THE INDIAN CONTRACT ACT , 1872

CONTRACT
Section 2(h) defines a contract as an agreement enforceable by law
Thus to make a contract there must be
(i) an agreement
(ii) the agreement should be enforceable by law.
All agreement are not enforceable by law and therefore all
agreements are not contracts. Some agreements may be enforceable
by law and others not. !or e"am#le an agreement to sell a radio set
may be a contract but an agreement to go to see a mo$ie may be a
mere agreement not enforceable by law. Thus all agreements are not
contracts. %nly those agreements which satisfy the essentials
mentioned in section &' become contract. (owe$er all contracts are
agreements.
AGREEMENT
According to section 2(e) an agreement is defined as e$ery #romise
and e$ery set of #romises forming the consideration for each other
And a #romise is defined as an acce#ted #ro#osal as Section 2(b)
says a #ro#osal when acce#ted becomes a #romise Therefore it
can be said that an agreement is an acce#ted #ro#osal.
The #rocess of definition comes down to this ) A contract is an
agreement * an agreement is a #romise and a #romise is an acce#ted
#ro#osal.

+n an agreement there is a #romise from both the sides. !or e"am#le
A #romises to deli$er his radio to , and in return , #romises to #ay
a sum of -s. .'' to A there is said to be an agreement between A
and ,
Thus e$ery agreement in its ultimate analysis is the result of a
#ro#osal from one side and its acce#tance by the other.
A #romise is a result of an offer (#ro#osal) by one #erson and its
acce#tance by the other. !or e"am#le when A makes a #ro#osal to
sell his radio to , for -s. .'' and , acce#ts this #ro#osal there
results a #romise between the two #ersons. Section 2(b) of the Act
defines a #romise as under )
/hen the #erson to whom the #ro#osal is made signifies his assent
thereto the #ro#osal is said to be acce#ted. A #ro#osal when
acce#ted becomes a #romise.
Thus when there is a #ro#osal from one side and the acce#tance of
that #ro#osal by the other side it results in a #romise. This #romise
from one side to the other is known as an agreement.
An agreement is regarded as a contract when it is enforceable by law.
+n other words an agreement that the law will enforce is a contract.
The conditions of enforceability are stated in Section &'. According to
this section all agreements are contracts if they are made by the free
consent of #arties com#etent to contract for a lawful consideration
and with a lawful ob0ect and are not hereby e"#ressly declared to be
$oid.
The essentials needed for a $alid contract therefore are as under )
&. The agreement should be between two #arties. An agreement is
the result of a proposal or offer by one #arty followed by its
acceptance by the other.
2. The agreement should be between the parties !o are
competent to contract"
1. There should be a la#$l consi%eration and la#$l o&'ect in
res#ect of that agreement.
2 There should be #ree consent o# t!e parties when they enter into
the agreement.
.. The agreement must not be one which has been %eclare% to &e
(oi%"
)RO)O*A+ OR O,,ER
The term #ro#osal has been defined in section 2(a) as follows)
- .!en one person signi#ies to anot!er !is illingness to %o or
a&stain #rom %oing an/t!ing it! a (ie to o&taining t!e assent
o# t!at ot!er to s$c! act or a&stinence, !e is sai% to ma0e a
proposal"1
T!e illingness to %o or abstain from doing something i.e. the
#ro#osal or offer must be made with a $iew to obtain the assent of the
other #arty thereto. !or e"am#le A3s willingness to sell his radio set
to , for -s. .'' if , acce#ts to #urchase the same amounts to
#ro#osal by A for the sale of the radio set. ,ut if a statement is made
without any intention to obtain the assent of the other #arty thereto that
cannot be termed as #ro#osal.
