Project on Contract Act I FYLLB SEM I

The Communication of Proposal : Acceptance and

Revocation

SUBMITTED BY
Pratik Tukaram Godage

DIV-A; ROLL NO – 22

SUBMITTED TO
Prof. Madhura Bhangle

Thakur Ramnarayan College of Law

(TRCL)
Table of Contents
Introduction............................................................................................... 3
Definitions.................................................................................................. 3
Proposal or Offer.......................................................................................................3
Communication of Proposal......................................................................................3
Acceptance of Proposal.............................................................................................5
Revocation of Proposal..............................................................................................5
Essentials of Valid Acceptance.................................................................5
Communication of Acceptance................................................................6
Revocation of Acceptance......................................................................... 6
Case Laws.................................................................................................. 8
Conclusion................................................................................................. 9
Bibliography............................................................................................ 10
Introduction.
Contracts play an important role in our everyday life ranging from insurance policies to
employment contracts. In Fact, we enter into contracts even without thinking, for example,
while buying a movie ticket or downloading an app. The contract is oral or written
agreements between two or more parties. Parties entering into a contract might include
individual people, companies, non-profits, or government agencies. The whole process of
entering into a contract starts with an offer by one party, an acceptance by another party, and
an exchange of consideration (something of value)

Definitions
Proposal or Offer
According to the Indian Contract Act 1872, proposal is defined in Section 2(a) as “when one
person will signify to another person his willingness to do or not do something (abstain) with
a view to obtain the assent of such person to such an act or abstinence, he is said to make a
proposal or an offer.”

It signifies an intention to enter into legally binding contract and the person, acting as an
offeror stresses on the assent of the acceptor. The person making the offer is called
‘Promisor’ and person accepting the offer is called ‘Promisee’, according to the section 2(c )
of Indian Contract Act, 1872.

In the case of Deep Chandra v Ruknuddaula Shamsher Jung Nawab Mohammad Sajid Ali
Khan, the court came up with a conclusion that where a person intends, actually or his
objectively, to be bound without further negotiation by a simple acceptance of his terms, his
expression will be an offer or proposal. To make a proposal, a person signified his
willingness to do or abstain from doing a particular action and does such an act to obtain the
assent of that person 1.

A statement may act as a proposal, depending on the words using the sentence ‘I hereby
agree to assign the lease to you’2. Thus, even a letter requesting for loan becomes mere
proposal, instead of promise.

Communication of Proposal.
Section 3 and Section 4 of Indian Contract Act 1872 refers about communication of proposal
stating that The communication of proposal is complete when it comes to knowledge of

1
Deep Chandra v Ruknuddaula Shamsher Jung Nawab Mohammad Sajid Ali Khan, AIR 1951 All 93
2
Visweswaradas Gokuldas v. BK Narayan singh, AIR 1969 SC 1157 at 1158, (1969)1SSC 547
another individual for whom it is made or drafted. Section 3 explicitly mentions about
Communication, acceptance and revocation of proposal stating that all the 3 are deemed to
made by any act or omission of the party; proposing, accepting or revoking by which he
intends to communicate such proposal, acceptance or revocation or which has the effect of
communicating it,

In the case of William vs Carwardine, Mrs. William gave the information for getting the
reward, it to her husband’s arrest. The court decided in this case that offer is communicated
as soon as she got to know about it and her real motive behind it does not matter.3
The revocation of proposal can be made the time offeree has not made his acceptance.
Communication of proposal is complete when the letter reaches the addressee’s residence.
Any delay in reading the letter on offere’s part will not be taken into consideration. A
proposal by letter is made at the place where the offer is received.
The information Technology Act, 2000 section 13(1) provides that when the dispatch of an
electronic record occurs, when it enters the computer resource and outside the control of the
originator, the communication of proposal is complete.
In contract negotiated orally by parties, the contract can only be enforced when the offeror
has received the acceptance by hearing and understanding it.

Illustrations

1. Nishant offered a reward of rupees sixty for giving information about the tragic
robbery, recently take place. Prateek gives the information and now is entitled to the
claim as she heard the proposal
2. Rishabh offered to sell this property to Sneha, so the communication of Sneha’s
proposal becomes complete as soon as Sneha got the information about it.
3. In the above example, the letter of Rishabh reached Sneha on 22 nd November 2020
and Rishabh sent his acceptance on 27 th November 2020 but on 25th November 2020
Sneha sent her revocation. So, this is not a valid proposal anymore.
4. Reena made an offer to Paresh on phone and due to the noise produced by the passing
train, she could not hear the acceptance. So, no contract is made.

