Bcl_indian Contract Act 1872 Provisions as to Offer & Acceptance

March 15, 2019 | Author: Vishal Gattani | Category: Offer And Acceptance, Contract Law, Common Law, Business Law, Law Of Obligations
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Dr. Ravi Shekhar Vishal


Section 2 (h) defines a contract as ³ an agreement enforceable by law´ thus to make a contract there must be 1.

An agreement


The agreement shall be enforceable by law.


All agreements are not enforceable by law


and therefore, all agreements are not




 Agreement  According to Section 2(e) 2(e) an agreement is defined as ³ every promise and every set of promises forming the consideration for each other´.  A promise is defined as an accepted proposal as Section 2(b) 2(b) says ³ a proposal when accepted becomes a promise promise ³ Therefore it can be said that an agreement is an accepted proposal. In an agreement there is a promise from both the sides. sides. For example, example, A promises promises to deliver deliver his radio radio to B and and in return return B promis promises es to pay pay a sum of Rs. 500 to A , there is said to be an agreement betw betwee een n A and and B 3

 An agreement is regarded as a contract when it is enforceable by law. In other other words words,, an agreem agreement ent that that the the law will will enforce enforce is a contract. contract. The conditions of enforceability are stated in Secti ection on 10. Acc ccor ordi din ng to this his sect sectio ion n ³ all all agreements are contracts if they are made by the free consent of parties competent to contra contract, ct, for for a lawful lawful consi consider derat ation ion and and with with a lawful lawful object, object, and are not not hereby hereby expressly expressly declared to be void.´ 4


of a valid contract


The agreement should be between two parties. An agreement is the result of a proposal or offer by one party followed by its acceptance by the other.


The The agre agreem emen entt shou should ld be betw betwee een n the the parties who are competent to contract.


There should be a law lawful conside ideration ion and lawfu lawfull obje object ct in respect of that agreement.


Ther There e shou should ld be free consent of the parties, when they enter into the agreement.


The agreement must not be one, which has been declared to be void. 5


of offer

The term proposal has been defined in section 2(a) 2(a) as follows: 

³ 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 act or   abstinence, he is said to make a proposal.´



willingness to do or abstain from doing something, i.e. the proposal or offer must be made with a view to obtain the assent of the other party thereto. For example, A¶s willi illing ngne ness ss to to sel selll his his rad radio io set set to B for for Rs. Rs. 500 if if B accepts to to pur purchase th the sa same, amoun amounts ts to propos proposal al by A for the sale sale of of the the radio radio set. set. But if if a stateme statement nt is made made with without out any intention to obtain the assent of the other  party thereto that cannot be termed as proposal.



and invitation to treat di stinguished

 A proposal or an offer has to be distinguished from an invitation to treat. Sometimes a person may not offer to sell his goods, but may make some statements or give some information with a view to invite others to make offers on that that basis. For example, a bookselle booksellerr sends a catalogue of books indicating prices of various books to many persons. This catalogue is not an offer to sell those books at prices indicated against those books. This is an µInvitation to treat.¶ If any person is interested in purchas purchasing ing those those books books mention mentioned ed in the catalogu catalogue e he may make make an offer. offer. Similar Similarly, ly, inviting inviting perso persons ns to an auction where goods, which are to be auctioned, are displayed is not an offer for the sale of goods. The intending buyers, who make the bid make an offer. Such an offer, when accepted, by the fall of hammer or in some other customary way, will result in a contract. 8

Intention 

to create legal relation ship

In order that an offer, after acceptance, can result in a valid contract it is necessary that the offer should be made with an intent intention ion to create create legal relati relations onship hip.. Promi Promise se in the case case of a social engagements is generally without an intention to create legal relationship, such an agreement cannot be considered to be a contract. contract. Thus an agreeme agreement nt to go for a walk, walk, to go to movie, movie, to play some game, or entertain another person with a dinner, cannot cannot be enforced enforced in a court of law. law. Sometime Sometimes s the party may expressly mention that it is not a formal or legal agreement, where hereas as in som some othe otherr case cases s such such an inte ntention tion coul could d be presumed from their agreement. The test to know the intention of the parties is objective and not subjec subjectiv tive. e. Merely erely because because the promiso promisorr conten contends ds that there there was no intention to create obligation would not exempt him from liability