O##er an% in(itation to treat %isting$is!e%
A #ro#osal or an offer has to be distinguished from an in$itation to
treat. Sometimes a #erson may not offer to sell his goods but may
make some statements or gi$e some information with a $iew to in$ite
others to make offers on that basis. !or e"am#le a bookseller sends
a catalogue of books indicating #rices of $arious books to many
#ersons. This catalogue is not an offer to sell those books at #rices
indicated against those books. This is an 4+n$itation to treat.3 +f any
#erson is interested in #urchasing those books mentioned in the
catalogue he may make an offer. Similarly in$iting #ersons to an
auction where goods which are to be auctioned are dis#layed is not
an offer for the sale of goods. The intending buyers who make the bid
make an offer. Such an offer when acce#ted by the fall of hammer or
in some other customary way will result in a contract.
Intention to create legal relations!ip
+n order that an offer after acce#tance can result in a $alid contract it
is necessary that the offer should be made with an intention to create
legal relationshi#. 5romise in the case of a social engagements is
generally without an intention to create legal relationshi# such an
agreement cannot be considered to be a contract. Thus an agreement
to go for a walk to go to mo$ie to #lay some game or entertain
another #erson with a dinner cannot be enforced in a court of law.
Sometimes the #arty may e"#ressly mention that it is not a formal or
legal agreement whereas in some other cases such an intention could
be #resumed from their agreement.
The test to know the intention of the #arties is ob0ecti$e and not
sub0ecti$e. 6erely because the #romisor contends that there was no
intention to create obligation would not e"em#t him from liability
+n Rose an% ,ran0 Co" 2s" Crompton 3 4rot!ers +t%" the
agreement between the #arties #ro$ided *
This arrangement is not entered into 777. as a formal or legal
0urisdiction in the 8aw 9ourts 77. that it (the agreement) will be
carried through by #arties with mutual loyalty and friendly
co: o#eration.
%ne of the #arties made a breach of this agreement. +n an action by
the other #arty to enforce the agreement it was held that since the
agreement had #ro$ided that it was not a formal or legal agreement
the same was not enforceable..
+n the case of Meritt 2s" Meritt, 516778 the husband and wife were
the 0oint owners of a building which was sub0ect to a mortgage to a
building society. The husband left the matrimonial home to li$e with
another woman. At that time at the insistence of the wife the
husband signed a note saying that the wife will #ay all outstanding
amounts in res#ect of the house and in return -I ill agree to trans#er
t!e propert/ into /o$r sole oners!ip1. +t was held that in this case
it was clear that the #arties intended to create legal relationshi# and
therefore the husband was bound by the contract
Comm$nication o# O##er
An o##er !en accepte% res$lts in a contract" An o##er can &e
accepte% onl/ a#ter t!e same !as come to t!e 0nole%ge o# t!e
o##eree" +t means that the offer has to be communicated to the
offeree in order that the offeree can acce#t it. According to section 2
- t!e comm$nication o# a proposal is complete !en it comes to
t!e 0nole%ge o# t!e person to !om it is ma%e"1
+f an offer has not yet been communicated e$en if somebody acts
according to the terms of the offer he cannot be deemed to be the
acce#tor of the offer. Acting in ignorance of an offer does not amount
to the acce#tance of the same. This #oint may be e"#lained by
referring to the case of +alman *!$0la 2s" Ga$ri D$tt" 516198
+n this case the defendant3s ne#hew absconded from home. The
#laintiff who was defendant3s ser$ant was sent to search the missing
boy. After the #laintiff had left in search of the boy the defendant
issued handbills announcing a reward of -s. .'& ;: to anyone who
might find the boy. The #laintiff who was ignorant of this reward was
successful in searching the boy. /hen 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. +t was held that
since the #laintiff was ignorant of the offer of reward his act of bringing
the lost boy did not amount to the acce#tance of the offer and
therefore he was not entitled to claim the reward.
