ACCEPTANCE

Essential of a Valid Acceptance

 Acceptance should emanate from an offer

 Made by Offeree
 Before the lapse of offer
 Acceptance by conduct or implied acceptance[Sec. 8]
 Absolute and unqualified [Sec.7(1)]
 Communicated to Offeror
 As per prescribed mode [Sec.7(2)]
 Within specified Time
 Acceptance

1. When the person to whom proposal is made - for example if A offers to sell his car to
B for `of200000.
Definition Acceptance: In 4.terms
Here, proposalAccepted
isof
madeproposal
to B.2(b)
Section becomes
of the promise.
Act, ‘the term acceptance’ is
defined as follows: Offer to sell his car
“When the person to whom the proposal is made signifies his assent thereto, proposal is
said to
2. be person
The accepted. The proposal,
to whom proposalwhen accepted,
is made i.e. Bbecomes a promise”.
in the above example and if B signifies
Promise
his assent on that proposal. In other words if B grants his consent on A’s proposal,
3. then we
When B can
has say that Bhis
signified hasconsent
signifiedonhis consent
that on the
proposal, weproposal
can say made by proposal
that the A. has
been accepted. Accepts for Rs. 5,00,000

Offeror Acceptor
SIGNIFIES IS WITH A VIEW OF
Acceptance
ASSENT Acceptance
should be in can
response to not
an precede
offer. i.e. an offer
Acceptance=Consent to anANoffer
OBTAINING ASSENT
 Relationship between offer and acceptance:
According to Sir William Anson “Acceptance is to offer what a lighted match is to a train
of gun powder”. The effect of this observation is that what acceptance triggers cannot be
recalled or undone. But there is a choice Offer
to the person who had the train to remove it
before the match is applied. It in effect means that the offer can be withdrawn just before
it is accepted. Acceptance converts the offer into a promise and then it is too late to
revoke it. This means as soon as the train of gun powder is lighted it would explode.
Accept
Train of Gun powder [offer] in itself is inert, but it is the lighted match [the acceptance]
which causes the gun powder to explode. The significance of this is an offer in itself
cannot create any legal relationship but it is the acceptance by the offeree which creates
a legal relationship. Once an offer is accepted it becomes a promise and cannot be
Gun Powder
withdrawn or revoked. An offer remains an offer so long as it is notMatch Box but
accepted
Contract
becomes a contract as soon as it is accepted.
Legal Rules regarding a valid acceptance

 Acceptance can be given only by the person to whom offer is made:

 Acceptance must be absolute and unqualified
 The acceptance must be communicated:
 Acceptance must be in the prescribed mode:
 Time:
 Mere silence is not acceptance:
 Acceptance by conduct or implied acceptance
 Acceptance can be given only by the person to whom offer is made:

In case of a specific offer, it can be accepted only by the person to whom it is made.
[Boulton vs. Jones (1857)] Order goods
Case Law: Boulton vs. Jones (1857)
Facts: Boulton bought a business from Brocklehurst. Jones, who was Brocklehurst's
creditor, placed an order with Brocklehurst for the supply of certain goods. Boulton
Broklehurst’s
supplied the goods even though the order was not in his name. Jones refused to pay
Boultan for the goods because by entering into the contract with Brocklehurst, he
intended to set off his debt against Brocklehurst. Held, as the offer was not made to
Boulton, therefore, there was no contract between Boulton and Jones.
In case of a general offer, it can be accepted by any person who has the knowledge of the
offer. [Carlill vs. CarbolicSue
Smoke
himBall Co.
but cant (1893)]
Refuse
win
forto
Provided
Ask asgoods
pay
there is no contract
payment

Case Law: Boulton vs. Jones(1857) Boulton

Jones
 Case Law: Carlill Vs. Carbolic Smoke Ball Co. (1893)

In this famous case Carbolic smoke Ball Co. advertised in several

newspapers that a reward of £100 would be given to any person who
One lady, Mrs.
contracted Carlill,after
influenza usedusing
the smoke balls as
the smoke per produced
balls the directions of company
by the Carbolic
and even
Smoke then suffered
Company fromtoinfluenza.
according Held, she could recover the amount
printed directions.
Give
as by using the smoke an advertisement
balls to general
she had accepted the public
offer

