Interpretation of Statutes

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COMMUNICATION
Section 2(a) When one person signifies to another his
willingness to do or to 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;
(b) When the person to whom the proposal is
made signifies his assent thereto(i.e. to the
proposal), the proposal is said to be accepted. A
proposal, when accepted, becomes a promise.

Sec. 2 (a) and (b) say that a promisor has to

signify his willingness and a promisee has to signify his
assent. It is to be determined what is meant by such
signification and the mode of such signification. This is
described as “communication”.
The words "signifies to another" clearly imply
that the willingness(in case of proposals) or the assent(in
case of acceptance), must be “brought to the notice of the
other”, in other words "is communicated to the öther."

Section 3.Communication, acceptance and revocation of

proposals.—
The communication of proposals, the acceptance of
proposals, and the revocation of proposals and acceptances,
respectively, are deemed to be made by any act or omission of
the party proposing, accepting or revoking by which he intends
to communicate such proposal, acceptance or revocation, or
“which has the effect of communicating” it.

This section provides two general modes of

communication viz.
(i) any act or
(ii) omission
intending thereby to
communicate to the other
or Which has the effect of
communicating it to the other.
The first mode "any act" would include any
conduct and words, written or oral. Written words
would include letters, telegrams, telex messages,
advertisements etc. Oral words would include telephone
messages. “Any conduct” would include positive acts or

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signs so that the other person understands what the

person acting or making signs means to say, or convey.
The second mode “Omission” would not mean
silence but would include such conduct or forbearance on
one's part that the other person takes it as his willingness
or assent. It would include negative acts or signs.
It is a matter of the commonest experience that the
communication of intentions may be effectually made in
many other ways besides written, spoken, or signaled
words. For example, delivery of goods by their owner to
a man who has offered to buy them for a certain price
will be understood by everyone as acceptance by act or
conduct, unless there be some indication to the contrary.
No words are needed, again, to explain the intent
with which a man steps into a ferry-boat or a tramcar, or
a public vehicle or drops a coin into an automatic
machine. These are instances of communicating by
conduct. It is also possible for parties to hold
communication by means of pre-arranged signs not
being any form of cipher or secret writing, and not
having in themselves any commonly understood
meaning.
The words "which has the effect of
communicating it" clearly refer to an act or omission or
conduct, which may be indirect but which results in
communicating it to the other. The said words would
include communication to an agent (Henthorn v Fraser).1
A mere mental but unilateral act of assent in one's own
mind will not amount to a communication as it cannot
have the effect of communicating it to the other. A
resolution passed by a bank to sell land to A remained
uncommunicated to A and it was held that there was no
communication and no contract.
Notification of acceptance is required for the
benefit of the person who makes the offer. The words
"which has the effect of communicating it" have been
further elaborated in sections 4, 7, 8, 9. The person
making the offer may, however, either dispense with the
notice of acceptance or may provide a particular mode of
acceptance as sufficient to make the bargain binding. Sec.

1 (1892) 2 Ch. 27
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7 provides for that contingency. Sec.-8 provides for a

contingency or acceptance by the mode or performance
of the condition contained in the proposal.

Section 4 of Indian Contract Act – Communication when

Complete – the communication of a proposal is complete
when it comes to the knowledge of the person to whom it is
made.
The communication of an acceptance is complete, -
As against the proposer, when it is put in a
course of transmission to him so as to be out of the
power of the acceptor;
As against to acceptor, when it comes to the
knowledge of the proposer, or his authorized agent.

a) About Communication of Acceptance: - The

principle is that there should be some external
manifestation (overt act) of acceptance. A mere
mental determination to accept unaccompanied by
an external indication will not be sufficient. Such
manifestation may be in the form of express words
(written or spoken) or may be signified through
conduct by which he intends to communicate such
proposal/acceptance of proposals/revocation of
proposals or which has the effect of communicating
it.