In Rose and Frank Co. Vs. Crompton & Brothers Ltd. the agreement between the parties provided ; ³ This arran arrangeme gement nt is not not entered entered into into «««. «««. as a formal or legal jurisdiction in the Law Courts««. that it (the agreement) will be carried through by parties with mutual loyalty and friendly cooperation.´ One of the parties made a breach of this agreement. In an action by the other party to enforce the agreement, it was held that since the agreement had provided that it was not a formal or legal agreement the same was not enforceable.. enforceable.. 10

In the case of  Meritt Vs. Meritt, (1970) the husband and wife were the joint owners of a building which was subject to a mortgage to a building society. The husband left the matrimonial home to live with another  woman woman.. At that that time, time, at the insi insiste stence nce of the the wife, the husband signed a note saying that the wife will pay all outstanding amounts in resp respe ect of the hous house e and in retu return rn ³I will agree to transfer the property into your   sole ownership´. It was held that in this case it was clear that the parties intended to create legal relationship and, therefore, the husband was was bound by the contract 11


of offer


offer when accepted results in a contract. An offer can be accepted only after the same has come to the knowledge of the offeree. It means that the offer has to be communicated to the offeree in order that the offeree can accept it. According to section 4, ³ the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.´ 12

If an offer has not yet been communicated, even if somebody acts according to the terms of the offer, he cannot be deemed to be the acceptor of the offer. Acting in ignorance of an offer does not amount to the acceptance of the same. This point may be explained by referring to the case of L of  Lalman Shukla Vs. Gauri Dutt. Dutt. (191 (1913) 3) In this case the defendant¶s defendant¶s nephew absconded from home. home. The plaintiff, who was defendant¶s servant, was sent to search the missing missing boy. boy. After the the plaintiff plaintiff had left left in search of of the boy, the defendant issued handbills announcing a reward of Rs. 501 /- to anyone who might find the boy. The plaintiff who was ignorant of  this this rew reward, ard, was succ succes essf sful ul in sear search chin ing g the the boy boy. When When he came to know of the reward, which had been announced in his absence, he brought an action against the defendant to claim this reward reward.. It was held that that since since the plainti plaintiff ff was ignoran ignorantt of the offer of reward, his act of bringing the lost boy did not amount to the acceptance of the offer, and therefore, he was not entitled to claim the reward.



the plaintiff has the know ledge of the offer, his acting in accordance w ith the terms thereof   amounts to the acceptance of the same. In such a case it is immaterial that at the time of accepting the offer the acceptor does not intend to claim the reward mentioned in the offer. In William Williams s Vs. Carwar Carwardine dine (1833) the plaintiff who knew that the reward had been announced to be given to anyone who gave information leading to the conviction of an assailant for for mur murder der, gav gave the nece necessa ssary ry infor informat mation ion.. While While givi giving ng the info informa rmati tion on the plaintiff mentioned that she had given the information µto ease her conscience¶. At that that time time she did not intend intend to claim claim the reward. reward. It was held held that since the offer had been accepted with its knowledge, ther there e was a valid alid cont contra ract ct and, and, ther therefo efore re,, she she was entitled to claim the reward. 14

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 1st 1st Januar January y A offer offers s to sell sell his his radi radio o set set to B for Rs. Rs. 500/500/- through through a letter letter sent by post. post. On the same same date B also also writ writes es to A maki making ng an offe offerr to purc purcha hase se A¶s A¶s radio set for Rs. 500 /- Whe When A or B send their  letters they do not know about the offer which is being made made by the other other side. side. In these these cros cross s offers offers,, even even though both the parties intend the same bargain, there arises arises no contract. contract. A contract contract could arise only only if either  either  A or B , after having th the knowledge of the offer, had accepted the same.



