JAMIA MILLIA ISLAMIA

New Delhi – 110025

FACULTY OF LAW

CONTRACT– ASSIGNMENT
TOPIC – COMMUNICATION AND REVOCATION OF
AN OFFER.

NAME : ALTAMAS RAJA

SUBMITTED TO :
MS. RICHA KHARE

ACKNOWLEDGEMENT
 I would like to express my gratitude to my teacher MS.
RICHA KHARE , who gave me the opportunity to do
this wonderful project of the subject CONTRACT on the
topic COMMUNICATION AND REVOCATION OF AN
OFFER.

This project helped me to learn about acceptance and

DATE: 30 th October,2023
NAME : ALTAMAS RAJA

TABLES OF CONTENT
1. INTRODUCTION
2. AGREEMENT BETWEEN PARTIES
3. COMMUNICATION THROUGH FAX, EMAIL
AND OTHER ELECTRONIC MEANS
4. ACCEPTANCE OF PROPOSAL UNDER
VOLUNTARY RETIREMENT SCHEME
5. COMMUNICATION OF REVOCATION SHOULD
BE FROM OFFERER HIMSELF
6. REVOCATION OF GENERAL OFFER
7. BY DEATH OR INSANITY OF OFFERER
8. CONCLUSION
9. BIBLIOGRAPGY

INTRODUCTION
• This Chapter is very important. It deals with the completion of communication of proposals,
acceptance and revocations and helps one in deciding whether the contract is concluded or not.
The provisions of this section are applied with Sections 2 and 3 to determine the time when the
contract is concluded and also the place where the contract is made which assumes relevance
while deciding the jurisdiction of the court.

Communication of Proposal

• The first part of the definition of proposal lays emphasis upon the requirement that the
willingness to make a proposal should be signified. It means that the proposal should be
communicated to the other party.

• Thus, it is clear that the process of making a proposal is completed by the act of communicating
it.

• Section 3 of ICA recognises the modes of communication and Section 4 prescribes as to when
communication is complete.

Section 3 of ICA1

• A proposal may be made in any way which has the effect of laying before the offeree the
willingness to do or to abstain. It may be made by word of mouth, or by writing or it may even
be by conduct.

• This section provides two stages for a valid communication of a proposal. The communication
of the proposal is the first stage. Receipt of the communication by the acceptor is the second
stage.

1.indian contract act ,1872

Powel v. Lee2

• The managers of a school resolved to appoint a person as the headmaster. One of the managers
communicated this to the candidate in his personal capacity. No other communication was
received, and subsequently, the manager received their decision. It was held that there was no
contract as there had been no authorised communication on the part of managers. The court
further observed that Non-authorisation of communication was held to imply that the managers
reserved power to reconsider the matter. The candidate coming to know indirectly of the
selection was held to be not material.

• Whether a proposal has or has not come to the knowledge of the person to whom it was made is
purely a question of fact.

Agreement between parties at a distance

• When the parties are in the presence of each other, the proposer and the acceptor know whether
the acceptance has been communicated.

• If they are at a distance, they depends upon other modes of communication.

• The present modes of communication can be grouped into three categories:

1. Non-instantaneous mode like the post, courier or telegram.

2. Instantaneous mode like the telephone, telex, etc.

3. Intermediate modes of communication like fax, email and other electronic methods.

• Each of these categories required to be looked at separately.

Non-Instantaneous communication

• To answer this question, have a look on the second and the third paragraph of Section 4 as well
as the illustrations.

• Formation of agreement between parties at a distance by correspondence through post.

• It has done this by enacting that for a certain time namely, while the acceptance is on its way,
the receiver of the acceptance (proposer) shall be bound and the sender (acceptor) not. Why?

• This type of practice is seen in common law. Anson’s statement.

2.Powell v Lee (1908) 99 LT 284 was an English contract law case.

• In India, though proposer (i.e. Promisor) is bound when letter of acceptance is posted by
acceptor (i.e. Promisee).

• Again question is Whether the acceptor is bound by mere posting of the letter of acceptance?

• Acceptor is bound only when the letter of acceptance comes to the knowledge of the proposer
(Section 4).

• Kamisetti Subbiah v. Katha Venkatswami,3 (The gap of time between the posting and
delivery of acceptance to proposer can be utilised by acceptor if he wants to revoke his earlier
acceptance by a speedier means of communication which reaches faster or earlier than the letter
of acceptance.

• But again you have a question how can acceptor do such types of things. In the same case the
court said that the contract is not complete as against the acceptor when the letter of acceptance
is posted.

• In the second para, communication is divided into two parts, but the question remains the same
why should we study this so long and in depth.

• The answer is until the offeror or proposer comes to know of the acceptance, the contract is not
complete.