I# t!e plainti## !as t!e 0nole%ge o# t!e o##er, !is acting in
accor%ance it! t!e terms t!ereo# amo$nts to t!e acceptance o#
t!e same" +n such a case it is immaterial that at the time of acce#ting
the offer the acce#tor does not intend to claim the reward mentioned in
the offer. +n williams Vs. Carwardine 518998 the #laintiff who knew
that the reward had been announced to be gi$en to anyone who ga$e
information leading to the con$iction of an assailant for murder ga$e
the necessary information. /hile gi$ing the information the #laintiff
mentioned that she had gi$en the information :to ease !er
conscience;" At that time she did not intend to claim the reward. +t
was held that since the offer had been acce#ted with its knowledge
there was a $alid contract and therefore she was entitled to claim the
reward.
Cross O##ers
/hen the offers made by two #ersons to each other containing similar
terms of bargain cross each other in #ost they are known as cross
offers. !or e"am#le on &
st
<anuary A offers to sell his radio set to ,
for -s. .'';: through a letter sent by #ost. %n the same date , also
writes to A making an offer to #urchase A3s radio set for -s. .'' ;:
/hen A or , send their letters they do not know about the offer
which is being made by the other side. +n these cross offers e$en
though both the #arties intend the same bargain there arises no
contract. A contract could arise only if either A or , after ha$ing the
0nole%ge o# t!e o##er, !a% accepte% t!e same" In (Tinn Vs.
Hoffmann 1873), A wrote to B indicating his willingness to sell 800
tons of iron at => s. #er ton. %n the same day , also wrote to A
offering to buy ?'' tons of iron at the same rate of => s. #er ton. The
two letters crossed each other in #ost. , brought an action against A
for the su##ly of iron contending that a $alid contract had been created
between the two #arties. +t was held that in this case there were only
two cross offers and the offer of neither of the #arties ha$ing been
acce#ted by the other there was no contract which could be enforced.
*peci#ic an% General O##ers
/hen the offer is made to a s#ecific or an ascertained #erson it is
known as a speci#ic o##er but when the same is not made to any
#articular #erson but to the #ublic at large it is known as general o##er"
!or instance an offer to gi$e reward to anybody who finds a lost %og
is a general offer This general agreement will be deemed to be
acce#ted by an/one !o act$all/ finds the lost dog. The #erson
who acce#ts this offer generally by #erforming the condition of the
#ro#osal can bind the #erson making the offer. According to Section
? 5erformance of the conditions of a #ro#osal 7.. is an acce#tance
of the #ro#osal. Thus although a general offer is made to the #ublic
at large the contract is conclud2d only with that #erson who acts u#on
the terms of the offer.
The case of Carlil 2s" Car&onic *mo0e 4all Co" 518698 is an
illustration of a contract arising out of a general offer. The facts of the
case are ) The defendants ad$ertised their #roduct 9arbonic Smoke
,all a #re$enti$e remedy against influen@a. +n the ad$ertisement
they offered to #ay a sum of &'' #ounds as reward to any one who
contracted influen@a colds or any disease caused by taking cold after
ha$ing used the Smoke ,all three times a day for two weeks in
accordance with the #rinted directions. They also announced that a
sum of &''' #ounds had been de#osited with the Alliance ,ank to
show sincerity in the matter. The #laintiff ( 6rs. 9arlil ) relying on the
ad$ertisement #urchased a Smoke ,all from a chemist used the
same in accordance with the directions of the defendants but still
caught influen@a. She sued the defendants to claim the reward of &''
#ounds ad$ertised by them. +t was held that this being a general offer
addressed to all the world had ri#ened into a contract with the #laintiff
by her act of #erformance of the reAuired conditions and thus
acce#ting the offer. She was therefore entitled to claim the reward.
Re(ocation o# o##er
+t is only after the acce#tance of an offer that there arises a contract
and then both the #arties becomes bound by their res#ecti$e
#romises. ,efore the offer has been acce#ted it can be re$oked.
After the offer has been acce#ted it ri#ens into a contract and then it
cannot be re$oked. According to Section . )
A #ro#osal may be re$oked at any time before the communication
of its acce#tance is com#lete as against the #ro#oser but not
afterwards.