(T inn inn Vs. Vs. Hoff offmann mann 1873 1873), ), A wrote to B indicating his willingness to sell 800 tons of iron at  69 s. per per ton. ton. On the the same same day day B also also wrote rote to A offering to buy 800 tons of iron at the same rate of  69 s. per ton. ton. The two two letters letters crossed crossed each each other other in post post.. B brou brough ghtt an an acti action on agai agains nstt A for for the the supp supply ly of iron contending that a valid contract had been created created betwee between n the two two parties parties.. It was held held that that in this case there were only two cross offers and the offer of neither of the parties having been accepted by the other, there was no contract which could be enforced



and General Offers

When the offer is made to a specific or an ascertained pers person on itit is know known n as a spec specif ific ic off offer , but when the same is not made to any particular person but to the public at large it is known as general offer. For  instance, an offer to give reward to anybody who finds a lost dog is a gener general al offer offer This This genera generall agreemen agreementt will be deemed to be accepted by anyone who actually finds finds the lost lost dog. dog. The perso person, n, who accepts accepts this offer, generally by performing the condition of the proposal, can bind the person mak making the offer.  According to Section 8, ³Performance of the conditions of a proposal «.. is an acceptance of the proposal.´ Thus although a general offer is made to the public at large, the contract is conclud4d only with that person who acts upon the terms of the offer. 17

The The cas case of  Carlil Vs. Carbonic Smoke Ball Co. ( 1893) is an illustration of a contract contract arising out out of a general offer. The facts of the the cas case are are : The defe defen ndants adv advertised their pro product ³Carbo ³Carbonic nic Smoke Smoke Ball´, Ball´, a preve preventi ntive ve remedy remedy agains againstt influ influenz enza. a. In the the adve adverti rtise seme ment nt they they offer offered ed to pay pay a sum sum of of 100 100 pou pound nds s as rewa reward rd to any any one one who who cont contrac racte ted d influ influen enza za,, col colds ds or any any disease disease cause caused d by by takin taking g cold, cold, after having having used the Smoke Smoke Ball three times a day for for two weeks, in accordance with the prin printe ted d dire direct ctio ions ns.. They They also also anno announ unce ced d that that a sum sum of 1000 1000 poun pounds ds had been been dep deposit osited ed with ith the the Alli Allian ance ce Bank Bank to show show sincer sincerity ity in the matter matter.. The plaint plaintiff  iff ( Mrs. Carlil ) relying on the advertisement purchased a Smoke Ball from a chemist, used the same in accordance with the directions of the defendants, defendants, but still caught influenza. influenza. She sued the defendants defendants to claim claim the reward of  of  100 100 poun pounds ds adver adverti tise sed d by them them.. It was held held that that this bein being g a general offer addressed to all the world had ripened into a contract with the the plai plaint ntiiff by her act act of per perform forma ance of the the requ requiired red cond condit itio ions ns and and thus thus acce accept ptin ing g the the offe offer. r. She She was ther there efore fore,, entitled to claim the reward. 18

R evocation evocation

Of Offer

It is only after the acceptance of an offer that there arises a cont contra ract ct and then then both both the the part partie ies s beco become mes s boun bound d by thei their  r  respectiv respective e promises. promises. Before Before the offer offer has been accepte accepted d it can be revoked. After the offer has been accepted it ripens into a contract contract and and then then it cannot cannot be be revoked. revoked. Accordi According ng to Section Section 5 : ³ A proposal may be revoked at any time before the comm commun unic icat atio ion n of its its acce accept ptan ance ce is comp comple lete te as agai agains nstt the the proposer, but not afterwards.´ In case of sale by auction the bids made at the t he auction are offers, and and the the highe highest st offer offer may may be accept accepted ed by the the aucti auction onee eer. r. In such a case the t he sale is complete when the auctioneer announces its completion by the fal fall of the hammer or in any other  customary manner ; and , until such announcement is made, any bidder may retract his bid.


