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Understanding Acceptance in Business: A Comprehensive Guide

by | Jun 2, 2023 | FinTech Articles | 0 comments

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Important Keywords: Acceptance, Business, International Trade, Documentary Collections, Legal Aspects, Indian Contract Act.

Introduction:

In international trade, accepting payment terms is crucial to ensure a smooth transaction between the buyer and the seller. It is an agreement made by the importer to pay the amount due for procuring goods at a future specified date. In this article, we will discuss the concept of acceptance in business and its legal aspects in India.

Acceptance in Business:

Acceptance in business refers to the contractual agreement made by the importer to repay the amount due for procuring goods at a future specified date. In international trade, documents are presented for accepting. 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 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.

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 accepting. After accepting of the offer, it is termed as a promise. An offer can be withdrawn or reversed before it is accepted. Upon acceptance, it cannot be revoked or withdrawn.

Key Takeaways:

  • In business is a contractual agreement made by the importer to repay the amount due for procuring goods at a future specified date.
  • Its agreement is a portion of the documentary collections for international trade.
  • It can lead to legal obligations between parties.

Conclusion:

It is an essential aspect of international trade, and it is crucial for both buyers and sellers to understand the concept thoroughly. In India, acceptance is defined under the Indian Contract Act, 1872, and it is necessary to ensure that all contractual obligations are met by both parties.

Read More: Notification No. 53/2018 – Central Tax: Seeks to make amendments (Eleventh Amendment, 2018) to the Central Goods and Services Tax Rules, 2017. This notification restores rule 96(10) to the position that existed before the amendment carried out in the said rule by notification No. 39/2018- Central Tax dated 04.09.2018.

Web Stories: Notification No. 53/2018 – Central Tax: Seeks to make amendments (Eleventh Amendment, 2018) to the Central Goods and Services Tax Rules, 2017. This notification restores rule 96(10) to the position that existed before the amendment carried out in the said rule by notification No. 39/2018- Central Tax dated 04.09.2018.

Download Pdf: https://taxinformation.cbic.gov.in/

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