+n case of sale by auction the bids made at the auction are offers and
the highest offer may be acce#ted by the auctioneer. +n such a case
the sale is com#lete when the auctioneer announces its com#letion by
the fall of the hammer or in any other customary manner * and until
such announcement is made any bidder may retract his bid.
Submission of a tender to su##ly or #urchase goods at a stated #rice
is making an offer. 5erson submitting the tender may withdraw his
tender before the same has been a##ro$ed. B$en after the tender has
been a##ro$ed that remains only a standing offer which is ca#able of
being re$oked before a contract arises by #lacing of orders. +n
Ra'en%ra <$mar 2erma 2s" *tate o# Ma%!/a )ra%es! AIR 1672
The res#ondents ad$ertised for recei$ing tenders for sale of Tendu
5atta (lea$es). The #etitioner submitted his tender. ,efore the date
of the o#ening of the tenders the #etitioner made an a##lication
withdrawing his tender and also reAuesting that his tender be not
o#ened. %ne of the conditions in the tender notice was that a tenderer
may withdraw his tender before the tender are o#en #ro$ided that
there should be at least one other $alid tender when the tenders are
o#ened. 5etitioner3s tender was the only tender submitted. +n s#ite of
his reAuest to withdraw the tender the Co$ernment acce#ted his
tender. Since the #etitioner did not e"ecute the #urchaser3s
agreement Tendu lea$es were sold to somebody else at a lower rate
and then an action was brought against the #etitioner to claim
com#ensation for the loss suffered by the Co$ernment.
The contention of the #etitioner was that since he had withdrawn his
tender before the same had been o#ened and acce#ted there was no
offer in e"istence which could be acce#ted. The res#ondents
howe$er contended that the offer could not be withdrawn in
accordance with the tender notice and therefore the #etitioner3s offer
was still ali$e and had ri#ened into contract by acce#tance.
+t was held that in s#ite of the clause in the tender notice against the
withdrawal of the offer the #etitioner had a right to withdraw his offer
before the same was acce#ted. +n this case there was no offer which
could be acce#ted there had arisen no contract between the #etitioner
and the res#ondents and as such the res#ondents had no right to
claim any com#ensation.
Re(ocation in contracts &/ post
/e ha$e already seen earlier that as #er Section . a #ro#osal may be
re$oked at any time before the communication of its acce#tance is
com#lete as against the #ro#oser but not afterwards. +n contracts by
#ost it has to be seen as to what time the communication of
acce#tance is com#lete against the offeror because no re$ocation is
#ossible after such communication has been com#leted.
.!en is t!e comm$nication o# acceptance complete against t!e
o##eror 5proposer8 =
According to section 2 ) The communication of an acce#tance is
com#lete as against the #ro#oser when it is #ut in the course of
transmission to him so as to be out of the #ower of the acce#tor.
!or instance in res#onse to my offer sent by #ost to you you #ost the
letter of acce#tance to me. As soon you ha$e #osted the letter my
#ower to re$oke comes to an end. This may be made further clear by
referring to the following illustration *
A #ro#oses by a letter sent by #ost to sell his house to , . ,
acce#ts the #ro#osal by a letter sent by #ost. A may re$oke his
#ro#osal at any time before or at the moment when , #osts his letter
of acce#tance but not afterwards.
Re(ocation !o ma%e=
Section = mentions the $arious modes of re$ocation which are as
under )
A #ro#osal is re$oked
(&) by the communication of notice of re$ocation by the #ro#oser to
the other #arty *
(2) by the la#se of time #rescribed in such #ro#osal for its
acce#tance or if no time is so #rescribed by the la#se of a
reasonable time without communication of the acce#tance )
(1) by the failure of the acce#tor to fulfil a condition #recedent to
acce#tance )
5>8 by the death or insanity of the #ro#oser if the fact of his death or
insanity comes to the knowledge of the acce#tor before
acce#tance )
&. 4/ notice o# re(ocation
An o##er ripens into a contract a#ter it is accepte%" 4e#ore it
!as &een accepte% it creates no legal o&ligation an%,
t!ere#ore, it ma/ &e re(o0e% at an/ time &e#ore it is accepte%"
To be effecti$e the notice of re$ocation has to be communicated by
the #ro#oser and not by any body else.