Claim for the reward

 Acceptance must be absolute and unqualified

If on the other hand ‘B’ agrees to purchase the car from ‘A’ as per his proposal
As per to
subject section 7 of the
availability Act, acceptance
of valid Registration is valid only
Certificate when
/ book forit the
is absolute
car, then and
the un
qualified
Example: and
acceptance ‘A’ inisplace
also expressed
is enquires from ‘B’,
though in
the“Willsome
offeryou usual
purchase
contained and
no myreasonable
car forofRs
mention manner
R.C.2 lakhs?” unless
is the
If ‘B’
book. This
replies “I
proposal
because shall purchase
prescribes
expecting a valid your
thetitle forcar
manner thefor
in ` 2not
carwhich
is lakhs, if youbebuy
aitcondition.
must my motorcycle
accepted.
Therefore the for
Ifacceptance
the `
proposal
50000/-,
prescribes
in here
this case the‘B’manner
is unconditional inWill
cannot be you itpurchase
considered
which bemy
to have
must car for the
accepted
accepted Rs 2proposal.
accordingly.
Will you purchase my car for Rs 2
lakhs?”
lakhs?”

I shall purchase your car for Rs 2 lakhs, if you

Ihave
shall purchase your car for ` 2 lakhs,
valid Registration Certificate / book for the
if you buy my motorcycle car for ` 50000/-

Acceptance is Not Valid

 The acceptance must be communicated:
Union of India vs
Counter offer
Babulal

offer
To conclude a contract between the parties, the acceptance must be communicated in
some perceptible form. AnyHe conditional
offer to sellsacceptance
A t-shirt foror
Rs.acceptance
500 with varying or too
deviant conditions is no acceptance. Such conditional acceptance is a counter
proposal and has to be accepted by the proposer, if the original proposal has to
Counter
materialize into a contract. Acceptance
offer

He Wants It For ₹400

Acceptance

He Sells A T-shirt For Rs. 400

 Offeree must have the knowledge

a n
Rosh
T
ells ik
Further when a proposal his rit
er taccepted, the offeree must have the m
knowledge
H of the offer made
hat knowledge, there can be no acceptance.o
to him. If he does not have the he car fr The acceptance must
wa he
relate specifically to the offer made.ntThento s only it canas e tmaterialize into a contract. The above
ell h ch
points will be clearer from the following examples, is car
r- to S
o Pu idd
a nt t har
t
ew h fo
th rR
tha s2
,0 0
her 0,000 ,0 0
ls 0 0
Tel Rs 2,
fo r
Brogden vs Metropolitan Railway Co. Manager of Railway co.

(a) Brogden vs. Metropolitan Railway Co. (1877)

Draft
Facts: B a supplier, sent a draft Agreement
agreement relating to the supply of coal to the
manager of railway Co. viz, Metropolitan railway for his acceptance. The manager
wrote the word “Approved” on the same and put the draft agreement in the drawer of
the table intending to send it to the company’s solicitors for a formal contract to be
drawn up. By an over sight the draft agreement remained in drawer. Held, that there
was no contract as the manager had not communicated his acceptance to the
supplier, Didn’t send

Not Valid Acceptance

 Neale vs Merret

Offer to sell the Land for Rs. 280 Pound

(b) M offered to sell his land to N for £280. N replied purporting to accept the offer
but enclosed a cheque for £ 80 only. He promised to pay the balance of £ 200 by
monthly instalments of £ 50Paid
each. It waspromise
80 pound held that N200
to pay could notand
pound enforce his acceptance
because it was not an unqualified one. [Neale vs. Merret [1930] W. N. 189].
installment

Pay 50 Pound

Pay 50 Pound

Pay 50 Pound

Pay 50 Pound
Similar to the fact of Union of India vs Babulal
Counter offer
((c) A offers to sell his house to B for Rs 1,00,000/-. B replied that, “I can pay Rs
80,000 for it. The offer ofoffer
‘A’ is rejected by ‘B’ as the acceptance is not unqualified. B
however changes his mind and is prepared to pay ` 1,00,000/-. This is also treated as
counter offer and it is upto A whether to accept it or not. [Union of India v. Bahulal
AIR 1968 Bombay 294]. He Offer to Sells house For Rs. 1,00,000

