petroleum had accepted his Great Eastern stand sub silent show and it continued to bind itself on all other terms and conditions of the charter party, which obviously included the arbitration clause. Thus, the Supreme Court ruled there was an arbitration agreement even for the subsequent period. And the tribunal had the jurisdiction which was a classic case of acceptance sub silent show. So what is the test here. The test is simply an objective test. The task of the court is to discover what each party could be said to convey, or rather what the other party was reasonably entitled to conclude from the behavior or attitude of the maker of the communication. So the court is required to review how the parties acted, what the parties said or wrote, and then infer whether the intention expressed by them in their acts or words was to bring into existence a mutually binding contract. Now section four tells us when the communication is complete. The communication of a proposal is complete as against both the proposer and the offering when it comes to the knowledge of the offering. But whereas the communication of acceptance is concerned it is complete differently as against the proposer and the acceptor as against the proposer it is complete when it is put in course of transmission to him so as to be out of the power of the acceptor. And the communication is complete as against the acceptor when it comes to the knowledge of the proposal. There is an illustration of the act in the act for each of these propositions. A proposes by letter to sell a house to be at a certain price. The communication of the proposal is complete when we receive the letter. And then B accepts the proposal by a letter sent by post the communication of the acceptance is complete as against a when the letter is posted, not when it is received. But as against B to whom it is addressed, it is complete only when the receipt when the letter is received by a. For example, communication of a proposer proposal. Requires knowledge of the offering the moment the offering however accepts it by sending an intimation such acceptance is complete as against the proposer as soon as the intimation is sent or transmitted. The law does not require that intimation to be actually received by the proposal. One of things there is a corollary provision which is consistent with this scheme of communication and completion of proposals and acceptance and that is contained section five of the contract act. It deals with revocation of the proposals or acceptances. The proposal may be revoked according to section five at any time before the communication of his acceptance is complete as against the proposer, but not afterwards. As we have seen the communication of acceptance is complete as against the proposer when it is put in course of transmission so as to be out of the power of the acceptor. Before the communication is put in such course of transmission, the proposer is free to revoke his proposer but once it is put in such course by the acceptor, the proposer is not free to revoke his proposer. So when a makes a proposal and it reaches B, it is within the power of a to revoke it at any time before B posts his letter of acceptance but not afterwards. As for the acceptance, it may be revoked at any time before the communication of acceptance is complete as against the acceptor. So when B posts a letter of his acceptance before the letter reaches A, he is free to revoke his acceptance but not afterwards. Let us see how this works in life. There is a case of Janardhan Mishra who was an employee in health and medical services department of the UP government. His resignation from service was a subject matter of an appeal before the alabadhaiko. He had resigned and that whether this what happened to this resignation was the subject before the alabadhaiko. It was his case that some higher ups in his department were harassing him. And as part of this harassment when he was going to office, they took his resignation on the spot by use of force. So the very next day, he lodged a complaint with a request that he might not be relieved from service based on the forcible resignation. The appointing authority after a few days without responding to his complaint proceeded to accept his resignation and relieved him from service. The lower court ruled in favour of the department. It said that a resignation once tendered cannot be withdrawn without the permission of the appointing authority. And it was entirely in the appointing authority's discretion whether to allow such withdrawal. So the alabadhaiko actually upheld the lower court's order on some other grounds. It did not agree with this view on the employee's inability to unilaterally withdraw his resignation. The alabadhaiko said that in the absence of any statutory rules governing the matter, submission of a resignation by an employee was like a proposal for bringing the contract of service to an end. According to section 5 of the contract, a proposal could be revoked at any time before communication of its acceptance was complete as against the proposer. The court said the plaintiff appellant in this case before it was a temporary employee of the government and there was no rule regarding regulating the resignation from service by a temporary government servant. The only rule was to the effect that such service was terminable by a one month notice given either by the government servant or by the appointing authority. The court said that going by the principles, the general principles of law of contract in sections 4 and 5, if before the acceptance the government servant were to withdraw his resignation, the appointing authority could not refuse permission to withdraw. If such withdrawal was received at any time before the acceptance of his resignation or before such