2. 4/ lapse o# time
A #ro#osal is re$oked by the la#se of time #rescribed in such
#ro#osal for its acce#tance or if no time is so #rescribed by the la#se
of a reasonable time without communication of the acce#tance.
1. 4/ t!e #ail$re to #$l#il a con%ition prece%ent
/hen the offer is sub0ect to some condition #recedent such a
condition has got to be fulfilled before the acce#tance is made. +f
there is failure of the acce#tor to fulfil a condition #recedent to
acce#tance the offer stands re$oked. !or e"am#le if the offer
reAuires the de#osit of some earnest money or the e"ecution of some
document etc. these conditions must be fulfilled. !ailure to fulfil these
conditions may make an offer to la#se.
2. 4/ t!e %eat! or insanit/ o# t!e o##eror
An offer is re$oked by the death or insanity of the #ro#oser if the fact
of death or insanity comes to the knowledge of the acce#tor before
acce#tance. +n +ndia the death or insanity of the offeror does not
automatically make the offer to la#se. The offer stands re$oked if the
fact of death or insanity comes to the knowledge of the acce#tor
before acce#tance. +t means that if the fact of death or insanity has
not come to the knowledge of the offeree while he acce#ts the offer it
is $alid acce#tance gi$ing rise to a contractual obligation.
+n Bngland the #osition is different. There after the offeree knows
about the offeror3s death the offer la#ses and cannot be acce#ted.
*tan%ing, Open or contin$ing o##er
An offer which is allowed to remain o#en for acce#tance o$er a #eriod
of time is known as a sanding o#en or a continuing offer. !or
e"am#le an offer to su##ly &''' bags of wheat from &
st
<anuary to
1&
st
December in accordance with the orders which may be #laced
from time to time to time is a standing offer. As and when the orders
are #laced that amounts to acce#tance of the offer to that e"tent. +n
the abo$e stated illustration if an order for the su##ly of &'' bags of
wheat is #laced on &.
th
<anuary there is acce#tance of the offer to
that e"tent and the offeror becomes bound to su##ly those &'' bags
of wheat. So far as the remaining Auantity is concerned this offer can
be re$oked 0ust like any other offer.
Tender for su##ly of goods is a kind of standing offer. An
ad$ertisement in$iting tenders is merely in$itation for Auotations.
/hen the tender is a##ro$ed it becomes a standing offer.
In Bengal Coal Co. Vs. Homie Wadia & Co., the defendants
(,engal 9oal 9o.) agreed to su##ly coal to the #laintiff ((omie /adia
E 9'. ) u# to a certain Auantity at an agreed #rice for a #eriod of &2
months as may be reAuired by the #laintiffs from time to time. The
#laintiffs #laced orders for the su##ly of coal and the same were
com#lied with. ,efore the e"#iry of &2 months the defendants
withdrew their offer to su##ly further coal and refused to com#ly with
the orders to su##ly further coal and refused to com#ly with the orders
#laced thereafter. They were sued for breach of contract. There was
sim#ly a continuing offer to su##ly coal. They were bound to su##ly
coal only as regards orders which had already been #laced but were
free to re$oke their offer for su##ly of coal thereafter.
ACCE)TANCE
A proposal !en accepte%, res$lts in an agreement" +t is only
after the acce#tance of the #ro#osal that a contract between the two
#arties can arise.