Counter offer

He can accept for only Rs. 80,000

Hrithik rejected Siddharth offer Rs. 80,000

He can accept and buy the house Rs. 1,00,000

 a n
Rosh
Tel ik
ls it
her
m Hr
tha fr o
t he
wa e car
nt e th
Where an offer madeto seby ll h thech intended offeree without the
as
is c
knowledge that an offer P u r- has ar been made to him cannot be
to S
to idd
deemed as an acceptance
e wa n t thereto. (Bhagwandas
har
th f
o
v. Girdharilal)
th rR
tha s2
,0 0
her 0,000 ,0 0
ls 0 0
Tel Rs 2,
fo r
Heyworth vs Knight

A mere variation in the language not involving any difference

OFFER TO SELL in English
in substance would not make the acceptance ineffective.
[Heyworth vs. Knight [1864] 144 ER 120].

Acceptance to provided in Gujarati

Valid Acceptance
 Acceptance must be in the prescribed mode
Prescribe mode
Example: If the offeror prescribes acceptance through messenger
Where the mode
and offeree sendsof acceptance
acceptance by is prescribed
email, there in the proposal,
is no it must
acceptance of
be
theaccepted in offeror
offer if the that manner.
informsBut theifofferee
the proposer
that thedoes not insist
acceptance is noton
the proposal
according being
to the modeaccepted
Application in His
Form
Promise To Sell
prescribed. the
Carmanner
should
But
(prescribes
if the prescribed
be submitted
offeror failsafter
to do itso,has
it
online
acceptance through messenger )
been accepted
will be presumed otherwise,
that he has i.e.,Contract
not in
accepted validthe prescribed manner, the
the acceptance and a valid
proposer is presumed
contract will arise. to have consented to the acceptance.

offeree sends acceptance by email

Contract void
Applied for Examination form offline
the acceptance is not according to the mode
prescribed
Acceptance is Not Valid
 Time

Acceptance must be given within the specified time limit, if any, and if no time is
stipulated, acceptance must be given within the reasonable time and before the
offer lapses. What is Application
reasonable Formtime
should is nowhere
be submitted defined
before in the law and thus
31 st March
would depend on facts and circumstances of the particular case.
Acceptance
is Valid

Applied for Examination before 31st March

Acceptance
is not Valid

Applied for Examination after 31st March

 Mere silence is not acceptance
Valid Acceptance
The acceptance of an offer cannot be implied from the silence of the offeree or his
failure to answer, unless the offeree has in any previous conduct indicated that his
silence is the evidence of acceptance.

Provided digital camera on sale on approval

for 7 days

No answer Within 7 Days assume accepted.

The Terms Of Offer Was That If He Did Not Respond Within 7 Days, The Offer Will Be
Considered Accepted
 Case Law:Felthouse vs Bindley (1862)
He is accepted but
not communicated

He offer to buy a horse for 30 pound

Facts: F (Uncle) offered to buy his nephew’s horse for £30 saying “If I hear no
more about it I shall consider the horse mine at £30.” The nephew did not reply to
F at all. He told his auctioneer, B to keep the particular horse out of sale of his
farm stock as he intended to reserve
If I hear itit,for
no more about I shallhis uncle.
consider By
the horse is mistake the auctioneer
mine at 30 pound
sold the horse. F sued him for conversion of his property. Held, FNot to not
could
sold
succeed as his nephew had not communicated the acceptance to him. particular
horse

By mistake Sold

There was no contract as the Manager had not communicated his acceptance
 Mere silence is not acceptance

Liable to payfor the weekly magazine for one year. Even after expiry
Example: ’A’ subscribed
of his subscription, the magazine company continued to send him magazine for
five years. And also subscribed
‘A’ continued
for theto use magazine
weekly the magazine
for one but
year denied to pay the bills
sent to him. ’A’ would be liable to pay as his continued use of the magazine was
his acceptance of the offer.

