What is Acceptance in Business?
Acceptance refers to a contractual agreement by an importer to repay the amount due for procuring goods at a future specified date. In international trade, documents are presented for acceptance. The buyer of the goods or importer accepts to pay the draft and writes "accepted," indicating acceptance. Thereafter, the buyer becomes the acceptor and is bound to make the payment by the maturity date.
Understanding Acceptance
An acceptance agreement is a portion of the documentary collections for international trade. During a documentary collection, the exporter's bank is accountable for collecting the funds from the importer's bank. The payment is caused once the documents, confirming the shipped goods, are presented to the buyer (importer).
The buyer has the option to accept the documents and, if accepted, is liable to pay the invoice based on the collection and credit terms. With the documents in hand, the buyer gets them to the shipping port or point of entry and offers them to take the property of the merchandise.
Legal Aspects of Acceptance in India
For a contract to be successful, there has to be a valid offer followed by the offer being accepted. Accordingly, the Indian Contract Act, 1872 defines acceptance in Section 2 (b). The definition is as follows:
When the person to whom the proposal was made implies his assent for it, then the offer is said to be accepted. Therefore, the proposal, when accepted becomes a promise.
As defined, when the offeree to whom the proposal is made, accepts the offer unconditionally, it will be considered as acceptance. After acceptance of the offer, it is termed as a promise. For instance, X offers to buy Y's car for Rs 2 lakh, and X accepts such an offer. The offer is now a promise.
An offer does not constitute any legal obligations. When the party accepts the proposal, it becomes irrevocable. The promise is irrevocable because it leads to legal obligations between parties. An offer can be withdrawn or reversed before it is accepted. Upon acceptance, it cannot be revoked or withdrawn.