Submission of a tender to supply or purchase goods at a stated price is making an offer. Person submitti submitting ng the tender may withdraw withdraw his tender  before before the same has has been approved. approved. Even Even after the tender tender has been been approved that remains only a standing offer, which is capable of being revo revoked ked befor before e a contr contrac actt aris arises es by placin placing g of orders. orders. In Rajendra Kumar Verma Vs. State of M adhy adhya a Prad Prades esh h AIR 1972 The respondents advertised for receiving tenders for sale of Tendu Patta (leaves). leaves). The petitione petitionerr submitted submitted his tender. tender. Before the date of  of  the ope openin ning of the tende nders the pet petition tione er mad made an appl appliication tion with withdr draw awin ing g his his tend tender er and and also also requ reques esti ting ng that that his his tend tender er be not not opened. One of the conditions conditions in the tender tender notice was that that a tenderer  may withdraw his tender before the tender are open provided that there should be at least one other valid tender when the tenders are opened. Peti Petiti tion oner er¶s ¶s tend tender er was was the the only only tend tender er subm submit itte ted. d. In spit spite e of his his request to withdraw the tender the Government accepted his tender. Since the petitioner petitioner did not execute the purchaser¶s agreement , Tendu leaves were sold to somebody else at a lower rate, and then an action was brought against the petitioner to claim compensation for the loss suffered by the Government.


The conten tentioner of the petitio tioner was tha that since he had withdrawn his tender before the same had been opened and acc ccep epte ted d, the there was no offe offerr in exi existen stence ce which ich cou could be accepted. accepted. The responden respondents, ts, however, however, contend contended ed that the offer  offer  could not be withdrawn in accordance with the tender notice and, therefore, the petitioner¶s offer was still alive and had ripened into contract by acceptance. It was held that in spite of the clause in the tender notice against the withdrawal of the offer, the petitioner had a right to withdraw his offer offer before the same same was accepted accepted.. In this case case there was was no offer which could be accepted, there had arisen no contract between the petitioner and the respondents and, as such, the respondents had no right to claim any compensation.


R evocation evocation

in contracts by post

We have already seen earlier that as per Section 5, a proposal may be revoked at any time before the communication of its acceptance is complete as against the propos proposer er,, but not afterwa afterwards rds.. In contrac contracts ts by post it has has to be seen, seen, as to what hat time time the commu communi nica cati tion on of  acceptance is complete against the offeror, because no revocation is possible after such communication has been completed.



is the communication of acceptance complete against the offeror (proposer) ? 

According to section 4 : ³The communication communication of of an acceptance is complete as against the proposer, when it is put in the course of  transmission to him, so as to be out of the power of the the acceptor.´ For instance in response to my offer sent by post to you, you post post the letter letter of accep acceptan tance ce to me. As soon soon you have have posted posted the the lett letter er my power power to revoke revoke come comes s to an end. end. This This may may be made further clear by referring to the following illustration ; A propos proposes, es, by a lette letterr sent sent by post, post, to to sell sell his house house to B . B accepts accepts the proposal proposal by by a letter letter sent sent by by post. post. A may revoke revoke his proposal proposal at any time time before before or at the momen momentt when B posts his his letter of acceptance, but not afterwards.


R evocation evocation how


Section 6, mentions the various modes of revocation, which are as under :  A proposal is revoked ± (1) by the communication of notice of revocation by the proposer to the other party ; (2) by the lapse of 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 : (3) by the failure of the acceptor to fulfil a condition precedent to acceptance : (4) by the death or insanity of the t he proposer, if the fact of his death or  insanity comes to the knowledge of the acceptor before acceptance:


By notice of revocation offer ripens ripens into a contract after it is accepted. accepted. Before it has been accepted it creates no legal obligation and, therefore, it may be revoked at any time before it is accepted. To be effective the notice of revocation has to be communicated by the proposer and not by any body else. 2. By lapse of time  A proposal is revoked by the lapse of time t ime 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. 1.