continued to send him magazine for five years

even after expiry

continued to use the magazine but denied to

pay the bills
 Acceptance by conduct / Implied acceptance

By word of8 mouth

Section of the Act lays down that “the performance of the conditions of a
proposal, or the acceptance of any consideration for a reciprocal promise which
may be offered with a proposal, constitutes an acceptance of the proposal. This
Therefore, when a person performs the act intended by the proposer as the
section provides the acceptance of the proposal by conduct as against other
consideration for the promise offered by him, the performance of the act
modes of acceptance i.e. verbal or written communication.
constitutes acceptance.
Promise To Sell His Car

Accepts For Rs. 7,00,000

 Acceptance by conduct / Implied acceptance

Section 8 of the Act lays down that “the performance of the conditions of a
proposal, or the acceptance of any consideration for a reciprocal promise which
Therefore, whenwith
may be offered a person performs
a proposal, to the
constitutes
Order act intended
anthe
deliver acceptance
car by of
thetheproposer
proposal.asThis
the
consideration
section providesforthe
theacceptance
promise offered by him, by
of the proposal the conduct
performance of theother
as against act
constitutes
For
modes acceptance.
example, when ai.e.
of acceptance tradesman
verbal orreceives
written an order from a customer and executes
communication.
the order by sending the goods, the customer’s order for goods constitutes the
offer, which has been accepted by the tradersman subsequently by sending the
goods. It is a case of acceptance by conduct.
Accepts For Rs. 7,00,000

Directly deliver the car

Tradesman
Communication of offer and acceptance

 Communication of offer
 Communication by act
 Communication of acceptance by ‘omission’ to do something
 Communication of acceptance by Conduct
 Where a proposal is accepted by a letter sent by the post
 Acceptance over telephone or telex or fax
 Communication of special conditions
 Standard forms of contract
The importance of ‘offer’ and ‘acceptance’ in giving effect to a
valid contract was explained in the previous paragraphs. One
important common requirement for both ‘offer’ and ‘acceptance’ is
their effective communication. Effective and proper communication
prevents avoidable revocation and misunderstanding between
parties.
When the contracting parties are face-to-face, there is no problem of
communication because there is instantaneous communication of offer and
acceptance. In such a case the question of revocation does not arise since the
offer and its acceptance are made instantly.

The difficulty arises when the contracting parties are at a distance from one
another and they utilise the services of the post office or telephone or email
(internet). In such cases, it is very much relevant for us to know the exact time
when the offer or acceptance is made or complete.

The Indian Contract Act,1872 gives a lot of importance to “time” element in

deciding when the offer and acceptance is complete.
 Communication of offer
Read on
15th Marchwhen it
In terms of Section 4 of the Act, “the communication of offer is complete
comes
Thus toit the
canknowledge
be summed of theupperson
that towhen
whomait is made”. is made by post, its
proposal
12 March
communication will 10 beMarch
complete when the letter containing the proposal reaches
Mere
the receiving
person of the
to whom it isletter
made.is not sufficient, he must receive or read the message
Offer to sell the house
contained inThethe offer
letter. is said to have been communicated on 12th
He receivesMarch
the letter on 12th March, but he reads it on 15th of March. In this
case offer is communicated on 15th of March, and not 12th of March.
10 April 7 April

Accept to buy the house for 5 Lakhs

Parties Offer Acceptance
Hrithik Roshan 10 March 7 April
Siddharth Varma 15 March 10 April
Communication of acceptance: There are two issues for discussion and
understanding. They are: The modes of acceptance and when is acceptance
complete?
Let us, first consider the modes of acceptance. Section 3 of the Act prescribes
in general terms two modes of communication namely, (a) by any act and (b)
by omission, intending thereby, to communicate to the other or which has the
effect of communicating it to the other.
 Communication by act

Communication by act would include any expression of words whether written or

oral. Written words will include letters, telegrams, faxes, emails and even
Promise
advertisements. Oral words will includeTotelephone
Sell his Car
messages. Again communication
would include any conduct intended to communicate like positive acts or signs so
that the other person understands what the person ‘acting
Oral ‘ or ‘making signs’ means
to say or convey.