According to Section 2 (b) ) when the #erson to whom the #ro#osal
is made signifies his assent thereto the #ro#osal is said to be
acce#ted. A #ro#osal when acce#ted becomes a #romise
The #erson making the #ro#osal does not become bound thereby until
acce#tance. As soon as his #ro#osal is acce#ted that is known as
#romise whereby both the #arties become bound.
E##ect o# Acceptance
A contract is created only after an offer is acce#ted. ,efore the
acce#tance is made neither #arty is bound thereby. At that stage the
offeror is free to re$oke or withdraw his offer and the offeree is free
not to acce#t the offer or re0ect the same. After the offer has been
acce#ted it becomes a #romise which if other conditions of a $alid
contract is satisfied binds both the #arties to the #romise. After
acce#tance each #arty becomes legally bound by the #romise made
by him through the medium of offer or acce#tance of it.
Essentials o# a (ali% acceptance
In or%er t!at acceptance of an offer can result in a contract the
acce#tance must satisfy the following reAuirements.
&. Acce#tance should be communicated by the offeree to the
offeror.
2. Acce#tance must be made in the #rescribed manner and if no
manner is #rescribed in some usual and reasonable manner.
1. Acce#tance should be absolute and unAualified.
2. Acce#tance should be made while the offer is still subsisting.
&. Acceptance s!o$l% &e comm$nicate%
/e ha$e seen abo$e that when the #erson to whom the
#ro#osal is made signifies his assent thereto the #ro#osal is said to
be acce#ted. +t means that the offeree must signify his assent or
communicate the acce#tance.
/hen the #arties are face to face communication could be oral.
/hen they are at a distant #lace communication could be made by
#ost by telegram by a message on #hone through a messenger or
in any other reasonable manner. Sometimes the conduct of a #erson
might indicate his assent. !or e"am#le when a #assenger boards a
bus and tra$els thereby he im#liedly assents to #ay the necessary
fare.
Comm$nication m$st &e ma%e &/ t!e o##eree or !is a$t!orise%
agent
In order that the acceptance can be treated as valid it is necessary
that the same must be communicated to the offeror either by the
offeree, or by some duly authorised person on his behalf. If the
communication is made by an unauthorised person it does not result
in a contract. +n )oell 2s" +ee, 516788 )oell was one of the
candidates for the #ost of head master of a school. The ,oard of
managers #assed a resolution selecting him for the #ost. Fo
communication about this decision was made to 5owell by the ,oard.
one of the members of the ,oard who had not been authorised to
communicate this decision acting in his indi$idual ca#acity informed
5owell about his selection for the #ost. SubseAuently the ,oard of
managers met again and decided to cancel the a##ointment of 5owell
and a##oint another candidate 5arker in 5owell3s #lace. 5owell sued
8ee the chairman of the ,oard of managers for the breach of contract.
+t was held that since the resolution #assed by the ,oard was not
communicated to 5owell by the ,oard or any authorised #ereson on
its behalf it could not gi$e rise to a contract. 5owell3s action therefore
failed.
.!en is comm$nication o# acceptance complete =
As soon as the communication of acce#tance is com#lete that results
in a contract whereby both the #arties become bound. +n case the
#arties to the contract are #resent at the same #lace one making the
offer and the other communicating the acce#tance both #arties
become bound immediately. The #roblem arises when the #arties are
at a distant #lace and the contract is concluded through #ost.
Acceptance &/ post
Section 2 of the Act mentions the following rules when the
communication of acce#tance is made by #ost )
&. The communication of acce#tance is com#lete as against the
#ro#oser when it is #ut in the course of transmission to him so as to
be out of the #ower of the acce#tor.
2. The communication of acce#tance is com#lete as against the
acce#tor when it comes to the knowledge of the #ro#oser.
Ill$stration
, acce#ts A3s #ro#osal by a letter sent by #ost. The communication
of the acce#tance is com#lete ::
As against A when the letter is #osted *
As against , when the letter is recei$ed by A.