3
Williams v. Carwardine,(1833)LJKB 101
Acceptance of Proposal
The section 2(B) of Indian Contract Act 1872 refers about acceptance and states that, when
the person to whom the proposal is made signifies his assent thereto, the proposal is said to be
accepted. A proposal, when accepted becomes a promise.

The assent can be expressed or implied. In the case of Brodgen v. Metropolitan Railway Co,
plaintiff altered the supply agreement and defendant’s agent kept it in a drawer. They traded
on new terms but in case of a dispute between then, it was held that the contract was valid as
by keeping the agreement he has given implied consent to it4. The intention of the offeree to
accept the proposal must be to accept it without any apprehensions. It originally works as a
minor image rule, but acceptance can also be derived in counter offers and battle of forms.

Revocation of Proposal
Section 5 of Indian Contract Act 1872 refers about revocation of proposal and states that a
proposal may be revoked at any time before the communication of its acceptance is complete
against the proposer, but not afterwards.

If offeror has to do the revocation of proposal, he has to make it before the offeree signifies
his assent.

Essentials of Valid Acceptance.

Section 7 of The Indian Contract Act, 1872 defines that the acceptance must be absolute. It
states that for converting a proposal into acceptance, the acceptance must:-

i. Be absolute and unqualified

ii. Be expressed in some usual and reasonable manner, unless the proposal prescribes
the manner in which it is to be accepted, and the acceptance is not made in such a
manner, the proposer may, within a reasonable time after the acceptance is
communicated to him, insist that his proposal shall be accepted in a prescribed
manner, and not otherwise; but if he fails to do so, he accepts the acceptance.

The section focusses on the prescribed manner of acceptance but if the offeree deviates than
the offeror has an upper hand to reject such acceptance within reasonable time. By giving his
acceptance in the prescribed mode, offeree becomes entitled to the contract, even if
acceptance does not reach the promisor.

4
Brodgen v. Metropolitan Railway Co. (1877)2 AppCas 666
Acceptance can be conditional based on the time when condition is given. If condition is
given before the acceptance, then it becomes condition precedent but if it given after
confirmation on the acceptance to the offer, it acts as a condition subsequent. E.g. The
security deposited after tender is accepted is example of condition subsequent.

Illustration

1. Jigar offered to sell his land to Hitesh for 2 lakh rupees, by drafting a letter. Hitesh, in
his letter of acceptance replied that he will inform his decision to Jigar after 15 days.
So, it is not a valid acceptance.
2. Ramesh offered to sell his cow to Suresh for fifty thousand rupees and Suresh accepts
to buy it at the same price. So, this is an absolute and unqualified acceptance.
3. Ninaad given an offer of selling the diary product at a certain price to Ajit. Ajit sent
his acceptance to Ninaad after a month so this is not a valid acceptance as reasonable
time for giving consent for perishable goods cannot be a month.
4. Chirag offered a plot of certain dimensions to Sanjeev at a certain price and asked him
to give his acceptance through an email, but he asserted through a WhatsApp
message. So, this is not a valid acceptance.

Communication of Acceptance.
Section 4 of The Indian Contract Act 1872 refers about the communication of acceptance.
The communication of an acceptance is completed,-
i. As against the proposer, when it is put in a course of transmission to him, so as to be
out of the power of acceptor.
ii. As against the acceptor when it comes to the knowledge of the proposer.

Revocation of Acceptance.
Section 5 of The Indian Contract Act 1872 refers about revocation of acceptance. An
acceptance may be revoked at any time before the communication of the acceptance is
complete as against the acceptor but not afterwards.

The communication of revocation is complete,-

 i. On the side of the proposer (who makes the proposal), when it is put into a course
of transmission of the person to whom it is made, so as to be out of the power of
the proposer.
ii. On the side of person to whom it is made when it comes to his knowledge

In the case of Bhagwandas Goverdhandas Kedia v. Girdharlal Purushottam Das, it was

made clear that in case of contract consisting of mutual promises, the proposer must receive
the intimation that the offeree has accepted his offer and signified his willingness to perform
his promise. In this case the question raise was of place of contract when people are entering
into a contract by long distance telephone. The contract is complete when the acceptance is
received by the proposer. The contract was therefore, formed at Ahmedabad, where the
acceptance was communicated5.

In electronic contracts, the acceptance is complete at the place where the computer resources
for such party is located.