Accepts for Rs. 7,00,000

Written

Accepts For Rs. 7,00,000

 Communication of acceptance by ‘omission’ to do something

Amir khan went on a ride of

Provided digital camera on sale on
Such omission is conveyed by approvalbus or by forbearance on the part of one
a conduct for 7 days
person to convey his willingness or assent. However silence would not be
treated as communication by ‘omission’.

It isNoananswer
implied contract
Within 7 Daystoassume
pay
accepted.

the terms of offer was that if he did not respond within 7 days, the offer will be considered accepted
 Communication of acceptance by Contract

For instance, delivery of goods at a price by a seller to a willing buyer will be

Went AbyRide
understood as a communication On to
conduct Bus.
convey acceptance. Similarly
one need not explain why one boards a public bus or drop a coin in a
weighing machine. The first act is a conduct of acceptance and its
communication to the offer by the public transport authority to carry any
passenger.

Need To Buy The Ticket

 Acceptance By Conduct

Order Goods
The second act is again a conduct conveying acceptance to use the weighing
machine kept by the vending company as an offer to render that service for a
consideration.

Weighing goods but not delivered

 [Central Bank YeotmalvsVyankatesh (1949) A. Nag. 286].

The other issue in communication of acceptance is about the effect of act or

omission or conduct. These indirect efforts must result in effectively
communicating its acceptance or non acceptance. If it has no such effect,
resolution
there is no communication
passed regardless of which the acceptor thinks about
the offer within himself. Thus offer
a mere mental
to sale unilateral assent in one’s own
a land
mind would not amount to communication. Where a resolution passed by a
bank to sell land to ‘A’ remained uncommunicated to ‘A’, it was held that
there was no communication and hence no contract. [Central Bank
YeotmalvsVyankatesh (1949) A. Nag. 286].

Did not communicated to Siddharth

 Time when offer & acceptance of offer is complete

(i) As against the proposer, when it is put in the course of transmission to

Where him so as to be
a proposal is out of the by
accepted power
a letterof the
sentacceptor to withdraw
by the post, the same;
the communication
12 March
of acceptance
For instance inwill the10be March
abovecomplete
example, as ifagain the proposer
‘B’ accepts, when and
A’s proposal the letter
sends of his
acceptance by is posted
post onand as Offer
14th, against
the the acceptor
communication
to sell the house ofwhen the letter
acceptance as reaches
against the‘A’
The goldenon
proposer.
is complete rule is proposer
14th, when the becomes bound As
letter is posted. byagainst
the contract, the moment
‘B’ acceptance will
acceptor
(ii)
be As has when
against
complete, posted theletter
the acceptor,
the letter
whenof acceptance.
it comes
reaches But
to the
‘A’. Here itthe
is necessary
knowledge
‘A’ of the
proposer that
will thebound
proposer.
be letter
is correctly
by
However, addressed,
B’s acceptance,
from evenadequately
the view if the of
point letterstamped heand
willduly
of acceptance
acceptor, be posted.byIn
is bound
delayed such
inhis
post oranlost
event
acceptance in
the loss
transit.
only whenof the
letter in transit,
letter wrong has
16acceptance
of march delivery,
reachednonthe delivery etc.,So
14 March
proposer. will notcrucial
it is affect
thethis
Of
in validity
course of
casethis
thatthe
will contract.
the give risereaches
letter to an awkward
the situation of only
is noone party ofto the
the
Accept to buy theproposer.
house for If 5there
Lakhs delivery
contract,
letter, thebeing treated could
acceptance as bound by the contract
be treated as having though
beenno one would
completed be sure
from the
as to whereofthe
viewpoint letter ofbut
proposer acceptance
not from had gone.
the viewpoint of acceptor.
parties Offer Acceptance
Hrithik Roshan 10 march 14 march
Siddharth Varma 12 march 16 march
 Acceptance over telephone
or telex or fax

When an offer is made of To

Promise instantaneous communication like telex,
Sell His Car Over
telephone, fax or through e-mail, the contract is only complete when the
Telephone
acceptance is received by the offeree, and the contract is made at the place
where the acceptance is received (Entores Ltd. v. Miles Far East
Corporation). However, in case of a call drops and disturbances in the line,
there may not be a valid contract.

