What is the legal effect of making a counter-offer on the original offer?
Under Section 7(1) of the Indian Contract Act, 1872, in order to convert a proposal into a promise, the acceptance must be absolute and unqualified. As established in Hyde…
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What is the legal effect of making a counter-offer on the original offer?
Answer and explanation
Correct answer C
Under Section 7(1) of the Indian Contract Act, 1872, in order to convert a proposal into a promise, the acceptance must be absolute and unqualified. As established in Hyde v. Wrench (1840) 3 Beav 334, a counter-offer proposing different terms is not an acceptance; instead, it operates as 'A rejection of original offer', terminating the original offer so that it cannot subsequently be accepted.
Option feedback
Option A
Incorrect. An invitation to an offer precedes an offer, whereas a counter-offer is a new proposal made in response to an existing offer that rejects the original offer.
Option B
Incorrect. Under Section 7(1) of the Indian Contract Act, 1872, acceptance must be absolute and unqualified; a conditional acceptance or counter-offer is not a valid acceptance.
Option C
Correct. Under Section 7(1) of the Indian Contract Act, 1872 and the principle in Hyde v. Wrench (1840), a counter-offer introduces variations to the terms of the proposal and operates as 'A rejection of original offer'.
Option D
Incorrect. 'Bargain' is a general colloquial term and does not state the legal effect of a counter-offer on the original proposal.
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