acceptance was put in course by the appointing authority so as to be out of its power to retract. So when we have seen, we have now seen when a revocation can be made. Let us now see how it is to be made, how it is to be made. Section 6 talks about how revocation of a proposer is to be made. According to section 6, the revocation of a proposal can be made in four different ways. The first of course is by communication of the notice of revocation, its timing of course must be in keeping with section 5. The second is the lapse of time prescribed in the proposal for its acceptance or if no time is prescribed by the lapse of a reasonable time without communication of the acceptance. There is a case of Mangalam Express cargo, the Delhi High Court case where the High Court was considering the debarment action taken by the respondent railways against a contractor. This debarment was on the ground that despite acceptance of their bids, the petitioners did not perform the contracts. In that case, the petitioners had submitted their bids incorporating a clause in the tender conditions which required them to abide by their quoted rates for a period of 90 days from the date of opening of the tenders. The tenders were opened on 1st May 2015 but the acceptance letters were issued only on 30th July 2015 that is to say after expiry of 90 days. So the offer being valid only till 90 days and the acceptance having come there after according to the court there was no concluded contract between the parties. So no obligation to perform and since the time prescribed in the offer letters had elapsed due to prior to the acceptance the offer set through revoked under section 6 of the contract act. So the railways action of debarment was struck down by the Delhi High Court. So this was a case where the time for acceptance was prescribed in the proposal. In another case of Ramsgate Victoria Hotel, the defendant wanted to purchase shares in the hotel. He put in his offer for a certain price and paid a deposit to his bank account to buy them at that price that was in June. He did not hear anything from the hotel company until 6 months later when he received a letter of acceptance from the hotel company. But by that time the value of the shares had dropped significantly and he was no longer interested. Though he had not formally withdrawn his offer he did not go through with the sale. The company brought an action for a specific performance. The court held that the hotel company's action ought to fail. According to the court the defendant's offer was made as far back in June. A reasonable period had elapsed since then. Six months had elapsed and the offer was thereafter no longer valid for acceptance to form a contract. And what is a reasonable time is of course in any given case would depend on the subject matter. In this case the court held that six months could be said to be reasonable time in the case before it. Whereafter the offer for shares could be said to have expired by lapse of time. So this is the second way of revoking a proposal. The third way of revoking a proposal is by the failure of the acceptor to fulfill a conditional precedent to acceptors. What the section suggests is that if a condition is to be complied with by an acceptor before acceptance. Its non-fulfillment will prevent the formation of a contract where a section is not unfortunately not very happily worded. The meaning of the term condition preceded to acceptance is not very clear. But in plain language I can explain it this way. If the proposal is conditional then it would lapse if the offer he does not accept the condition. For example, there was a case called a Piperite sugar mills case where the Supreme Court was considering the case of an employer who was proposing to transfer his mills. And as a result as the trade union had threatened a strike. The employer made an offer to the union that if this strike were to be withdrawn a certain amount would be paid to the workers from of the profits that he would make on the transfer. The union did not respond, there was no correspondence and the transfer went through. The union thereafter demanded money based on the employer's offer. The court said no, there was no acceptance of the condition of offer that being thus to make an offer to withdraw that strike. There was no such offer and hence no liability on the part of the employer to pay any amount to the workers. So that's the third wave of revoking a proposal. The fourth way is by the death or insanity of the proposer if the fact of such death or insanity comes to the knowledge of the acceptor before acceptance. If the death or insanity occurs after the acceptance then of course the legal heirs are all the guardian as the case may be in the case of insanity will be bound by the contract because it has already come into existence by means of offer, acceptance and consideration both supported by consideration. There are of course exceptions like when in the case an offer is for personal service which anyway comes to an end after the death of the offeror or even of the offering. There was a insurance case, Amandu Nisa versus LIC where the life insurance policy of the insured had lapsed and then death took place. The policy holder having died before the revival procedure could be completed when the process but was not completed. The claimants were held entitled only to the paid up value of the lapsed policy and not the full amount of the policy. As renewal was possible only during the lifetime of the assured and the rights and liabilities under the new contract revived contract did not begin until the new terms and conditions were accepted. If an offer is addressed to a man who dies without having accepted or refused it, his executors have no power to accept it. This is so both in England and India. And