Accepts For Rs. 7,00,000

(Entores Ltd. v. Miles Far East Corporation).

 Communication of special conditions

Sometimes
When someone there travels
are situations whereto there
from one place another areby contracts with
air, it could
Indian special
beairlines
seen
conditions.
that special These special are
conditions conditions
printedareat conveyed
the back tacitly
of the and the acceptance
air ticket in small of
these conditions
letters [in awhereare computerized
non also conveyedtrainby theticket
offeree
evenagain
thesetacitly
are or
notwithout him
For instance a passenger undertakes a travel, the conditions ofprinted]
travel are
even realizingthese
Sometimes it. conditions
printed at the back the are
of Went Afound
Ride
tickets, to
Onhave
Bus.
sometimes been
thesedisplayed
special at the noticeare
conditions
board of the Air lines Want
office, to go
which Canadamay not have cared to read.
passengers
brought to the notice of the passenger, sometimes not. In any event, the
The question
passenger here isaswhether
is treated these conditions
having accepted can condition
the special be considered to have he
the moment
been his
bought communicated
ticket. to the passengers of the Airlines and can the
passengers be treated as having accepted the conditions. The answer to the
question is in the affirmative and was so held in Mukul Datta vs. Indian
Airlines [1962] AIR cal. 314 where the plaintiff had travelled from Delhi to
Kolkata by air and the ticketNeed
Needbore
ToToconditions
Buy
BuyThe Thein fine print.
Ticket
Ticket
 Lilly White vs. Mannuswamy (1970)

Facts: P delivered some clothes tocustomer drycleanerwouldfor

be entitled
which she received a
to claim 15% of the market
Yet laundry receipt containing
another example a condition
is where a launderer that
gives hisincustomer
case of aloss, customer
receipt would
for clothes
price of value of the
be entitled
received to claim
for washing. The15% of the
receipt market
carries
Provided price
special
saree of valueand
for conditions
cleaning
article,
of the
are article, P lostasher
to be treated
having
newbeen duly
saree. communicated
Held, to theunreasonable
the terms were customer and and therein a tacit
P was acceptance
entitled of
to recover
these conditions
full value ofisthe
implied
sareeby the customer’s
from acceptance of the receipt [Lily White vs.
the drycleaner.
R. Mannuswamy
In the cases [1966] A. Mad.
referred 13].the respective documents have been accepted
above,
CASE LAW: Lilly White vs. Mannuswamy (1970)
without a protest and hence amounted Provided toReceipt
tacit acceptance.

Saree was lost

Standard forms of contracts
 [Raipur transport Co. vs. Ghanshyam [1956] A. Nag.145].

It is well established that a standard form of contract may be enforced on another who is
subjectively unaware of the contents of the document, provided the party wanting to
enforce the contract has given notice which, in the circumstances of a case, is
sufficiently reasonable. But the acceptor will not incur any contractual obligation, if the
document is so printed Aand delivered
transport carriertoaccepted
him in thesuch
goodsaforstate that it does not give
reasonable notice on its face thatwithout
transport it contains certain special conditions. In this
any conditions.
connection, let us consider a converse situation. A transport carrier accepted the goods
for transport without any conditions. Subsequently, he issued a circular to the owners of
goods limiting his liability for the goods. In such a case, since the special conditions were
not communicated prior to the date of contract for transport, these were not binding on
the owners of goods Subsequently, he issued a circular to the owners
of goods limiting his liability for the goods
COMMUNICATION OF PERFORMANCE

We have already discussed that in terms of Section 4 of the Act,

communication of a proposal is complete when it comes to the knowledge of
the person to whom it is meant. As regards acceptance of the proposal, the
same would be viewed from two angles. These are:
(i) from the viewpoint of proposer and
(ii) the other from the viewpoint of acceptor himself:

