Communication of Offer and Acceptance
Introduction
An offer, an acceptance of the proposal and their revocation to be complete, must be communicated properly as per provisions made in law. These provisions are contained in Sections 3-6 of Indian Contract Act, 1872.
Communication of proposals, their acceptance, revocation and acceptances, respectively, are deemed to be made by an act or omission of the party proposing, accepting or revoking, by which that the party intends to communicate such proposal, acceptance or revocation of which has the effect of communicating it [Section 3]. Thus a proposal, its acceptance or revocation may be communicated by conduct or by words written or spoken.
When the contracting parties are face to face and negotiate in person there is instantaneous communication of offer and acceptance. But where services of the post offices are utilized for communication, the following rules as laid down in Sections 4 and 5 will apply.
Communication of Offer
Section 4 of the Indian Contract Act 1872 says that the communication of the offer is complete when it comes to the knowledge of the person it has been made to. So when the offeree (in case of a specific offer) or any member of the public (in case of a general offer) becomes aware of the offer, the communication of the offer is said to be complete.
So when two people are talking, face-to-face or via telephone, etc the communication will be complete as soon as the offer is made.
For Example- if A tells B he will fix his roof for five thousand rupees, the communication is complete as soon as the words are spoken.
When an offer is made by post, its communication will be complete when the offeree receives the letter.
For example- A writes to B offering to fix his roof for five thousand rupees. He posts the letter on 2nd July. The letter reaches B on 4th July. So the communication is said to complete on 4th July.
The communication of acceptance has two aspects viz., as against the proposer and as against the acceptor. The communication of an acceptance is complete:
For example- B accepts ‘A’s proposal by a letter sent by post on 16th June. The letter reaches A on 20th June. The communication of acceptance is complete, as against A (proposer) when the letter is posted, i.e., 16th and as against B on 20th i.e. when the letter is received by A.
The acceptor becomes bound only when his acceptance comes to the knowledge of the proposer after the posting of the acceptance and before its delivery to the proposer, the acceptor has the right to rescind the contract by revoking his acceptance by speedier means.
Where the acceptance is given by post, the communication of acceptance is complete as against the proposer when the letter of acceptance is posted. Thus, mere posting of letter of acceptance is sufficient to conclude a contract. However, the letter must be properly addressed and stamped.
For example: If A post his letter of acceptance to B. Then, the contract is said to be made.
Where the letter of acceptance is posted by the acceptor but it never reaches the offeror, or it is delayed in transit, it will not affect the validity of acceptance. The offeror is bound by the acceptance.
For example: If A post his letter of acceptance, but it never reaches to B(promisor), then too he is bound by the acceptance.
If the communication of an acceptance is made by telephone, teleprinter, telex, fax machines, etc, it completes when the acceptance is received by the offeror. The contract is concluded as soon as the offeror receives not hears the acceptance.
For example: A accepted the offer made by B on telephone call. But due to some network issue, B could not hear the acceptance. Then too, he is bound by the acceptance.
In case of acceptance by the post, the place where the letter is posted is the place of contract. Where the acceptance is given by instantaneous means of communication (telephone, fax, tele printer, telex etc ), the contract is made at the place where the acceptance is received.
In case of acceptance by post, the time of posting the letter of acceptance is the time of contract. But in case of acceptance by instantaneous means of communication, the time of contract is the time when the offeror gets the communication of acceptance.
Where the offer has been made through an agent, the communication of acceptance is completed when the acceptance is given either to the agent or to the principal. In such a Case, If the agent falls to convey the acceptance received from offeree, still the principal is bound by the acceptance.
For example: A post the letter of acceptance to B's agent. But the agent forgot to convey the acceptance to his Principal(B). Even then, B is bound by the contract.
An acceptance given on loudspeaker is not a vaild acceptance.
An offer may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. (Section 5). This means that offer can be revoked at any time before the letter of acceptance is posted by the acceptor.
For example: A proposes to B to sell his factory by sending a letter by post and B also sending a letter by post accepts the proposal made by A. A can revoke his proposal at any time before B posts his letter of acceptance but in no case afterwards.
In India, acceptance is generally revocable. This means that an acceptance can be revoked at any time before the letter of acceptance is actually received by the proposer. Section 5 is the relevant provision which provides that it may be revoked at any time before the communication of its acceptance is complete as against the acceptor, but not afterwards. An acceptor may cancel his acceptance by the speedier mode of communication which will reach earlier than the acceptance itself.
For Example:A proposes by letter sent by post to sell his car to B. B accepts the proposal by a letter sent by post. B may revoke his acceptance at any time before the communication of the acceptance or at the moment when letter communicating it reaches A, but not afterwards.
1. By communication of notice of revocation:
When an offer is made by post, its communication will be complete when the offeree receives the letter.
For example- A writes to B offering to fix his roof for five thousand rupees. He posts the letter on 2nd July. The letter reaches B on 4th July. So the communication is said to complete on 4th July.
Communication of Acceptance
The communication of acceptance has two aspects viz., as against the proposer and as against the acceptor. 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, and
- as, AGAINST THE ACCEPTOR, when it comes to the knowledge of the proposer i.e., when the letter of acceptance is received by the proposer.