because no proposer can be presumed to have intended to contract with a deceased person's estate. So we have seen now four ways of communicating revocation of a proposal. Now to convert a proposal into a promise. The next principle is that the acceptance must be firstly absolute and unqualified. That is the mandate of section 7 of the contract. Secondly, it must be expressed in some usual or reasonable manner. Unless the proposer describes the manner in which it is to be accepted. But if it is not so accepted in the manner proposed by the proposer within a reasonable time, the proposer must insist that the proposal shall be accepted only in the manner prescribed by him and not otherwise. But if he fails to do so, then he is said to accept the offer, he is said to accept the acceptance. The idea behind this rule, which is sometimes called the mirror rule, is that the offer and acceptance must correspond. The acceptance much matched the terms of the offer. If there is a variation between the offer and the acceptance in respect of any material term, the parties cannot be said to be at idem, then they are at cross purposes so that there is no real correspondence between offer and acceptance. Now, the intention of the offer to accept. It must be expressed with such certainty as to leave no manner of doubt that the terms offered by the proposer are assented. A mere acknowledgement of an offer or a reply that the offer intends to place an order does not amount to an acceptance. So also seeking a clarification of an offer neither amounts to its acceptance nor even to making of a counter offer. An acceptance given under protest also does not result in a binding contract. Now, we must note one distinction in this behalf. Sometimes acceptance is made subject to payment of deposit or consent or confirmation of the third party. A question may then arise whether this acceptance is conditional and therefore not binding on the proposer. Now, it all depends on whether any such condition is a condition preceded to the performance of the contract or a condition preceded to the formation of the contract. If it is a condition preceded to performance, then it is a promissory condition. The acceptance in such cases can be said to be unconditional. It does result into a contract. What the condition qualifies in such cases is the performance of the acceptor's promise is qualified by this condition. So that if this condition is not performed, the acceptor would not perform his promise or part with his consideration. That is a promissory condition. But if on the other hand, the acceptance comes with a condition preceded to the formation of the contract, then such acceptance by itself does not create a contract. It may sometimes be termed as a counter proposal on the part of the acceptor who then becomes a proposer and whose proposer is then subject to acceptance on the same terms and conditions as are applicable to any acceptance. An acceptance with a variation in the terms of the proposer or with a qualification is a counter proposal, which must be accepted by the original proposer before a contract is made. An interesting case arose in this behalf in the matter of Devkar exports versus New India show-offs. The affluent Devkar exports had imported an expensive machine which was financed by the Maharashtra Finance Corporation, MSFC. It was insured with the respondent New India assurance against the risk of fire. Now long after the expiry of that policy, MSFC sent a check for renewal of that policy. A formal stamp receipt was also issued by New India assurance confirming receipt of that check. By a subsequent letter, New India wrote that though it had received the premium amount, no proposal was received from the appellant Devkar exports. So it was not in a position to issue the fire insurance policy. So it sent a standard proposal form to the appellant Devkar along with this letter. The appellant filled in and signed the proposal form and delivered it to the insurer. Now in the signed form he stated that this insurance cover was required by him for a period from it is 12th March 1988 to for 18 months, 12th September 1989. But the insurer issued an insurance policy dated June 89, 30th June 89 extending the insurance cover for a period of one year. But this was with effect from the date when the premium check was received by that was sometime in August 88. So the cover given by the insurance company was between August 88 to August 89. This policy was received by MSFC. They did not raise any objection about the period of the cover. And as luck would have it, the machine was damaged in a fire accident in February 90. The appellant launched a claim with the insurer. The claim was rejected on the ground that there was no cover anymore. As of February 90, there was no cover. The appellant approached the consumer commission, then he went to the civil court. And after all that, he came to the Supreme Court in an appeal. And its argument before the Supreme Court, but it's a very ingenuous kind of argument. It said that when the insurer was not able to issue a policy of insurance for the period required in his proposal, then the only alternative for the insurer was to issue a policy to be effective prospectively from the date of its issue. And the date of issue being 30th June 89. The policy should be treated as covering the machine against fire is during the period from June 89 to June 90. And if that is so, the date of fire, on the date of fire that is February 90, there was an existing cover. Ingenuously put. But the court also made a very ingenuous observation. It did not find merit in the appellant's argument. What the court said was that an insurance policy was a contract based on a proposal and acceptance. The appellant made a proposal. The respondent accepted the proposal with a