From the viewpoint of proposer, when the acceptance is put in to a course of

transmission, when it would be out of the power of acceptor. From the viewpoint
of acceptor, it would be complete when it comes to the knowledge of the proposer.
 Mrs. Carlill boughtCase Law:smoke
these Carlillballs
Vs. Carbolic
and used Smoke
themBall Co. (1893)but contracted
as directed
influenza. It was held that Mrs. Carlill was entitled to a reward of $100 as she
At
hadtimes the offeree
performed may be required
the condition to communicate
for acceptance. Furtherthe performance
as the (or act)
advertisement did by
way of acceptance.
not require In this caseofitcompliance
any communication is not enough if the
of the offeree itmerely
condition, performs
was not
the act but
necessary he should also
to communicate communicate
the same. The courthisthusperformance
in the processunless the offer
laid down the
includes a term that a mere performance
following three important principles: will constitute acceptance.
(i) an offer, to be capable of acceptance, must contain a definite promise by the
The position
offeror thatwas
he clearly
would explained
be boundinprovided
the famous case ofspecified
the terms Carlill Vs
by Carbolic
him are
&Smokeball
accepted; Co. InGive thisan case the defendant
advertisement to general apublic
sole proprietary concern
manufacturing a medicine which was a carbolic ball whose smoke could be
(ii) an offer
inhaled may be
through themade
noseeither
to cureto influenza,
a particular person
cold or to connected
and other the public ailments
at large,
iii) if an offer is made in the form of a promise in return for an act, the
andissued an advertisement for sale of this medicine. The advertisement also
performance of that act, even without any communication thereof, is to be
included a reward of $100 to any person who contracted influenza, after using
treated as an acceptance of the offer Claim for the reward
the medicine (which was described as ‘carbolic smoke ball’)
 REVOCATION OF OFFER AND ACCEPTANCE

If there are specific requirements governing the making of an offer and the
acceptance of that offer, we also have specific law governing their revocation .
In term of Section 4, communication of revocation (of the proposal or its
acceptance) is complete.
(i) as against the person who makes it when it is put into a course of
transmission to the person to whom it is made so as to be out of the power of
the person who makes it, and
(ii) as against the person to whom it is made, when it comes to his knowledge.
 Communication of Revocation
If you revoke your proposal made to me by a telegram, the
revocation will be complete, as far as you are concerned when you
have dispatched the telegram.
As regards revocation 4 April of acceptance, if 6you April go by the above
example, I canquestion
But the important revokeRevoke
myconsideration
for acceptance is (of
when your offer)
a proposal canbybearevoked?
telegram.And
But as far as I am concerned,
the Offer it
to will
sell the be complete
house only when I
This revocation
when can of be
an acceptance acceptance
revoked? Theseby questions
me willarebemore complete
importantwhen
than theI
receive the telegram.
question when the revocation (of proposal and acceptance) is complete.
dispatch the telegram.
Ordinarily, the offeror can revoke his offer before it is accepted. If he does so, the offeree
cannot create a contract by accepting the revoked offer.
9 April 8 April

and against you,Revoke

it will be complete when it reaches you
the Accept to buy the house for 5 Lakhs
 For example the bidder at an auction sale may withdraw (revoke) his bid
(offer) before it is accepted by the auctioneer by fall of hammer.
An offer may be revoked by the offeror before its acceptance, even though
he had originally agreed to hold it open for a definite period of time. So
long as it is a mere offer, it can be withdrawn whenever the offeror desires.
 It will open
till 6 pm

Example: X offered to sell 50 bales of cotton at a certain price and promised

to keep it open for acceptance by Y till 6 pm of that day. Before that time X
sold them to Z. Y accepted before 6 p.m., but after the revocation by X. In
this case it was held that to
Offer thesell
offer
50was already
bales revoked.
of cotton at a
Accept the order but revoked
certain price
It will open
till 6 pm