• However, the case of an acceptance being put in a course of transmission to the proposer, but
failing to reach him is not expressly dealt with.

• To overcome this issue, the wording is like that the proposer must be deemed to have received
the acceptance at the moment when it was despatched so as to be out of the power of the
acceptor and that accordingly it becomes a promise on which the acceptor can sue.

• The acceptor in posting the letter has put it out of his control and power and done an extraneous
act which shows that he is bound thereby.

If the letter is not received

• In Household Fire Insurance Co. v. Grant 4( the Court held that a casualty in the post, whether
resulting in the delay, which is often as bad as no delivery, or in non-delivery cannot unbind the
parties. The court further observed that upon balance of conveniences and inconveniences the
contract would be complete as soon as the acceptance is posted.

• However, if the wrong address is mention then what happen? To overcome this issues in Ram
Das v. The Official Liquidator (1887) it was held that a letter not correctly addressed by an
acceptor cannot be said to have been put in the course of transmission.

• However, again if the wrong address is not due to the fault of the acceptor, the letter could be
said to be in the course of transmission [Townsend’ case (1887)] even though there might be
some delay in the letter reaching the addressee.

3.(1903) 27 Mad 355,

4.(1879) 4 Ex D 216,

Instantaneous Communication on Phone or on telex

• In Entores Limited v. Miles for East Corporation (1955), a communication by means of

• The communication on phone or telex machine are direct between the parties and hence instantaneous.
• Communicationbyphoneortelexwouldfallunderfirst para of section 4 as if the parties make the oral offer
and acceptance.

Communication through fax, email and other electronic means

• Fax message fall into an intermediate position; the message is transmitted immediately however if the
receiver is not there the communication of proposal is not complete.

• The despatch in such cases resembles that by post in that once the message is sent, it goes into a course
of transmission so as to be out of the control of the sender and therefore a similar rule should be
applicable.

• Thus, it is concluded that the rules of postal communication must apply to communication by electronic
means, except where the sender has an opportunity of immediately verifying the proper communication
of the message.

• Place of Contract: In PremChand RoyChand v. Moti Lal, it was held that a proposal is made not at the
place where it emanates but where it is received.

• Time and place of contract: when the instantaneous method of communication is used, a contract is then
said to take place at the time when and the place where the acceptance is received. [Firm kanhayalal v.
Dineshchandra, AIR 1959 MP 234]

• When an agreement is entered into by correspondence, the contract is made at the time when and the
place where the letter of acceptance is posted.

• And if the communication takes place through an electronic record, Section 13 of the IT Act is relevant
as it has introduced certain legal fictions in respect of the time and place of despatch and receipt of
electronic records.

Modes of acceptance

• Section 4: Postal Rule.

• Section 8: either by performing the conditions as stipulated in the proposal or the acceptance of any
consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the
proposal

Section 5 of ICA

• While Section 4 provides the time at which communication of acceptance and of revocation of
proposal and acceptance is complete, this section i.e. Section 5 provides that both the proposal
and acceptance can be revoked and secondly gives the time before which the right of revocation
can be exercised. This section must be read along with Section 5.
• Section 5 provides that “a proposal may be revoked at any time before the communication of its
acceptance is complete as against the proposer, but not afterwards. As against the proposer, the
communication of acceptance is complete when it is put in a course of transmission to him, so as
to be out of the power of the acceptor. It means, therefore that the communication of revocation
to be effective must reach the offeree before he mails the acceptance putting it out of his power.

• A revocation becomes effective only when it reaches the offeree [Henthron v. Fraser (1862) 2
Ch 27].

Section 6 of ICA

• Section 6 of ICA provides for four methods of revocation of an offer.

1. Notice of revocation by offeror or his authorized agent.

2. Lapse of given time, if time is not provided then lapse of reasonable time.

3. Non-fulfilment of condition precedent.

4. Death of the offeror but death comes to the knowledge before the communication of
acceptance.

Brief facts of Henthron v. Fraser6

• The secretary of a building society handed to the plaintiff in the office of the society an offer to
sell a property at $ 750 giving him the right to accept within fourteen days. The plaintiff resided
in a different town and took away with him the offer to that town. The next day at about 3.50 PM
he sent by post his letter of acceptance. This letter was received at the society’s office at 8.30
PM. But before that at about 1 PM the society had posted a letter revoking its offer. The
revocation and acceptance crossed in the course of the post. The plaintiff received the letter of
revocation at 5.30 PM. The revocation was held to be ineffective.

