CONTRACT I NOTES MODULE 1 A: Formation of Contract Meaning and Nature of Contract Indian Contract Act, 1872 * The Indian Contract Act,1872 governs the law relating to contracts in India. * Itis applicable to the whole of India * Itcame into effect from 1* September, 1872. What is a Contract? A Contract means an agreement which is enforceable by law. According to Section 2(h) of the Indian Contract Act, 1872, “An agreement enforceable by law is a contract.” Agreement According to Section 2(e): “Every promise and every set of promises forming the consideration for each other is an agreement.” In an agreement there is a promise from both sides. Example: A promises to deliver his watch to B and in return B promises to pay a sum of Rs. 2000 to A. There is said to an agreement between A and B. A promise is a result of an offer (proposal) by one person and its acceptance by the other. In the example, when A makes a proposal to sell his watch to B for Rs. 2000 and B accepts his proposal, there results a promise between the two persons, Section 2(b) of the Act, 1872, defines “promise” —“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.” ‘Thus, when there is a proposal from one side and the acceptance of proposal by the other side, it results in a promise. Section 2(c ) defines promisor and promisee ‘The person making the offer is called the promisor ‘The person accepting the offer is called the promisee To summarize, Offer + Acceptance = Promise Promise + Consideration = Agreement ‘Agreement + Enforceability by law = Contract2 Are all agreements contract re are not contracts. Some agreements rent to sell a watch may ent not enforceable All agreements are not enforceable by law and, therefo may be enforceable by law and other are not. For example, an agreen be a contract but an agreement to go watch a movie may be a mere agreem: by law. Thus, all agreements are not contracts. Why is this so? he essential elements mentioned in The answer is that only the agreements which satisfy all contracts are Section 10 of the Indian Contract Act, 1872, become contracts. However, agreements. e by the free consent of parties Section 10: “All agreements are contracts if they are mad ha lawful object and are not competent to contract, for a lawful consideration and wit hereby expressly declared to be void. Essential elements of a Valid contract: 1. An agreement between the two parties. An agreement is the result of a proposal or an offer by one party followed by its acceptance by the other. ‘Agreement should be between the parties who are competent to contract. ‘There should be a lawful consideration and lawful object in respect of that agreement. There should be free consent of the parties, when they enter into the agreement. wan The agreement must not be one, which has been expressly declared to be void. Some more essential elements that have not been mentioned in Section 10 but are a part of the Act: 1. There should be at least 2 parties for a contract. 2, The intention of the parties to a contract must be to create a legal relationship between them. Case law: Balfour vs Balfour 3, Certainty of meaning — It is essential that the terms of the contract must be clear, definite, ceitain and complete and the contract must be free from doubt, vagueness and ambiguity. 4,. Possibility of performance ~ The agreement should be capable of being performed. 5. Legal formalities if required such as registration, writing, must be followed.Void Agreements According to Section 2(g) of the Act, an agreement not enforceable by law is said to be void. This means that it is void-ab-initio (void from the beginning) and cannot become a contract An agreement that is void does not bind the parties to the agreement and no rights accruc to any party thereto, For instance, an agreement by a minor has been held to be void. Sections 24- 30 of the Indian Contract Act, 1872 make a specific mention of agreements which are void. ‘Those agreements include an agreement without consideration, an agreement in restraint of marriage, and an agreement in restraint of trade. Voidable contracts According to Section 2(i), of the Act, 1872, an agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other, is a voidable contract. Thus, a voidable contract is one which could be avoided by one of the parties to the contract at his option. If such a party does not avoid the contract, the contract remains valid, but if it prefers to avoid the contract, then the contract becomes void. For instance, when the consent of a party to a contract has been obtained by coercion, undue influence, fraud or misrepresentation, the contract is voidable at the option of the party whose consent has been so obtained. Once an innocent party exercises the option and rescinds the contract, the contract becomes void. Void contract As specified in Section 2() of the Indian Contract Act, 1872, void contracts are contracts that are legally enforceable at the time of their creation but are annulled afterwards. When entered into, void contracts are legitimate because they meet all of the conditions of enforceability set forth in Section 10 of the Act and are binding on the parties, but they become void later due to the inability to execute. The circumstances that can render a contract void are Supervening impossibility/ frustration, change of laws or contingent contracts. Offer/ Proposal ‘The term proposal has been defined in Section 2 (a) of the ICA “When one person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of that other to such an act or abstinence, he is said to make a proposal.” The term ‘proposal’ used in ICA is the same as ‘offer’ used in English Law. The willingness to do or to abstain from doing something, i.c., the proposal or the offer may be made with a view to obtaining the assent(approval) of the other party thereto. For example, A's willingness to scll his radio set to B for Rs. 500 if B accepts to purchase the same, amounts to proposal by A for the sale of the radio set, But if a statement is made without any intention to obtain the assent of the other party thereto, that cannot be termed as proposal.Offer and invitation to offer/treat — Difference nt or gives some goods, but ma make offers on en kes some state’ a fe i Sometimes a person may not offer to sell his ssa information with a view to inviting others to . fous books to many For example, a book seller sends catalogue of books in H inst those persons. This catalogue is not an offer to sell those books at prices indicate co BOOKS pooks, Ths is an invitation to treat’, fany person is interested in purchasing 16 "| hag mentioned in the catalogue, he may make an offer and the person circulating the cal a discretion to accept or not to accept the offer. Likewise, inviting persons to an auction, where goods to be auctioned are dis offer for the sale of goods, The offer is made by the intending buyers in the fo an offer (bid), when accepted by the fall of hammer or in some other customary WAYs in a contract. sdicating prices of ¥™ played, is not an mm of bid. Such will result In the same way, the advertisement calling for tenders is not a proposal or offer but merely an invitation to the contractors for making an offer. may not accept even the highest n auction being an invitation accepting the offer which is Nobody is bound to accept an offer. An auctioneer, therefore, bid (offer). An advertisement by the auctioneer to sell goods by an to treat rather than an offer, he does not incur any liability by not in the form of a bid. An auctioneer is even free to cancel an auction sale announced by him. In Harris v. Nickerson, the defendant advertised a sale by auction. The plaintiff travelled to the advertised place of auction to find that the defendant had cancelled the auction sale. He brought an action against the defendant to recover the expenses of his travel. It was held that he was not entitled to the same as there was as yet no contract between the two parties, which could make the defendant liable. ‘Another example ~ Display of goods bearing price tags in a show room or shop would not ‘amount to an offer to sell goods at the prices mentioned in the price tags. It would be a mere invitation to treat. Harvey v. Facey is an example where the quotation of the price was held not to be an offer. were the owners of a plot of land known as Bumper Hall Pen. The 1 telegram to the defendants, "Will you the defendants reply telegraphed- ‘The defendants in this case, plaintiffs being interested in purchasing the same sent scll Bumper Hall Pen? Telegraph lowest cash pric “Lowest price for Bumper Hall Pen, £ 900." ‘The plaintiffs sent another telegram to the defendants saying, "We agree to buy Bumper Hall Pen for £900 asked by you. Please send us your title-deeds.” ‘The defendants refused to sell the land. In a suit, the plaintiffs contended that the second ‘m from the defendants quoting lowest price was an offer and the same had been accepted by the plaintiffs, and the contract was complete. The defendants, on the other hand, contended that quoting the price was not an offer which could be accepted. The Judicial Committee of the Privy Council held that exchange of the above stated telegrams had not resulted in a contract. It was observed that the first telegram had asked two questions, one regarding willingness to sell, and the other regarding the lowest price. In reply only lowest price was quoted, and this telegraquoting / to buy on Price was not an offer. The third telegram from the plaintiffs saying, "we aBre® acee| ae only an offer and not the acceptance of an offer. Since this offer had not been Pred, there was no binding contract between the parties. Communication of offer - Offer must be communicated AS per Section 2 (a) of the ICA Section 2(a) of the Indian Contract Act, 1872 explains that'a person is said to make a proposal "when he signifies to anather person is willingness to do or to abstain from doing something. ‘The emphasis, here, is upon the requirement thatthe willingness to make a proposal shoul be "signified". The term signify means to or communicate to make known. It thus requires that the offer must be communicated to the other person, i.e, the offeree Offer-How Communicated (Section 3) ‘The question as to how an offer is communicated is explained in Section 3 of the Act, 1872. It follows that an offer may be communicated by the offeror by any act or omission by which the offeror (a) intends to communicate such offer; or (b) which has the effect of communicating the offer. ‘Thus, an offer may be made by words of mouth, or by writing or conducting