modification. Therefore, it became a counter proposal. Once that counter proposal is issued, the appellant had three choices. The first was to refuse the counter proposal, in which case there would be no contract. The second was to accept either expressly or implicitly, in which case there would be a contract, but in terms of the counter proposal. The third was to make a further counter proposal, in which case there would again be no concluded contract. Unless the respondent agreed to such counter proposal. But even that did not happen. But the court said the appellant did not have the fourth choice which he was exploring of propounding a concluded contract with a modification, which was neither proposed nor agreed by either party. So if the appellant did not agree to the policy covering the period August 88 to August 89, instead of what he had proposed, March 88 to September 89, 18 month period, which was originally proposed by him. If this did not happen, the result would never create an insurance contract effective from June 89 to June 90, that was impermissible as a result of these provisions. So that's how it is to be made. Now, the acceptance may come, not merely through its communication by the acceptor. The performance of conditions of a proposal or the acceptance of any consideration for a reciprocal promise offered with the proposal is an acceptance of the original proposal. This is provided in section eight of the act that is called acceptance by conduct as against the other modes of acceptance, which is verbal or written communications contemplated by section seven and nine. But it is well settled that a proposal may be accepted by conduct. What needs to be seen is whether the conduct of the offeree, either in performing the conditions of the proposal or in accepting the consideration offered by the proposer amounts to an unequivocal acceptance of the offer made. In this case, Bhagwati Prasad versus Union of India decided by the Supreme Court. Here, a railway contractor had a claim against the respondent railways, two consignments of iodized salt, which were booked by him, were not delivered by the railways. So he launched two claims for rupees 53,264 and rupees 51,686 for non delivery of the two consignments. The railways admitted the claims only to the extent of something like 9,000 and odd in both cases and issued two checks for these admitted amounts. The checks were encashed by the contractor and he thereafter filed a claim for the balance. The contractor's case was that he wrote a letter treating these checks as payments accepted under protest and he was entitled to claim the balance payment in court. On the other hand, it was the case of the railways that the checks were sent with a note that they were issued in full and final settlement and if there was any dispute about this settlement, they should be returned. The court held that it was proved that the checks were sent under specific instructions of the railways as claimed by them and that they were encashed. This, the court said, amounted to the acceptance of the railways proposal by Kondak. The court found that there was no proof that the letter was sent to the railways before encashing the checks. The court observed that if there was no evidence that retention and encashment of the checks were with a reservation and such reservation having to be communicated before conveying acceptance by Kondak. The proposal must be treated as having been accepted by Kondak and the contractor would have no claim thereafter. Now, here we must remember one thing. It's not always necessary that the performance of the conditions must be notified to the offeror. It may be sufficient that the conditions were performed. The most obvious example is of a publicly offered reward where a person who recovers a particular lost object is offered an reward. In such a case, the party finding the object has to prove nothing more than that he performed the conditions on which the award was offered. He may not have communicated that he did so. Section 9, which is the last section of our discussion, provides for what are known as express promises and what are implied promises. If a proposal or acceptance of promises made in words, the promise is said to be expressed. Insofar, it is made otherwise than in words, it is said to be implied. A proposal or acceptance may be expressed orally or in writing, a party signing a written contract or a written offer in a document accepted by another writing, by the offeree, by fax, telex, telegram, by word of mouth, either in the presence of each other or on telephone, voicemail. These are all examples of express promises. On the other hand, if there is no express offer or acceptance, but the act or conduct is such that it can only give rise to an inference that there is an offer or acceptance, the promise is said to be implied. An example of an implied term is to be found in the old case of Haridas-Ranchoddas versus Mercantile Bank, decided by the Privy Council. In this case, the bank had instituted a suit against defendants Haridas-Ranchoddas in Bombay High Court. The suit was to recover an overdraft balance due from the defendants to the bank and the interest on that balance. The interest charge was compound interest with monthly rests on the amount, amounts from time to time withdrawn by the defendants. The defendants claimed that there was no contract of compound interest. They relied on the express clause of the contract, which simply provided for interest at 7.7% per annum calculated on daily balance of the overdraft. What the court found was that whatever may be the strict interpretation of this clause, the bank invariably struck a balance on its customers' accounts on the last day of each month and charged interest on that amount. And the interest so charged was added