• Explaining the principle, LORD HERSCHELL observed: “If the acceptance by the plaintiff of
the defendant’s offer is to be treated as complete at the time the letter containing it was posted, I
can entertain no doubt that the society’s attempted revocation of the offer was wholly ineffectual.
I think that a person who has made an offer must be considered as continuously making it until
he has brought to he knowledge of the person to whom it was made that it is withdrawn.

• Thus, the communication of revocation should reach the offeree before the acceptance is out of
his power. An illustration to section 5 explains the matter.

• A proposes by letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post.
A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but
not afterwards.

Withdrawal before expiry of fixed period

• Where an offeror gives the offeree an option to accept within a fixed period, he may withdrew it even
before the expiry of that period. Is it so? Yes or No.

• In Alfred Schonlank v. Muthunayna Chetti 7the defendant left an offer to sell a quantity of indigo at
the plaintiff’s office allowing him eight days time to give his answer. On the 4th day however the
defendant revoked his proposal. The plaintiff accepted it on the 5th day. Holding the acceptance to be
useless, the court said: “Both on principle and on authority it is clear that in the absence of consideration
for the promise to keep the offer open for a time, the promise is mere nudum pactum.

Acceptance of proposal under Voluntary Retirement Scheme

• Case Name is Bank of India v. O.P. Swarnakar, AIR 2003 SC 858.

• Legal issue to be discussed under this topic: Whether an employee can withdraw an application under
the Voluntary Retirement Scheme (VRS) before the Competent Authority accepts the same?

• Facts: A large number of employees submitted their applications out of whom a small number of
employees withdrew their offer. Despite withdrawal of their offer the same was accepted. In some cases
offers despite withdrawal thereof were accepted within the period during which the scheme was operative
and in some beyond the same. The scheme was introduced by the banks with the approval of the Board of
Directors.

• Judgement: The court held that the voluntary scheme was not a proposal or an offer but merely an
invitation to treat and the applications filed by the employees constituted an ‘offer'. He could withdrew it
before it was accepted. A term in the scheme which prevented the employee from withdrawing his request
was held to be not binding. It had the effect of a promise not to withdraw the request and there was no
consideration for the promise to make it binding.

Shashikalah Parashar v. State of Goa (1988) 2 Bom CR 427

• An employee first proposed to take voluntary retirement and then requested that his resignation be kept
in abeyance. The Government accepted the resignation. The court said that the mere assertion without any
proof or affidavit that the retraction was served on the government before acceptance could not be
accepted. The court further said a request for keeping the proposal in abeyance was not the same thing as
withdrawing it.

Agreement to keep open for specified period

• Principle: Where the agreement to keep the offer for a certain period of time is for some
consideration, the offeror cannot cancel it before the expiry of that period.

• Mountford v. Scott (1975) 1 AII ER 198: The owner of a house agreed, in consideration of the
sum of one pound, to give the plaintiff an option to purchase the house for ten thousand pounds
within a stated period. He was not allowed to revoke the proposal within that time. One pound
was a sufficient consideration because it was valuable. The effect was that the offer was
irrevocable for the specified period of time and the offeree could accept it notwithstanding the
purported revocation.

6. (1862) 2 Ch 27

7.(1892) 2 Mad LJ 57

Communication of Revocation should be from Offerer himself

• It is of course, necessary that the communication of revocation should be from the offeror or
from his duly authorised agent. But it has been held in England in Dickinson v. Dodds (1876) 2
Ch D 463 that it is enough if the offeree knows reliably that the offer has been withdrawn.
• The facts were: The defendant signed and delivered to the plaintiff an offer to sell a property at
a price fixed and added a postscript saying “This offer to be left open until Friday 9 AM, 12th
June. A day before the expiry of this period the plaintiff was informed by a third person that the
property had already been sold to another. However, the plaintiff before 9 AM, 12th June handed
him the notice of acceptance.

• The court held that the document amount only to an offer which might be withdrawn at any
time before acceptance, and that to a sale to a third person which came to the knowledge of the
person to whom the offer was made was as an effectual withdrawal of an offer.

• However, in Indian case, the thing is little bit different as this rule will be not applicable in
India for the simple reason that Section 6(1) requires in so many words that the notice of
revocation should be by the proposer to the other party.

Revocation of General Offer

• Where an offer of a general nature is published through newspaper, it can be withdrawn by the
same media and the revocation will be effective even if a particular person subsequent to the
withdrawal, happened to perform its terms in ignorance of the withdrawal. In an American case,
the announcement through newspaper of a reward for reporting criminals was withdrawn by a
subsequent notification. But a person who was working on the track of the criminals detected
and reported them. He was absolutely unaware of the revocation. He could not recover. It was
withdrawn through the same channel in which it was made. The same notoriety was given to the
revocation that was given to the offer.