b) Communication by the offeree to the offeror only: -

Acceptance must be communicated to the offeror
himself. A communication to any other person is as ineffectual
as if no communication has been made.
Another point of importance is that the offeror cannot
impose upon the offeree a duty to reply and therefore an
offeror cannot say that failure to reply will be deemed to be the
acceptance of the offer. It is not open to an offeror to
stipulate against an unwilling offeree that the latter's
silence will be regarded as equivalent to acceptance. He
cannot force him to take a positive course of action under
penalty of being contractually bound if he does not.
CASE LAW:
Felthouse v. Bindley –
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The plaintiff offered by means of a letter to

purchase his nephew's horse. The letter said: "If I hear no
more about the horse, I consider the horse mine at
£33.15s." To this letter no reply was sent. But the nephew
told the defendant, his auctioneer, not to sell the horse as
it was already sold to his uncle. The auctioneer by
mistake put up the horse for auction and sold it. The
plaintiff sued the auctioneer on the ground that under
the contract the horse had become his property and,
therefore, defendant's unauthorised sale amounted to
conversion. But the action failed.
The court said: "It is clear that the nephew in his
own mind intended the uncle to have the horse, but he
had not communicated his intention to the uncle." The
case is also an authority for two further propositions.
One of them is that the acceptance of an offer made
should be communicated to the offeror himself or to the
person he has authorised to receive the acceptance. A
communication to a stranger, like the auctioneer in this
case, will not do.
c) Communication must be made by the offeree or his
authorized agent: - (only offeree can accept the offer)
– This is a natural corollary to the above mentioned
principle. If an unauthorized person makes the
communication it does not result in a contract.
CASE LAW:
Powell v. Lee –
The plaintiff was an applicant for the
headmastership of a school. The managers passed a
resolution appointing him, but the decision was not
communicated to him. one of the members, however, in
his individual capacity informed him. The managers
cancelled their resolution and the plaintiff sued for
breach of contract.
Rejecting the action the court observed: "There must
be notice of acceptance from the contracting party in
some way. Information by an unauthorised person is as
insufficient as overhearing from behind the door."

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d) Communication of acceptance to a wrong

person is no acceptance: - The offeror becomes
bound as soon as the letter of acceptance is
posted to him. If the letter of acceptance is
posted at a wrong address or to a wrong person,
that will not bind the offeror.
CASE LAW:
Karan Singh v. The Collector Chattarpur-
The offeror however becomes bound
immediately on the posting of the letter to him
and it makes no difference that the letter is
delayed in transits or it is even lost in the post
and the offeror never receives it. A complete
contract arises on the date when the letter of
acceptance is posted or in due course. The only
condition is that the letter should be correctly
addressed.
CASE LAW:
1. Household Fire and Carriage Accident
Insurance Co. v. Grant – Letter lost in
post/never received. Held that the offeror is
bound by the contract.
The defendant in this case had applied for
allotment of 100 shares in the plaintiff
company. A letter of allotment addressed to
the defendant at his residence was posted in
due time, but it never reached the defendant.
Nevertheless he was held bound by the
acceptance.
Thesiger LJ stated the rule thus: “An
acceptance which only remains in the breast
of the acceptor without being actually and
by legal implication communicated to the
offeror, is no binding acceptance.... But if the
post be treated as the agent of both parties,
then as soon as letter of acceptance is
delivered to the post office, the contract is
made as complete and final and absolutely
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binding as if the acceptor had put his letter

into the hands of a messenger sent by the
offeror himself as his agent to deliver the
offer and to receive the acceptance..... The
acceptor, in posting the letter has “put it out
of his control and done an extraneous act
which clinches the matter, and shows
beyond all doubt that each side is bound.
How, then, can a casualty in the post office,
whether resulting in delay, which in
commercial transactions is often as bad as no
delivery, or in non-delivery, unbind the
parties or unmake the contract?”
2. Dunlop v. Higgins –
Due to the frosty weather the letter of
acceptance was delayed. Held that the
offeror is bound by the contract.
3. Adams v. Lindsell –
The acceptance was delayed. Held that the
offeror is bound by the contract.
In this case, on September 2, 1817,
the defendants sent a letter offering to sell
quantity of wool to the plaintiffs. The letter
added “receiving your answer in course of
post”. The letter reached the plaintiffs on
September 9th. The defendants waited for
the acceptance up to September 8th and not
having received it, sold the wool to other
parties on that date. They were sued for
breach of the contract.
It was contended on their behalf that till
the plaintiff’s answer was actually received
there could be no binding contract and,
therefore, they were free to sell the wool on
8th. But the court said:
“If that were so, no contract could ever be
completed by the post. For if the defendants
were not bound by their offer when accepted

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by the plaintiffs till the answer was received,

then the plaintiffs ought not be bound till
after they had received the notification that
the defendants had received their answer
and assented to it. And so it might go on ad
infinitum (without end).”
The rule of postal communication stands
differently from the Instantaneous communication like
Telex/Telephone where, the parties are deemed to be in
each other’s presence or though separated in space they
are in direct communication e.g. by telephone.

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