to the monthly balance and the resultant balance which included that interest was carried forward to the debit of the customer as the balance due on the first of the following month. The passbook of the defendants clearly showed all this. So both the trial court and high court took the view that the defendants knew that the bank was charging compound interest and agreed to that interest being charged in that way with monthly rests and the privy council agreed with this view. So here by the course of conduct consistently followed by the parties, the term for computation of compound interest was implied into the contract. Now these terms are implied in broadly three ways. These terms implied by custom or usage, terms implied by law and other terms implied by courts. Custom usage of course is the usual understanding of persons entering in like transactions in like circumstances. Every trade has its way of doing things. On the other hand examples of implication by statute are there is a section in sale of goods act which implies rights of an unpaid seller. Then a provision in the transfer of property act section 65 which provides for implied contracts by a mortgager. So apart from custom and statute, it is also permissible to the court to consider the circumstances in which terms can be implied. A contract is many times partly expressed, partly implied. It is not just what is set out expressly in a written contract that constitutes the terms of that contract. If on the reading of a document as a whole, it can be fairly deduced from the words used by the parties that they had agreed to a particular term. The courts would allow the parties to set up that term. Sometimes the courts do it to imply to lend a business efficacy to a contract. So these are all the third type of implied terms. So friends with that, we come to the end of our today's topic. Mind you, we only discussed so far what is a contract and how it is made. As I said in the very beginning, we have only made a beginning. For making any enforceable contract, there are various other vital elements such as free consent of parties competent to contract, lawfulness of the consideration forming the basis of their contract as also lawfulness of the object of that contract. All of which go into making of a lawful contract. They are all interesting facets, but these I'm afraid we'll have to wait for another day. Thank you. So I was just feeling as if I'm back to my law school, the way you clarified the things. It helped me to relive my missing and in fact, thank you. One of our followers and he's a principle he writes an authoritative and an encyclopedia flow of jurisprudential traditional torrent of general principles of contract. Who goes to justice? This is by a professor, Dr. Mohan. Principal question to the college of law. Another message has come excellent session sir looking forward for more and more sessions. Okay. It was a wonderful evening and it was nice to talk about these basic principles after a long time I was talking about all this. And in fact, the way you were explaining I felt as if I was studying from a professor who could explain that things and it only shows the knowledge how deep it is. Thank you. Since I was talking to you in the morning and whether we can take it in English or Hindi, because we are seeing all sessions are coming excellent sir amazing session sir thumbs up. So, since we have taken the entire session and we have not received any questions I said because I felt myself that it was so wonderful explained that people who so ever is a student or dealing in commercial law etc. But actually enjoy this session. I can see all these comments coming up and it's nice to read them. I was also watching on the YouTube people are actually loving it. I do not know off the cuff it can be. It's saying no questioning only listening. Thank you. So, thank you. Thank you. I will just ask sir if this in the way you explained illicitly in English, if it has to be explained in Hindi, what could be the gist of all these sessions in a bird eye view. I have a sense of know would be much better in English I remember that. Yeah, and I love to take make special efforts, you know, because I may be slightly more comfortable talking in Marathi, but that's my mother tongue but Hindi. Let's try it for the first time though I will not be. I was mentioning to you I heard justice Nandra jokes, Hindi, and it was so endearing, you know, the language, the way he was explaining in Hindi. It was pleasure to hear that I may not be able to do that. I'm not even for a moment expecting because myself, maybe the flow of English as a normal person if you once speaks it's different. But if you have to explain the legal policies and legal connotations, it's entirely different. Some gist if you can be it can be mixed also in the English combination, so that if I feel that an audience who watches this and he has more clear of an ending, you can understand. Let's attempt that. I remember saying that it's better to try and fail rather than failing to try. That's really well put. Yes, excellent session, knowledgeable session, please come along with more topics. Thank you because good day, good evening, good day to all of you. We all get from the feedback what we get, then we keep on insisting upon the speakers or our entire endeavor is you would have also seen that to bring the best of the speakers from back. I really appreciate it. Thanks. So let's try for the first time. Hello. I think you have logged out. It seems that sir has logged out, but thank you friends for staying connected with us. And tomorrow, we have a session with just a swing Thomas and just sharing the topic with you. The topic for tomorrow is legal here's legal representatives and nominees. Is there any difference so subtle between the between them.