In cases of postal communication, the acceptance is effective when the letter is posted, or the
telegram handed over for transmission to the offeror. It was laid down in the case of Adams
v. Lindsell.6

The offer cannot be withdrawn by the offeror without the consent of the other party, as
mentioned by court in the case National Highway Authority of India v Ganga Enterprises.7

Illustrations
(a) Kedar proposes, by email , to sell a car to Aniket at 98,000. The communication of
proposal is complete when Aniket receives the letter.
(b) Aniket accepts Kedar’s proposal by revert the email. The communication of the
acceptance is complete,-
As against Kedar when the email is sent.
As against Aniket, when the email is received by A.
(c) Kedar revoke his proposal by email. The revocation is complete as against Kedar when it
sent. It completes against Aniket when Aniket receives it .
Aniket revokes his acceptance by email. Aniket’s revocation is complete as against Aniket
when the email is sent, and as against Kedar when it reaches him.

5
Bhagwandas Goverdhandas Kedia v. Girdharlal Parshottamdas, AIR 1966 SC 543,[1966]1 SCR 656
6
Adams v. Lindsell, (1818)1 B & Aid 681
7
National Highway Authority of India v. Ganga Enterprises AIR 2003SC 3823
Case Laws
In P. Syamala v. R. Gopinathan (2004) 1 CTC 118 case, there was an oral agreement of
sale of property and seller received cheques for the price and enchased then. Court health that
in this case , the oral agreement is valid because there was the conclusion of the oral contract
and subsequent sale of the property by the seller to subsequent buyer is invalid

In Lalman Shukla v. Gauri Datt (1913) A11 LK 489 case, A’s nephew has absconded from
his house. He sent his servant to trace his missing nephew, When the servant had left, A then
announced that anybody who has discovered the missing boy would be given the reward of
Rs. 500. The servant discovered the missing boy without knowing the reward. When the
servant came to know about the reward, he asked for the same from A. A refused to give the
reward. The servant bought an action against A in the court of law to recover the same. But
the court held that when the servant discovered the boy, he was not aware of the reward.
Thus, the offer was not communicated to him. Hence, he is not liable to get the reward.

In Henthorn v. Fraser, (1892) 2 Ch 27 case, the secretary of a building society handed to

the plaintiff in the office of the society an offer to sell a property of 750 pounds giving him
right to accept within 14 days. The plaintiff resided in a different town and took away with
him the offer to that town. Next day at about 3.50 pm he sent by his post his letter of
acceptance. This letter was received at the society office at 8:30 pm. But before that at about
01:00pm, the society had posted a letter revoking the offer. The revocation and the
acceptance crossed in the course of post. The plaintiff received the letter of revocation at
05:30 pm. The Court held the revocation ineffective.

In Alfred Schonlank v. Muthunya Chetti, (1892) 2 MLJ 57 case, the defendant left an
offer to sell a quantity of indigo at the plaintiff’s office allowing him eighty days’ time to
give his answer. On the fourth day, however the defendant revoked his proposal. The plaintiff
accepted it on the fifth day. Holding the acceptance to be useless the madras High Court said:
“Both of principle and authority it is clear that in absence of consideration for the promise to
keep the offer open for a time, the promise is mere nudum pactum (bare promise).”

In Ram Das Chakrabarti v. Cotton Ginning Co. Ltd ILR (1887) 9 All 366 case, the Court
held that the offeror becomes bound when a properly addressed and adequately stamped letter
of acceptance is posted.
Conclusion
Examination of offer and contract is a standard law used to determine if arrangement between
two parties exists. An offer is a sign of their willingness to agree on certain terms and
conditions laid down by one party to another. A contract is said to come into being when the
acceptance of an offer has been told to the offeror by the offeree.

The communication of the offer shall be complete when it comes to the knowledge of the
person to whom the offer is made and the communication of the acceptance shall be complete
when the acceptance is put in a course of transmission to the offeror. Therefore, offer and
acceptance are the essential elements of a contract and in either case, it should be done on the
basis of one’s free will and with the intention of concluding a legally binding agreement.

Section 2(a), 2(b), 2(c) of Indian Contract Act 1872 outlines about offer and acceptance while
Section 4 and 5 mentions different aspects related to communication of acceptance and
revocation from offeror and offeree. The case laws and illustrations clearly explain on how
proposal must be certain with an intension to create legal obligation and on the other hand,
acceptance must be absolete and unqualified.
Bibliography
 Offer and Acceptance Under Indian Contract Act, 1872 (ipleaders.in)
 Communication, Acceptance and Revocation of Proposal under the Indian Contract Act, 1872
– BlackGown
 https://www.scribd.com/document/449659922/contracts-project-final
 Bare Acts | Law Library | AdvocateKhoj
 Communication of Offer or Proposal (S. 3 and S. 4 of Contract Act) (thefactfactor.com)
 Revocation of Offer: Its Communication and methods do it (thefactfactor.com)
 Communication of acceptance: Its communication and methods do it (thefactfactor.com)

 Indian Contract Act,1872

 Mulla, Indian Contact Act. Edition 15th