By the failure to fulfil a condition precedent

When the offer is subject to some condition precedent, such a condition has got to be fulfilled before the acceptance acceptance is made. made. If  there is failure of the acceptor to fulfil a condition precedent to acceptance acceptance,, the offer stands stands revoked. revoked. For example example,, if the offer  requires the deposit of some earnest money, or the execution of  some document document etc. these conditions must be fulfilled. Failure to fulfil these conditions may make an offer to lapse.


4. By

the death or insanity of the offeror 

 An offer is revoked by the death or insanity of the proposer, if the fact of death or insanity comes to the knowledge of the acceptor  before before accept acceptanc ance. e. In India India the death death or insani insanity ty of the offeror  offeror  does not automa automatical tically ly make the offer offer to lapse. The offer stands stands revoked if the fact of death or insanity comes to the knowledge of  the acceptor before before acceptance. acceptance. It means that that if the fact of death or insanity has not come to the knowledge of the offeree while he accepts the the offe ffer, it is valid acceptance giv giving rise to a contractual obligation. In Engl Englan and d the the posi positi tion on is diffe differe rent nt.. There There,, after after the the offe offeree ree knows about the offeror¶s death, the offer lapses and cannot be accepted.


Standing, 

Open or continuing offer

An offer which is allowed to remain open for acceptance over a period of time is known as a sanding, open or a continuing offer. For example, an offer to supply 1,000 bags of wheat from 1st January to 31st December, in accordance with the orders which may be placed placed from from time to time time to time, time, is a standing standing offer. As and when the orders are placed that amounts to acceptance of  the offer to that that extent. In the above above stated illustration illustration if an order  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  become becomes s bound to suppl supply y those 100 bags bags of wheat. wheat. So far as the remaining quantity is concerned this offer can be revoked just like any other offer. Tend Tende er for for sup supply ply of good goods s is a kind kind of stan tanding ding offer ffer.. An advertisement inviting tenders is merely invitation for quotations. When the tender is approved it becomes a standing offer.


I n

Beng Bengal al Coa Coall Co. Co. Vs. Vs. Homi Homie e Wadi Wadia a & Co. Co.,, the defendants (Bengal Bengal Coal Coal Co.) agree agreed d to suppl supply y coal to the plainti plaintiff  ff (Homie Wadia Wadia & Co. ) up to a certain certain quan quantit tity y at an agreed agreed price price for a period of 12 months, as may be required by the plaintiffs from time to time. The plaintiffs placed orders for the supply of coal and the same were complied with. Before the expiry of  12 months, the defendants withdrew their offer to supply further  coal, and refused to comply with the orders to supply further coal, and refu refuse sed d to compl comply y with with the orde orders rs placed placed ther therea eafter fter.. They They were sued for breach of of contract. There was simply a continuing offer offer to suppl supply y coal. coal. They They were were bound bound to supp supply ly coal coal only only as regards orders which had already been placed, but were free to revoke their offer for supply of coal thereafter. thereaf ter.



proposal when accepted, results in an agreement. It is only after the acceptance of the proposal that a contract between the two parties can arise. According to Section 2 (b) : ³ whe when n the the pers person on to whom hom the the prop propo osal sal is mad made sig signifie fies his ass sse ent the thereto, to, the the proposa osal is said to be accepted ted. A proposal, proposal, when when accepted, becomes a promise promise ³ The person making the proposal does not become bound und the thereby reby until til acc cce eptan tance. ce. As soo soon as his proposal sal is accepted ted tha that is known as promis mise whereby whereby both the parties become bound. A


Effect of  A cceptance cceptance  A contract contract is created created only only after an offer offer is accepted accepted.. Before Before the acceptance is made neither neither party is bound thereby. At that stage stage the offeror is free to revoke or withdraw his offer, and the offeree is free not to accept accept the offer offer or reject reject the same. same. After the the offer  has been accepted it becomes a promise which, if other  conditions of a valid contract is satisfied, binds both the parties to the the pro promise mise.. After fter acce accept ptan ance ce each ach part party y beco become mes s lega legall lly y bound by the promise made by him through the medium of offer  or acceptance of it.