in a manner, which has the effect of communicating the offer to the offerec. ‘An offer may, therefore, be an express offer, i.e., which is made by some positive act on the part of the offeror, or it may be implied offer, which is inferred from the conduct of the offeror. Communication of Offer-When Completes (Section 4) [As discussed above, an offer, to be valid, must be communicated. Further, it must be communicated to the person or persons, to whom it is made. Section 4 of the Indian Contract ‘Act, 1872 says that "the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made." It, thus, follows that an offer cannot be accepted unless and until it has been brought to the knowledge of the person to whom it is made. To put it otherwise, A cannot be said to make an offer to B unless A brings the offer to the knowledge of B. B cannot be said to have accepted the offer, even if he acts according to the term of the offer. Thus, acting in ignorance of an offer does not amount to acceptance of the offer. In Lalman Shukla v. Gauri Dutt, the defendant's nephew absconded from home. The plaintiff, who was defendant's servant, was sent to search for the missing boy. After the plaintiff had left in search of the boy, the defendant issued handbills announcing a reward of Rs. 501 to anyone who might find out the boy. The plaintiff, who was ignorant of this reward, was successful in searching the boy. When he came to know of the reward, which had been,to claim this reward. It of bringing the lost not entitled to claim . defendant anni a tion against the i ‘ounced in his absence, he brought an action agi reward, his act was held that since the plaintiff was ignorant ofthe offer of reware’ A boy did not amount to the acceptance of the offer, and, therefore, the reward. Ih the terms thereof If a person has the knowledge of the offer, his acting in accordance will amounts to the acceptance of the same. Types of offers 1. Specific Offer: - It is an offer made to a particular person or group of persons. 2. General Offer: It is an offer which is made to the whole world. For instance, an offer to give reward to anybody who finds a lost dog, is a general offer. This general offer will be deemed to be accepted by anyone who actually finds the lost dog. The person, who accepts this offer, generally by performing the condition of the proposal, can bind the person making the offer. Although a general offer ie made to the public at large, the contract is concluded only with that person who acts upon the terms of the offer, viz., who accepts the offer. In Carlill y. Carbolic Smoke Ball Co., the defendants advertised their product "Carbolic Smoke Ball", a preventive remedy against influenza. In the advertisement they offered to pay sum of £100 as reward to anyone who contacted influenza, cold or any disease caused by taking cold, after having used the Smoke Ball three times a day for two weeks, in accordance with the printed directions. They also announced that a sum of £ 100 had been deposited with the Alliance Bank to show their sincerity in the matter. The plaintiff (Mrs. Carlill) relying on the advertisement purchased a Smoke Balll from a chemist, used the same in accordance with the directions of the defendants, but still caught influenza, She sued the defendants to claim the reward of £ 100 advertised by them. It was held that this being a general offer addressed to all the world had ripened into a contract with the plaintiff by her act of performance of the required conditions and thus accepting the offer. She was, therefore, entitled to claim the reward, Express and Implied Offers Section 9 of the Indian Contract Act, 1872 says: “In so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied." 3. Express Offer: An offer would be an express offer when it is made by words of mouth or by writing. 4. Implied Offer: An offer made otherwise than in words, is said to be an implied offer. ILis an offer inferred from the conduct or gesture of the party. 5. Counter offer - When a person to whom the offer is made does not accept the offer [as it is) but makes another (counter) offer. This is called counter offer.Example: A offers to sell his books for Rs.300, B makes an offer to buy it for Rs. 250- he offer made by B is a counter offer, intended to Standing/Open/Continuing offer - An offer is a standing offer if it remain open for a specified period. Example: An offer to supply 1,000 bags of wheat from Ist January to 31st December, in accordance with the orders which may be placed from time to time, is a standing offer. As and when the orders are placed that amounts fo acceptance of the offer to that extent, In thé above stated illustration if an order for the supply of 100 bags of wheat is placed on 15th January, there is acceptance of the offer to that extent and the offeror becomes bound to supply those 100 bags of wheat. So far as the remaining quantity 1S concemed, this offer can be revoked just like any other offer. 