O##eror &o$n% !en letter o# acceptance poste% to !im
+t has been noted that the communication of acce#tance is com#lete
as against the #ro#oser when the letter of acce#tance is #osted to
him. %nce the letter of acce#tance is #osted the offeror becomes
bound. (e becomes bound immediately on the #osting of the letter to
him and it makes no difference that the recei#t of the letter is delayed
in transit or e$en if the letter is lost in the #ost and the offeror ne$er
recei$es it.
In Dnlo! Vs. Higgins (18"8), Dunlo# E 9o. offered to sell 2'' tons
of #ig iron at =. sh. 5er ton to (iggins E 9o. through their letters
dated 22
nd
and 2?
th
<anuary (iggins E 9o. recei$ed the letters on
2?
th
and 1'
th
<anuary and re#lied on the same indicating their
acce#tance to #urchase the #ig iron in accordance with the offer. Due
to frosty weather there was disru#tion in the train ser$ices and the
letter of acce#tance instead of reaching on 1&
st
<anuary reached
Dunlo# E 9o. on &
st
!ebruary. Dunlo# E 9o. refused to su##ly #ig iron
on the ground that the recei#t of the letter of acce#tance by them had
been delayed. +t was held that Dunlo# E 9o. had become bound by
the contract as soon as the letter of acce#tance was #osted to them.
Comm$nication o# acceptance to a rong person
+t has already been seen that the o>fferor becomes bound as soon as
the letter of acce#tance is #osted to him. +f the letter of acce#tance is
#osted at the wrong address or to a wrong #erson that will not bind
the offeror. +n this connection reference may be made to the decision
of the court in the case of <aran *ing! 2s" T!e Collector,
C!!atarp$r to e"#lain the #oint. +n that case in an auction of the
Auarry lease the #etitioner3s bid of -s. &?'' was the highest bid. +n
accordance with the auction conditions the #etitioner de#osited the
security de#osit and earnest money of -s. .2'. The bid was not
acce#ted at the auction. The bid was subseAuently acce#ted by the
collector but instead of sending the communication of acce#tance to
the #etitioner the same was wrongly sent to somebody else. The
officer concerned realised the mistake after the e"#iry of the #eriod of
lease. Then a demand notice was sent to the #etitioner asking him to
#ay the lease money. The #etitioner on the other hand demanded
the refund of the security de#osit of -s. .2'.
+t was held that the #etitioner3s bid which was an offer although
acce#ted on file did not result in a contract as no intimation was sent
to the #etitioner which was recei$ed by him. The demand notice for
reco$ering the lease money was Auashed and the res#ondents were
directed to refund the security de#osit.
Acceptor 4o$n% !en !is letter reac!es t!e o##eror
+t has been noted abo$e that though the offeror becomes bound when
the letter of acce#tance is #osted to him the acce#tor himself does not
become bound thereby. Acce#tor becomes bound by his acce#tance
when his letter of acce#tance comes to the knowledge of the offeror.
Re(ocation o# acceptance 5In%ia8
In In%ia, since the acce#tor does not become bound immediately on
#osting his letter of acce#tance he is free to re$oke the acce#tance by
ado#ting s#eedier mode of communication whereby his
communication of re$ocation of acce#tance may reach earlier than his
letter of acce#tance. Section . e"#ressly #ermits the re$ocation of
acce#tance through the following #ro$ision )
An acce#tance may be re$oked at any time before the
communication of the acce#tance is com#lete as against the acce#tor
but not afterwards.
Ill$stration
A #ro#oses by a letter sent by #ost to sell his house to ,. ,
acce#ts the #ro#osal by a letter sent by #ost. , may re$oke his
acce#tance at any time before or at the moment when the letter
communicating it reaches A but not afterwards.