Offer to sell 50 bales of cotton at a

Accept the offer
certain price
 Communication of Revocation

In terms of Section 5 of the Act a proposal can be revoked at any time before
6 April
the communication of its4 acceptance
April is complete as against the proposer.
Offer to sell the house
An acceptance to an offer must be made before that offer lapses or is
revoked. The law relating to the revocation of offer is the same in India as in
InContract
English
England, butlaw,
thethe
through moment
lawpost - As ato
relating person expresses
the revocation
acceptance, of his acceptance
acceptance
in English ofbeanrevoked,
offer,
is different.
law, cannot
that
so moment
that oncethethe contract
letter of 9isApril
concluded, and
acceptance such anposted
is properly acceptance
the becomesis
8 April
contract
irrevocable,
concluded.whether
In Indian it islaw,
made theorally or through
acceptor or canthe post. his
revoke In Indian law, the
acceptance any
position is different
time before the letter of Accept
as regards acceptanceto buy
contract the house
through
reaches for 5 Lakhs
post.offeror,
the if the revocation
An acceptance
telegram may beorrevoked
arrives before at the sameat any
timetime
withbefore theofcommunication
the letter acceptance, the of
acceptanceis isabsolute.
revocation complete
parties as against the acceptor.
Offer Acceptance
Hrithik Roshan 4 April 6 April
Siddharth Varma 6 April 9 April
 Contract over Telephone-
By word of mouth

A contract can be made over telephone. The rules regarding offer and
acceptance as well as their communication by telephone or telex are the
same as for the contract made by the mutual meeting of the parties. The
contract is formed as soon as the offer is accepted but the offeree must
Promise is
make it sure that his acceptance Toreceived
Sell HisbyCar
the offeror, otherwise there
will be no contract, as communication of acceptance is not complete. If
telephone unexpectedly goes dead during conversation, the acceptor must
confirm again that the words of acceptance were duly heard by the offeror.

Accepts For Rs. 7,00,000

Revocation of proposal otherwise than by communication: When a
proposal is made, the proposer may not wait indefinitely for its
acceptance. The offer can be revoked otherwise than by
communication or sometimes by lapse.
Modes of revocation of offer

 By notice of revocation
 By lapse of time
 By non fulfilment of condition precedent
 By death or insanity
 By counter offer
 By the non acceptance of the offer
according to the prescribed or usual mode
 By subsequent illegality
 By lapse of time

The time for acceptance can lapse if the acceptance is not given within the specified
time and where no time is specified, then within a reasonable time. This is for the
reason that proposer should not be made to wait indefinitely. It was held in
Ramsgate Victoria Hotel Co. Vs
Application Montefiore
Form (1866 L.R.Z.
should be submitted BeforeEx
31st109), that a person
who applied for shares in June was notMarch bound by an allotment made in November.
This decision was also followed in India Cooperative Navigation and Trading Co.
Ltd. Vs Padamsey PremJi. However these decisions now will have no relevance in
the context of allotment of shares since the Companies Act, 2013 has several
provisions specificallyApplied
covering these issues.After 31st March
for Examination

Acceptance is Not Valid

 Be Death or insanity

Death or insanity of the proposer would result in automatic revocation of the

proposal but only if the fact of death or insanity comes to the knowledge of the
acceptor.
Offer to Sale House for Rs 5 Lakhs
He is Death

Accept to buy house for Rs 5 lakh

 By non fulfillment of condition precedent

Where the acceptor fails to fulfil a condition precedent to acceptance the proposal
gets revoked. This principle is laid down in Section 6 of the Act. The offeror for
instance may impose certain conditions such as executing a certain document or
depositing certain amount as earnest money. Failure to satisfy any condition will
Offer to sold house for Rs 5 lakh provided
result in lapse of the proposal. As stated earlier ‘condition precedent’ to acceptance
earnest money of RS 1 lakh
prevents an obligation from coming into existence until the condition is satisfied.
Suppose where ‘A’ proposes to sell his house to be ‘B’ for Rs 5 lakhs provided ‘B’
leases his land to ‘A’. If ‘B’ refuses to lease the land, the offer of ‘A’ is revoked
automatically.

Propose to sale house of for Rs 5 lakh only

if you lease your land to me
 Counter offer

offer

He offer to sells A t-shirt for Rs. 500

Counter
offer Acceptance

He Wants It For ₹400

Acceptance

He Sells A T-shirt For Rs. 400

By the non acceptance of the offer according to the prescribed or usual mode

Application Form should be submitted

online

Applied for Examination form offline

Acceptance is Not Valid

 By subsequent illegality

Maharashtra Gujarat

To sell wine in
Gujarat is illegal
now

Offers to sell the wine from Maharashtra

Agrees to buy it at Rs. 500000

A change in the law or circumstances rendering the original offer unlawful or impossible, will lead to
termination of offer.