Communication of Offer, Acceptance and Revocation in Contracts

Law of Contracts

Introduction

As mentioned earlier that in order to be a valid offer and acceptance.

  • the offer must be communicated to the offeree, and
  • the acceptance must be communicated to the offeror.

Similarly, revocation of offer by the offeror to the offeree and revocation of the acceptance by the offeree to the offeror must be communicated.

Communication of a proposal

According to Section 4, the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

Example

A proposes by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter.

Communication of a Acceptance

The completion of communication of acceptance has two aspects, viz:

  • as against the proposer, and
  • as against the acceptor.

The communication of acceptance is complete:

  • as against the proposer, when it is put into a course of transmission to him, so as to be out of the power of the acceptor;
  • as against the acceptor, when it comes to the knowledge of the proposer.

Example

A proposes, by letter, to sell a house to B at a certain price. B accepts A’s proposal by a letter sent by post. The communication of acceptance is complete:

(i) as against A, when the letter is posted by B;

(ii) as against B, when the letter is received by A.

Communication of a Revocation

The communication of a revocation (of an offer or an acceptance) is complete:

  • as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it.
  • as against the person to whom it is made when it comes to his knowledge.
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Example

A proposes by letter, to sell a house to B at a certain price. B accepts the proposal by a letter sent by post.

A revokes his proposal by telegram. The revocation is complete as against A, when the telegram is despatched. It is complete as against B, when B receives it.

B revokes his acceptance by telegram. B’s revocation is complete as against B, when the telegram is despatched, and as against A, when it reaches him.

Revocation of Proposal and Acceptance

Section 5 provides that a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

Also an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

Example

A proposes, by a letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post.

A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards.

B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards.

Revocation of Proposal and Acceptance

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. Also an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

Example

A proposes, by a letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post.

A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards.

B may revoke his acceptance at any time before or at the moment when the letter

communicating it reaches A, but not afterwards.

Contracts over Telephone or Telex

Persons may enter into contracts either: (1) when they are face to face, or (2) over telephone or telex, or (3) through post office. When persons are face to face, one person making the offer and the other accepting it, the contract comes into existence immediately.

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Similarly, in the case of conversation over telephone, the contract is formed as soon as then offer is accepted but the offeree must make it sure that his acceptance is received by the offeror, otherwise there will be no contract, as communication of acceptance is not complete.

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