Essentials of a valid acceptance


order that acceptance of an offer can result in a contract the acceptance must satisfy the following requirements. 1. Acceptance should be communicated by the offeree to the offeror. 2. Acceptance must be made in the prescribed manner, and if no manner is prescribed, in some usual and reasonable manner. 3. Acceptance should be absolute and unqualified. 4. Acceptance should be made while the offer is still subsisting. 32


A cceptance cceptance should

be communicated

We have seen above that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accept accepted. ed. It means means that that the the offeree offeree mus mustt signif signify y his assen assent, t, or  communicate the acceptance. When the parties are face to face, communication could be oral. When they are at a distant place communication could be made by post post,, by tel telegra gram, by a mess ssa age on phone hone,, thro throu ugh a messenger, or in any other reasonable manner. Sometimes the cond conduc uctt of a perso person n migh mightt indi indica cate te his his asse assent nt.. For For exam exampl ple, e, when a passenger ger boards rds a bus and tra travels thereby, he impliedly assents to pay the necessary fare.


Communication must be made by t he offeree or his authorised agent I n

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 authorised person on his behalf. I f the communication is made by an unauthorised person it does not result in a contract. In Powell Vs. Lee, (1908) Powell was one of the candidates for the post of head mas master of a school hool.. The The Board oard of man managers passed sed a reso resolu lutio tion n selec selecti ting ng him for the the post post.. No commu communi nica catio tion n about about this decision was made to Powell by the Board. one of the members of the Board Board who had not not been been author authoris ised ed to commu communi nica cate te this this deci decisio sion, n, acting in his his individual capacity, capacity, informed informed Powell about about his selection selection for  the post. post. Subsequently, Subsequently, the the Board of managers managers met again again and decided to cancel the appointment of Powell and appoint another candidate, Parker, in Powell¶s Powell¶s place. Powell sued sued Lee, the chairman chairman of the Board Board of manag manager ers s for for the the brea breach ch of cont contra ract ct.. It was was held held that that sinc since e the the resolution passed by the Board was not communicated to Powell by the Board, or any authorised person on its behalf, it could not give rise to a contract. Powell¶s action action therefore therefore failed. failed.



is communication of acceptance complete ? 

As soon as the communication of acceptance is complete that results in a contract whereby both both the part parties ies beco become me bound bound.. In case case the the parties to the con contract are present at the same place, one making the offer and the othe otherr comm commun unic icat atin ing g the the acce accept ptan ance ce,, both both parties become bound immediately. ly. The problem arises ses when the parti rties are at a distant place and the contract is concluded through post 35

 A cceptance cceptance

by post

Section 4 of the Act mentions the followin f ollowing g rules when the communication of acceptance is made by post : 1. The communication of acceptance is complete as against the proposer, when it is put in 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. Illustration

B accepts A¶s proposal by a letter sent by post. 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 w hen letter of  acceptance posted to him It has been noted that the communication of  acceptance is complete as against the propo ropose serr when hen the lett etter of acce accept ptan ance ce is posted to him. Once the letter of acceptance is post posted ed the the offe offero rorr beco become mes s bound ound.. He becomes bound immediately on the posting of the letter to him and it makes no difference that the rec receipt of the lette tter is delaye ayed in transit, or even if the letter is lost in the post and the offeror never receives it. 37

I n

Dunlop Vs. Higgins ( 1848), 1848), Dunlop & Co. offered to sell 200 tons of pig iron at 65 sh. Per ton to Higgi iggins ns & Co. Co. throu through gh thei theirr lette letters rs dated dated 22nd 22nd and 28th January, Higgins & Co. received the letters on 28th and 30th 30th January January and and replie replied d on the same same indicating their acceptance to purchase the pig iron in accord accordan ance ce with the offer. offer. Due to frosty frosty weathe weather  r  there was disruption in the train services and the lett letter er of acce accept ptan ance ce inst instea ead d of reac reachi hing ng on 31st 31st Janu Januar ary y reac reache hed d Dunl Dunlop op & Co. Co. on 1st Febru Februar ary y. Dunlop & Co. refus fused to supply pig iron on the the ground that the receipt of the letter of acceptance by them had been delayed. It was held that Dunlop & Co. had become bound by the contract as soon as the letter of acceptance was posted to them.