Re(ocation o# acceptance 5Englan%8
Gnder the Bnglish law once the letter of acce#tance is #osted it binds
both the #arties and there a##ears to be no sco#e of re$ocation of
acce#tance by sending a telegram or through a #hone call. Although
there are no Bnglish cases on the sub0ect are of the $iew that the
#osting of the letter of acce#tance once #osted cannot be re$oked.
Acceptance &/ Telep!one or Tele?
Section 2 and . which makes #ro$isions about the communication of
offer and acce#tance and re$ocation thereof do not make a mention
whether these #ro$isions relate to communications through letters and
telegrams only or they also include communication made with the hel#
of tele#hone and tele" also.
+n 4!agan%as 2s" Gir%!ari +al 3 Co" 516@@8 t!e *$preme
Co$rt has held that in case of tele#honic con$ersation the #osition is
the same as in the case where the #arties are in the #resence of each
other and the rule of contract through #ost does not a##ly to such
contracts. +n case of acce#tance sent by #ost the contract is
concluded when the letter of acce#tance is #osted whereas in the
case of acce#tance by #hone the contract is deemed to be com#lete
when the offeror hears the acce#tance at his end rather than when the
acce#tor s#eaks the words of acce#tance.
Comm$nication o# acceptance not nee%e% in acceptance &/
con%$ct
+t has been noted abo$e that as a general rule no contract can arise
unless and until the acce#tance has been communicated to the
offeror. +n e"ce#tional cases the terms of the offer may be such which
wai$e the necessity of communication of acce#tance or a certain kind
of conduct on the #art of the offeree may be treated sufficient to create
a contract. +f that is so the contract could be created e$en without
communication of acce#tance. According to Section ? 5erformance
of the conditions of the #ro#osal77777. +s an acce#tance of the
#ro#osal. ( case of 6rs. 9arlil Hs. 9arbonic Smoke ,all 9o.)
2" Acceptance s!o$l% &e in t!e prescri&e% manner
+f the #ro#osal #rescribes any manner of acce#tance the acce#tance
must be made in that manner. /hen the manner of acce#tance has
not been #rescribed it must be made in some usual and reasonable
manner.
Acce#tance by #ost telegram tele#hone or through #ersonal
messenger may be considered to be a usual manner of acce#tance.
+f no manner of acce#tance is #rescribed acce#tance in some usual
and reasonable manner will suffice. +f howe$er the #ro#osal
#rescribes any #articular manner of acce#tance the acce#tance must
be made in that manner. +f the #ro#osal #rescribes a manner in which
it is to be acce#ted and the acce#tance is not made in such manner
then according to Section I (2) of the +ndian 9ontract Act the
#ro#oser may within a reasonable time after acce#tance is
communicated to him insist that his #ro#osal shall be acce#ted in
#rescribed manner and not otherwise * but if he fails to do so he
acce#ts the acce#tance.
9" Acceptance s!o$l% &e a&sol$te an% $nA$ali#ie% B It lapses
&/ re'ection or co$nterCo##er
Another essential of $alid acce#tance which can con$ert a #ro#osal
into a contract is that the acce#tance must be absolute and
unAualified. 9onditional or Aualified acce#tance is no acce#tance
which could result in a contract. ,y such an acce#tance the offer is
deemed to be re0ected. ,y such an acce#tance the offer is deemed to
be re0ected. The effect of such a counter:offer in the eyes of law is to
destroy the original offer. And an offer once refused is dead and
cannot be acce#ted unless renewed.
>" Acceptance s!o$l% &e ma%e !ile t!e o##er is still s$&sisting
/e ha$e seen earlier that the offeror is free to withdraw the offer or
the offer is re$oked under $arious circumstances mentioned in section
=. After the offer has been withdrawn or has la#sed there is nothing
which can be acce#ted. +t is therefore necessary that the acce#tance
should be made while the offer is still ali$e and subsisting. Acce#tance
after the la#se of the offer cannot gi$e rise to a contract. Similarly the
offer is deemed to ha$e ended by re0ection of the original offer or a
counter offer.