Section 3

Communication, acceptance, revocation (proposals

and acceptance).
•Deemed to be made by act or omission (Active or
explicit)- proposing, accepting or revoking
•Effect of communicating it (implied proposal)
•Implied proposal
•Conduct – an offer which is expressed by conduct
– implied offer
•One which is expressed by words (written or
spoken)- express offer
• S.9 Promises , express and implied
• Stepping into auto – self service restaurant- bid at auction-
create implied promises to pay for the benefits enjoyed.
• Question – test of communication – subjective or objective?
• Upton Rural District Council V Powell (1942)
• Defendant farm- fire- opted for services of upton fire brigade
under the impression that he was entitled to the free
services- defendant’ farm was not under the free service
zone.
• Held – “defendant wanted the service- asked for the service
of upton- upton in response to that request provided the
services. Hence services were rendered on an implied
promise to pay for them.
s.3 – “ which has effect of communicating it”- Mulla-
test of communication is objective.- “fly on the wall’
theory- objectivity requires that words used by one
party must be judged as they would appear to a
reasonable man.
Haji Mohammad Ishaq v Mohd Iqbal (1978)
Goods were supplied by the plaintiff on his own
account to def- def accepted the goods- paid part of
the price- liability arose to pay remaining balance.
Held- defendant by their conduct of accepting the
goods- paying a part – never repudiating letters of pl
demanding money-clearly shows direct contract
which in law is called implied contract.
 Communication when complete
• S.4 – the communication of a proposal is complete when it
comes to the knowledge of the person to whom it is made.
• Lalman Shukla v Gauri Dutt (1913)
• Def nephew absconded- servant sent in search of the boy-
when servant left, the defendant by handbills offered to
pay Rs 501 to anybody discovering the boy- servant traced
the boy- came to know about the offer after he traced the
boy- brought an action to recover award.
• Held (Banerji J)- there must be an acceptance of an offer
and there can be no acceptance unless there is knowledge
of the offer.
• R v Clarke (1927)
• Australian govt offered a reward- 1000 pound-
information about the murder- info given by
accomplice then he is also entitled to free
pardon. Pl excited by the hope of pardon –
forgot about the reward.
• Held- even if the acceptor had once known of
the offer but had completely forgotten about
it at the time of acceptance – he would be in
no better position than a person who had not
heard of the offer at all.
• Proposal can not impose liability upon another person to reply-
proposal should be in the form of request not in the form of
order.
• Ex- a makes proposal to b- to sell his car- condition –if b does
not reply within 10 days then the proposal will be deemed to
be accepted.
• Proposal once rejected cannot be accepted as the rejection
exhausts the proposal.
• Hyde v Wrench (1840)
• Offer to sell a form for 1000 pound – rejected by the pl (who
wanted it for 950 pound)- later on the pl agreed to pay 1000
pound.
• Held- by making an offer of 950 the plaintiff rejected the offer
made by the def. not competent for him to receive the proposal
of the def by an acceptance of it later.
• There exists no obligation.
Counter proposal and Cross proposal
• Rejection of the proposal + making of fresh
proposal from other’s side.
• In ICA, 1872, no provision has been made
directly on the counter proposal – s.7(1)
Acceptance must be absolute and unqualified.
• Cross Proposal-
• (1)Parties should be same (2)subject matter must
be the same (3) the terms must be the same (4)
the time of communication is same so that
proposals cross each other.
• Whether cross proposal make an agreement?
• If minds of both are same , why can the letter of
one be treated as the acceptance of the other’s
proposal?
• Difference between a counter proposal and the
cross proposal
1. The counter proposal is a proposal in reply to a
proposal, ie rejection of one proposal and making
a fresh proposal, while cross proposal are fresh
proposal.
2. Counter proposals exhausts the original proposal
but nothing of the sort happens in cross proposal.
 Offer and invitation to treat
• An offer is the final expression of willingness by the offerer to be
bound by his offer should the other party choose to accept it.
• S.2(a)- expression of willingness to do or abstain with a view to
obtaining the assent of the other.
• Where a party, without expressing his final willingness proposes
certain terms on which he is willing to negotiate, he does not
make an offer, but only invites the other party to make an offer on
those terms.
• Harvey v Facey- Pl- contention- by quoting the minimum price , def
made an offer
• Pl had two questions- 1. willingness to sell 2 lowest price , the def
answered only second therefore no offer made.
• Mcpherson v Appana (1951)
• Pl offered to purchase a lodge owned by def-
rs 6000, wrote to def- he was prepared to
accept any higher price- agent replied- won’t
accept less than rs 10000. pl accepted and
brought a suit of specific performance.
• Held- def was merely inviting offer- no assent
to the pl’s offer to buy at rs 10k- no contract
concluded.
Auction notice to sell specific goods- invitation to proposal-
bidder makes the bid- proposal- acceptance of a bid by fall
of the hammer or by any other manner amounts to
acceptance.
• Tender notice- contractor submits the tender , it is proposal
– giver of the tender may or may not accept the proposal.
• Catalogue- not a proposal – invites the other to make a
proposal to buy the goods.
• Goods displayed and price fixed on it. This is not a proposal
as it informs the other that these goods are sold at this
price. When the customer comes forward and wants to buy
the goods, it is a proposal from customers.
• Q. What will be the implication if catalogue is treated as
proposal?
• Pharmaceutical society of great britain v boots
cash chemists southern ltd (1952)
• Displaying of goods and giving facility to the
customers to select and takeout the goods from
the place where these are stored is an invitation to
the proposal.
• When the customer bring the articles in the bag or
on the trolley to the counter , it is a proposal. If at
the counter the seller accepts the prices for goods,
it is acceptance.
• State Bank of Patiala v Romesh Chander kanojia
(AIR 2004 SC 2016) – Voluntary Retirement Scheme
by the bank was held an invitation to the proposal.
 Difference between proposal and invitation
to the proposal
1. The proposal means declaring the willingness by one person
to another person to do or abstain from doing anything;
invitation to proposal- only advertises the quality of goods.
2. Proposal – object of the person signifying the willingness is
to obtain from the other assent to such act or abstinence.
ITP object is to obtain the proposal from others.
3. Proposal- negotiation- two stages- proposal and acceptance.
4. ITP- three stages- (a) Invitation to proposal, (b) proposal, (c)
Acceptance.
5. Proposal is a part of the contract; invitation to the proposal
is not part of the contract.