7. Cross Offers- When the offers made by two persons to each other containing similar terms of bargain cross each other in post, they are known as cross offers. For example, on Ist January, A offered to sell his watch to B for Rs. 2,000 through a letter sent by post. On the same date B also wrote to A making an offer to purchase A's watch for Rs. 2,006. When A or B sent their letters, they did not know about the offer which was being made by the other side. In these cross offers, even though both the parties intended the same bargain, there would arise no contract. A contract could arise only if either A or B, after having the knowledge of the offer, had accepted the same. Essentials of a Valid Proposal/Offer 1 Offer may be expressed or implied — An offer may be expressed or may be implied from the conduct of the parties or circumstances of the case. Example of implied offer: When a tramway company runs trams on a particular route, the company is said to make an offer to carry intending passengers over the route at scheduled fares. 2. Offer may be specific or general — a) A specific offer is one which is made to a particular person. It can be accepted by the person to whom it has been made, no one else can accept such an offer. b) A general offer is an offer made to the public at large. 3. Offer must create Legal Relations — For an offer to be valid, it must create legal relationship between the parties. Say for example a dinner invitation extended by A to B is not a valid offer. Kalai Halder vs Sheikh In this case, Kalai invited Sheikh, for dinner. Sheikh accepted the invitation but failed to attend dinner, Kalai sued Sheikh for the price of the unconsumed food, The court held that, an invitation to dinner creates social obligation and not a legal obligation, and therefore, Kalai could not succeed.Mrs. v/s. Mr. Balfour (1919) alfour, (i ie ee cine were i. residents of England. Mr. Balfour ;, Balfour (defendant), was a civil servant, who was posted in Ceylon. Tt resided in England. During vacation, Mr. Balfour also resided in POE NT ith his his vacation with her, After that, he was duc to return back to Ceylon athe defendant wife. But because of her ill health, she was advised to stay in England. a Ceylon. promised to send her 30 pounds per month till she becomes fit and joins hin nee Late, the relationship between them got estranged and they were separatcé “0% ciher, Mr. Balfour failed to full his promise to pay 30 pounds to Mrs. Balfour, MS. Balfour filed a suit against him to recover the amount. _ ‘The court held that, the parties had never intended to create legal obligation, nO intention existed to give rise to legal obligation. This is mere moral or domestic obligation. Therefore, Mrs. Balfour could not enforce this obligation. 4, Offer must be Clear, not Vague ~ The terms of an offer should not be vague (not clear J confusing) Example - A offers to sell fruits to B worth Rs 5000/-. This is not a valid offer since what kinds of fruits or their specific quantities are not mentioned. 5. Offer must be Communicated to the Offeree — (Refer to notes above) No offeree can accept the proposal without knowledge of the offer (Lalman Shukla v. Gauri Dutt.) 6. Offer must be distinguished from an invitation to offer. (Refer to notes above) Acceptance Definition — Section 2(b) “When the person to whom an offer is made signifies his assent thereto the proposal is said to be accepted, A proposal when accepted becomes a promise.” Essentials of valid Acceptance — 1. Acceptance must be communicated ~ Communication of Acceptance In order to create a binding contract, it is necessary that the acceptance must be communicated by the acceptor to the offeror. It has been noted above that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. It means that the offeree must signify his assent, or communicate the acceptance. The communication of acceptance is deemed to be made by any act or omission of the party accepting, by which he intends to communicate such acceptance, or which has the effect of communicating it. When the parties are face to face, communication could be oral, When they are at a distant place,Gj Communication could be made by post, by telegram, by a message on phoney through @ m lessenger, or in any other reasonable manner. Important points of Communication of acceptance: ‘A. Mere acceptance or silence without communication by the offeree is not acceptance at all in law. In Felthouse v. Bindley, Felthouse wrote a letter to his nephew offering to buy his horse for £30-15 sh. In the letter containing the offer it was also mentioned: "If I hear no more about the horse, I shall consider the same to be mine at £ 30-15 sh." The nephew did not reply to this letter. He, however, told his auctioneer, Bindley, that he wanted to reserve this horse for his uncle and, therefore, desired that the horse be not sold by the auctioncer. The auctioneer (Bindley) disposed of the horse by mistake. Felthouse sued Bindley for the tort of conversion on the plea that Felthouse had become the owner of the horse which Bindley had disposed of. It was held that since the nephew had not communicated the acceptance to Felthouse, no contract had arisen in this case, and therefore, Felthouse had not become the owner of the horse and as such his action for conversion failed. This case also explains that the intention of the nephew to accept the offer of his uncle, or the communication of his intention to the auctioneer, was not enough to create the contract. ‘Another point explained by this case is that the offeror cannot impose upon the offeree a duty to reply, and therefore, an offeror