Communication of acceptance to a wrong person It has already been seen that the offeror becomes bound as soon as the letter letter of acceptance is posted posted to him. If the letter letter of acceptance acceptance is posted at the wrong address or to a wrong person, that will not bind the offeror. In this connectio connection n reference may be made to the decision decision of the court in the case of K of  Karan Singh Vs. The Coll Collec ecto tor, r, Chha Chhata tarp rpur  ur to to explain the point. In that case case in an auction auction of the quarry lease lease the petitioner¶ petitioner¶s s bid of  Rs. 1,800 was the highest highest bid. bid. In accordance accordance with the the auction auction conditions conditions the the peti petiti tion oner er depo deposi site ted d the the secu securi rity ty depo deposi sitt and and earn earnes estt money money of  Rs. 540. The The bid bid was not accep cepted ted at the auc auction. on. The The bid was subs subseq eque uent ntly ly acce accept pted ed by the the coll collec ecto tor, r, but but inst instea ead d of send sendin ing g the the communication of acceptance to the petitioner the same was wrongly sent to somebody somebody else. The officer officer concerne concerned d realise realised d the mistake mistake after after the expi expiry ry of the period period of lease lease.. Then Then a deman demand d notice notice was was sent to the petitioner petitioner asking him to pay the lease lease money. The petitioner, petitioner, on the other  hand, demanded the refund of the security deposit of Rs. 540. It was held that the petitioner¶s bid, which was an offer, although accepted on file, did not result in a contract as no intimation was sent to the petitioner which was received by him. The demand notice for recovering the lease money was quashed and the respondents were directed to refund the security deposit.


cceptor  A cceptor

Bound w hen his letter reaches the offeror It has been noted above that though the offer ffero or beco become mes s bou bound when the the lett etter of  acce accept ptan ance ce is post posted ed to him, him, the the acce accept ptor  or  himself does not not become bound thereby. by.  Acceptor becomes bound by his acceptance when his letter of acceptance comes to the knowledge of the offeror.


R evocation evocation

of acceptance (India)

In India ndia,,

sinc ince the acceptor does not become bound immediately on post postin ing g his his lett lette er of acce accept ptan ance ce,, he is fre free to revo revoke ke the the acce accept ptan ance ce by ado adopti pting spee peedier dier mode ode of comm commun unic ica atio tion, wher whereb eby y his his comm commun unic icat atio ion n of revo revoca cati tion on of acce accepta ptanc nce e may may reach reach earli earlier er than than his his letter letter of of accepta acceptance nce.. Secti Section on 5 expre expressl ssly y perm permit its s the the revo revoca cati tion on of acce accep ptanc tance e thro throu ugh the the foll follow owin ing g provision : ³An acceptance may be revoked at any time before the comm commun unic icat atio ion n of the the acce accept ptan ance ce is comp comple lete te as agai agains nstt the the acceptor, but not afterwards.´ Illustration

  A prop propos oses es,, by a letter letter sen sentt by post post,, to sell sell his his hous house e to B. B accept accepts s the prop proposa osall by a lette letterr sent sent by post. post. B may rev revoke oke his his acceptance at any time before or at the moment when the letter  communica communicating ting it reaches reaches A, but not not afterwa afterwards. rds.