Revocation of Bid

• The Supreme Court felt that the words “instruction regarding bidding” were wide enough to include all
kinds of instruction about bids, including their revocations

Lapse of time

• An offer lapses on the expiry of the time, if any, fixed for acceptance.

• Where an offer says that it shall remain open for acceptance up to a certain date, it has to be accepted
within that date. It has been suggested by the Calcutta High Court that in such a case it is enough if the
acceptor has “posted the acceptance before the stipulated time”, even if it reaches the offeror after the
stipulated date. The court said, “that an effective date on which the option of acceptance is exercised by a
party is to be ascertained from the date when the acceptance is put in transmission and the letter is posted.

• In Bruner v. Moore8, where an offer was to last until the end of March and the offeree sent a telegram
accepting the offer on 28th March which was received by the offeror on 30th March, it was held that the
option was duly exercised.

• Where no time for acceptance is prescribed, the offer has to be accepted within a reasonable time.

• What is a reasonable time will depends upon the facts and circumstance of each case.
• The definition of a reasonable period is a question of fact depending on the surrounding circumstances
in which the agreement was made.

• For instance, the subject matter of the contract is gold, the price of which rapidly fluctuates in the
market, very short period will be regarded as reasonable, but not so in reference to the land.

By failure to accept Condition Precedent

• Where the offer is subject to a condition precedent, it lapses if it is accepted without fulfilling the
condition.

• Where a salt lake was offered by way of lease on deposit of a sum of money within a specified period
and the intended lessee did not deposit the amount for 3 long years, it was held that this entailed
cancellation of the allotment. [State of W.B. v Mahendra Chandra Das, (1990) 2 Cal LJ 1].

By death or Insanity of offerer

• Earlier case, Bradbury v. Morgan9 where a creditor continued to act on a guarantee without knowledge
of the surety’s death, the court pointed out that an offer is not necessarily terminated with the death of the
offeror. It may remain open until the offeree comes to know of death.

• However, after this case in England at one time that an offer terminates at once on the death of the
offeror whether or not the facts has come to the notice of the offeree. In Dickinson v. Dodds (1876) it was
held that an offer cannot be accepted after the death of the offeror.

• There is no provision in the Act about the effect of the death of an offeree. But as an offer can
be accepted only by an offeree and not by any other person, it should not be capable of being
accepted by the offeree’s executor also. [Reynolds v. Atherton (1921)]

8.(1904) 1 Ch 305,

9.(1862)

Revocation of Acceptance

• According to English law an acceptance once made is irrevocable. In the words of Anson:
Acceptance is to an offer what a lighted match is to train of a gun powder. It provides something
which cannot be undone. This rule is confined in its operation only to postal acceptance. It is
suggested in other line: But the powder may become damp or the train might have been removed
before the matches applied. It means that an acceptance can be revoked at any time before
acceptance is complete, provided, of course, that the revocation itself is communicated before
the acceptance arrives.

• In India, on the other hand, acceptance is generally revocable. An acceptor may cancel his
acceptance by a speedier mode of communication which will reach earlier than the acceptance
itself.

• Section 5 is the relevant provision.

• The only thing is that the communication of revocation

should reach earlier than the acceptance itself.

• But again there is a question, what will be the result if they reach together?

• If you see section, it does not make the point clear. Isn’t it or not? Tell me.

Illustration to Section 5 resolve the issue.

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

• In Countess of Dunmore v. Alexander, 10: A proposal of service made by a letter was sent
through an agent. The agent received the acceptance and forwarded it to the principal, but the
principal was away that day. The next day the agent received the revocation and forwarded it to
the principal, who received the two letters together.

• The revocation was held to be effective, the court saying that “the admission that the two letters
were received together puts an end to the case”.

10.(1830)

CONCLUSION
THEREFORE, AN OFFER OR ACCEPTANCE CAN BE
REVOKED BEFORE THE FORMATION OF A
CONTRACT.
A PROPOSAL CAN BE REVOKED BEFORE ITS
ACCEPTANCE, AND ACCEPTANCE CAN BE
REVOKED BEFORE ITS COMMUNICATION IS
COMPLETE.
BUT IN LIGHT OF RECENT DEVELOPMENTS LIKE E-
CONTRACTS OR SMART CONTRACTS, THE
PROVISIONS OF THE ICA MUST BE AMENDED TO
CREATE MODERN MODES OF COMMUNICATION.

REFERENCES
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contract-act-1872-part-i/what-is-a-contract/

2.https://www.vedantu.com/commerce/communication-of-
offer-and-acceptance-and-revocation-of-offer

3.https://www.indiacode.nic.in/handle/123456789/2187?
sam_handle=123456789/1362

4.https://egyankosh.ac.in/bitstream/123456789/13367/1/
Unit-.pdf