cannot say that failure to reply will be deemed to be the acceptance of the offer. The offerce has a right to make the offer lapse by not being accepted within the prescribed time or the reasonable time, as the case may be. Mere silence cannot be regarded as acceptance of the offer. B. Communication must be made by the offeree or his authorized agent (Only offeree can accept the offer) In order that the acceptance can be treated as valid, it is necessary that the same must be communicated to the offeror either by the offeree, or by some duly authorized person on his behalf. If the communication is made by an unauthorized person, it does not result in a contract. C. Communication of offer to a wrong person If the letter of acceptance is posted at a wrong address or to a wrong person, that will not bind the offeror. D. Acceptance can be express of implied ‘The acceptance ofan offer/promise can be in express terms and can also be in implied terms. Sometimes the conduct of the person might indicate his assent, For example, when passenger boards a bus and travels thereby, he impliedly assents to pay the necessary fare In M/s. Rakesh Kumar Dinesh Kumar y. U.G. Hotels & Resorts Lt for supply of goods by plaintiffs to defendant. Default was made ee ee payment. Defendant had made an offer in writing to pay certain amount in full and fing seitlement of dues, It was shown by the conduct ofthe partes that plaintiff had implore accepted offer and received part of amount. It was held that the receipt of the So the plaintiff, amounted to an acceptance of the offer. smmount byCarlill v. Carbolie Smoke Ball Co. ~ Implied acceptance E. Communication of acceptance ~ When complete? (Section 4) ing, As soon as the communication of acceptance is complete, a contract comes into being, whereby both the parties become bound. me place, one making the offer and become bound immediately. The wunication of offer and In case the parties to the contract are present at the sar the other communicating the acceptance, both the parties problem arises when the parties are at different places and the comm! acceptance is made by post, or telephone, etc. Acceptance by Post/Telegram Section 4 of the Indian Contract Act, 1872, explains the following rules when the communication of acceptance is made by post/telegra 1. The communication of acceptance is complete as against the proposer, when it is put the course of transmission to him so as to be out of the power of the acceptor. 2. The communication of acceptance is complete as against the acceptor, when it comes to the knowledge of the proposer. Ilustration B accepts A's proposal by a letter sent by post. A = Proposer/Offeror. B = Acceptor ‘The communication of the acceptance is complete, as against A, when the letter is posted; as against B, when the letter is received by A. Offeror bound when letter of acceptance (or telegram) is posted to him It has been noted above that the communication of acceptance is complete as against the proposer when the letter of acceptance is posted to him. The moment the letter of acceptance is posted, the offeror becomes bound. He becomes bound immediately on the posting of the letter to him and it makes no difference that the letter is delayed in transit, or it is even lost in the post and the offeror never receives it. Acceptor bound when his letter reaches the offeror It has been noted above that though the offeror becomes bound when the letter of acceptance is posted to him, the acceptor himself becomes bound by his acceptance when his letter of acceptance comes to the knowledge of the offeror. -End of points to be included in communication of acceptance- The points mentioned below are continuation of essentials of a valid acceptance2. Acceptance must be absolute and unqualified ~ Section 7 of the Act, lays down that, "the acceptance must be absolute and unqualified or unconditional", It means that, the acceptance must be in terms of the proposal, without any variation, addition or deletion. If the acceptance is made after variation, or deletion in the terms of the proposal, such acceptance is not an acceptance of the proposal. In such a case, it may amount to a counter proposal, Therefore, there must be an absolute and unqualified acceptance of all the terms of the offer. Qualified acceptance would amount to rejection of the offer. 3. Acceptance should be expressed in usual/prescribed manner According to Section 7(2), the acceptance must be "expressed in some usual and reasonable manner, unless the proposal prescribed the manner in which it is to be accepted". It means that if the manner of acceptance has been prescribed by the proposal, the acceptance has to be in that prescribed manner, otherwise the same may be made in some usual or reasonable manner. Usual and reasonable manner of acceptance means the manner which is usually adopted in 2 particular kind of transaction according to the usage or custom of trade. Acceptance by post, telegram, telephone or through personal messenger may be considered to be a usual manner of acceptance. Prescribed manner- If the proposal prescribes any particular manner of acceptance, the acceptance must be made in that manner. The manner of acceptance may include the requirement of fulfilment of certain conditions, such as the payment