R evocation evocation

of acceptance (England)

Under the English law, once the letter of  acceptance is posted it binds both the parties and there appears to be no scope of  revocation of acceptance by sending a telegram or through a phone call. Although there are no English cases on the subject are of the view that the posting of the letter of  acceptance once posted cannot be revoked.


cceptance  A cceptance 

by Telephone or Telex

Section 4 and 5, which makes provisions about the communication of offer and acceptance and revocation thereof, do not not make make a ment mentiion wheth hether er thes these e prov provis isio ions ns rela relate te to communications through letters and telegrams only or they also include communication made with the help of telephone and telex also. In Bhagwandas Vs. Girdhari Lal & Co. (1966) the Supreme Court has has held held that that in case case of tele teleph phon onic ic conv conver ersa sati tion on the the position is the same as in the case where the parties are in the presence of each other, and the rule of contract through post does not apply apply to such contrac contracts. ts. In case of acceptanc acceptance e sent by post the contract is concluded when the letter of acceptance is poste osted, d, where herea as in the the case ase of acc accepta eptan nce by phon hone, the the contract is deemed to be complete when the offeror hears the acceptance at his end rather than when the acceptor speaks the words of acceptance.


Communication of acceptance not needed in acceptance by conduct 

It has been noted above that as a general rule no contract can arise unless and until the acceptance has been communicated to the offeror. In exceptional cases the terms of the offer may be such which waive the necessity of communication of  acceptance, or a certain kind of conduct on the part of the offeree may be treated sufficient to create a contract. contract. If that that is so, the contract contract could be created created even without communication of acceptance.   Acc Accor ordi ding ng to Sect Sectio ion n 8, ³Performance of the conditions of the proposal«««««. Is an acceptance of the proposal.´ ( case of Mrs. Carlil Vs. Carbonic Smoke Ball Co.) 44


 A cceptance cceptance

should be in the prescribed manner

If the the pro proposa posall presc rescri ribe bes s any manne annerr of acc cce epta ptance, nce, the the acceptance must be made in that manner. When the manner of  acceptance has not been prescribed, it must be made in some usual and reasonable manner. Accept Acceptanc ance e by post, post, telegr telegram am,, telep telephon hone e or throu through gh perso personal nal messenger ger may be considered red to be a usual manner of  acceptance. If no manner of acceptance is prescribed, acceptance in some usual usual and reasonable reasonable manner manner will will suffice. If, how however ever,, the the prop propos osal al pres prescr crib ibes es any any part partic icul ular ar mann manne er of  acceptance, the acceptance must be made made in that that manner. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, then, according to Section 7 (2), of the Indian Indian Contra Contract ct Act, Act, ³the ³the propo propose serr may, may, within a reasonable time after acceptance is communicated to him, him, insi insist st that that his his prop propos osal al shal shalll be acce accept pted ed in pres prescr crib ibed ed manner, and not otherwise ; but if he fails to do so, he accepts the acceptance.´



cceptance should A cceptance

be absolute and unqualified: It lapses by rejection or counter-offer

Anot Anothe herr esse essent ntia iall of vali valid d acce accepta ptanc nce, e, which hich can can convert a proposal into a contract, is that the acceptan tance mus must be absol solute and unqu nqualified. ed. Conditional or qualified acceptance is no acceptance which could result in a contract. By such an acceptance the offer is deemed to be rejected. By such an acceptance the offer is deemed to be reje rejecte cted. d. The The effe effect ct of suc such h a cou counte nterr-of offe ferr in the the eyes of law is to destroy the original offer. And an offer once refused is dead and cannot be accepted unless renewed. 46

should be made w hile the offer is still subsisting 4.

cceptance  A cceptance

We have seen earl arlier tha that the the offe fferor is fre free to withd ithdra raw w the the offe offer, r, or the the offe offerr is revo revoke ked d unde under  r  various circumstances mentioned in section 6. Afte After  r  the offer has been withdrawn or has lapsed there is nothin thing g which hich can can be acc ccep epte ted d. It is, the therefo reforre, necess cessar ary y that that the the acc cce eptan tance sho should be made made while the offer is still alive and subsisting.  Acceptance after the lapse of the offer cannot give rise rise to a contract contract.. Simila Similarly rly,, the offer is deeme deemed d to have ended by rejection of the original offer or a counter offer. 47

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