of an advance. If such conditions are not fulfilled, there does not arise a valid contract. If the proposal prescribed a manner in which it is to be accepted and the acceptance is not made in such manner, then, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise: but if he fails to do so, he accepts the acceptance, 4. Acceptance should be made while the offer is still subsisting After the offer has been withdrawn or has lapsed, there is nothing which can be accepted. It is, therefore, necessary that the acceptance should be made while the offer is still alive and subsisting. Acceptance after the lapse of the offer cannot give rise to a contract. Similarly, the offer is deemed to have ended by rejection of the original offer or a counter offer. In such a case also, once the offer has lapsed, an attempt to accept the same would not give rise to any legal obligation.Revocation of Offer and Acceptance REVOCATION OF OFFER- Section 5 vies ariges a contract and then both the Parl re the offer has been accepted, it GA Es to a contract and then itcannot be ae ced. 4 at any time, before the communication but not afterwards.” It is only after the acceptance of an offer that there become bound by their respective promises. Befor revoked. After an offer has been accepted it ripens int ‘According to Section 5: "A proposal may be revoke of its acceptance is complete as against the proposer, Illustration B accepts the proposal by a letter A proposes by a letter sent by post, to sell his house to B. ° 7 time before or at the moment when sent by post to A. Here, A may revoke his proposal at any B posts his letter of acceptance to A, but not afterwards. Modes of Revocation of Offer — Section 6 1. By notice of revocation ‘A proposal may be revoked by the communication of notice of revocation by the proposer (or his agent) and not by anybody else, to the other party. 2. By lapse of time ‘A proposal is revoked by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance. Sometimes the parties may expressly fix the time up to which the offer will remain open. For example, it may be stated that the offer is open till 15th January, 5.00 PM. Such an offer lapses automatically if it remains unaccepted till the stipulated time and the same cannot be accepted farther thereafter. Even if no time has been prescribed within which the acceptance can be made, the offer stands revoked on the lapse of a reasonable time. Non-acceptance within a reasonable time means an implied refusal by the offeree to accept the offer. The offeror can also revoke the offer before the expiry of the stipulated time. An express rejection of the offer even before the lapse of a fixed or reasonable time makes the offer to lapse. 3. By failure to fulfil a condition precedent ‘When the offer is subject to some condition precedent, such a condition has got to be fulfilled by the acceptor before making the acceptance. If the acceptor fails to fulfil the condition precedent to acceptance, the offer stands revoked, For example, if the offer requires the deposit ome earnest money, or the execution of some document, etc., these conditions must be fulfilled.4 A By death or Insanity of the offeror pie ic Fevcked by the death or insanity of the proposer, if the fact of his death or insanity 10 the knowledge of the acceptor before acceptance. The death or insanity of the offeror docs not automatically make the offer to lapse. The offer stands revoked if the fact of death or insanity comes to the knowledge of the acceptor before acceptance. It means that if the fact of death or insanity has not come to the knowledge of the offeree while he accepts the offer, itis valid acceptance giving rise to a contractual obligation. REVOCATION OF ACCEPTANCE - Section 5 It has already been noted above that when the contract is created through post, according to Section 4, by the posting of the letter of acceptance: (i) the proposer becomes bound when the letter of acceptance is posted to him, ii) but the acceptor becomes bound when the letter of acceptance reaches the proposer. Since the acceptor does not become bound immediately on posting his letter of acceptance, he is free to revoke the acceptance by adopting speedier mode of communication, whereby his communication of revocation of acceptance may reach earlier than his letter of acceptance. Section 5 expressly permits the revocation of acceptance through the following provision: “An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards." Illustration ‘A proposes by a letter sent by post, to sell his house to B, B accepts the proposal by a lester sent by post. B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards. Communication of Revocation when complete? (Section 4) The communication of revocation is complete ~ i) as against the person who makes it: when it is put into the 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; ii) as against the person to whom it is made: when it comes to his knowledge. Illustration: ‘A revokes his proposal by telegram,is di |. It is complete as The revocation is complete as against A when the telegram is dispatched. against B, when B receives it. B revokes his acceptance by telegram. i i is di i when B's revocation is complete as against B when the telegram is dispatched, and against A it reaches him.