For example- B accepts ‘A’s proposal by a letter sent by post on 16th June. The letter reaches A on 20th June. The communication of acceptance is complete, as against A (proposer) when the letter is posted, i.e., 16th and as against B on 20th i.e. when the letter is received by A.
The acceptor becomes bound only when his acceptance comes to the knowledge of the proposer after the posting of the acceptance and before its delivery to the proposer, the acceptor has the right to rescind the contract by revoking his acceptance by speedier means.
General Rules as to Communication of Acceptance
1. In case of acceptance by post
Where the acceptance is given by post, the communication of acceptance is complete as against the proposer when the letter of acceptance is posted. Thus, mere posting of letter of acceptance is sufficient to conclude a contract. However, the letter must be properly addressed and stamped.
For example: If A post his letter of acceptance to B. Then, the contract is said to be made.
2. Delayed or no delivery of letter
Where the letter of acceptance is posted by the acceptor but it never reaches the offeror, or it is delayed in transit, it will not affect the validity of acceptance. The offeror is bound by the acceptance.
For example: If A post his letter of acceptance, but it never reaches to B(promisor), then too he is bound by the acceptance.
3. Acceptance by telephones telex or fax
If the communication of an acceptance is made by telephone, teleprinter, telex, fax machines, etc, it completes when the acceptance is received by the offeror. The contract is concluded as soon as the offeror receives not hears the acceptance.
For example: A accepted the offer made by B on telephone call. But due to some network issue, B could not hear the acceptance. Then too, he is bound by the acceptance.
4. The place of Contract
In case of acceptance by the post, the place where the letter is posted is the place of contract. Where the acceptance is given by instantaneous means of communication (telephone, fax, tele printer, telex etc ), the contract is made at the place where the acceptance is received.
5. The time of Contract
In case of acceptance by post, the time of posting the letter of acceptance is the time of contract. But in case of acceptance by instantaneous means of communication, the time of contract is the time when the offeror gets the communication of acceptance.
6. Communication of acceptance in case of an agent.
Where the offer has been made through an agent, the communication of acceptance is completed when the acceptance is given either to the agent or to the principal. In such a Case, If the agent falls to convey the acceptance received from offeree, still the principal is bound by the acceptance.
For example: A post the letter of acceptance to B's agent. But the agent forgot to convey the acceptance to his Principal(B). Even then, B is bound by the contract.
7. Acceptance on loudspeaker-
An acceptance given on loudspeaker is not a vaild acceptance.
Communication of revocation when complete
1. 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.
2. As against the person to whom it is made:
When it comes to his knowledge.
For Example: A revokes his proposal by telegram, the revocation is complete as against A when the telegram is dispatched. It is complete as against B when B receives it.
Revocation of Offer and Acceptance:
Revocation of a Proposal
An offer may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. (Section 5). This means that offer can be revoked at any time before the letter of acceptance is posted by the acceptor.
For example: A proposes to B to sell his factory by sending a letter by post and B also sending a letter by post accepts the proposal made by A. A can revoke his proposal at any time before B posts his letter of acceptance but in no case afterwards.
Revocation of an Acceptance
In India, acceptance is generally revocable. This means that an acceptance can be revoked at any time before the letter of acceptance is actually received by the proposer. Section 5 is the relevant provision which provides that it may be revoked at any time before the communication of its acceptance is complete as against the acceptor, but not afterwards. An acceptor may cancel his acceptance by the speedier mode of communication which will reach earlier than the acceptance itself.
For Example:A proposes by letter sent by post to sell his car to B. B accepts the proposal by a letter sent by post. B may revoke his acceptance at any time before the communication of the acceptance or at the moment when letter communicating it reaches A, but not afterwards.
Revocation how made or lapse of offer [Section 6]
1. By communication of notice of revocation:
An offer may come to an end by communication of notice of revocation by the offeror. It may be noted that an offer can be revoked only before its acceptance is complete for the offeror. In other words, an offeror can revoke his offer at any time before he becomes bound by it. Thus, the communication of revocation of offer should reach the offeree before the acceptance is communicated.
For example: A proposes to B to sell his house by sending a letter by post and B also sending a letter by post accepts the proposal made by A. A can revoke his proposal at any time before B posts his letter of acceptance but in no case afterwards.
2. By lapse of time:
For example: A proposes to B to sell his house by sending a letter by post and B also sending a letter by post accepts the proposal made by A. A can revoke his proposal at any time before B posts his letter of acceptance but in no case afterwards.
2. By lapse of time:
Where time is fixed for the acceptance of the offer, and it is not accepted within the fixed time. The offer comes to an end automatically on the expiry of fixed time. Where no time for acceptance is prescribed, the offer has to be accepted within reasonable time. The offer lapses if it is not accepted within that time. The term ‘reasonable time’ will depend upon the facts and circumstances of each case.
For example: A offers to purchase some shares in a firm in March. But the allotment is made in November. Here, A is not bound by the acceptance as it is not given within reasonable time.
3. By failure to accept condition precedent:
For example: A offers to purchase some shares in a firm in March. But the allotment is made in November. Here, A is not bound by the acceptance as it is not given within reasonable time.
3. By failure to accept condition precedent:
Where, the offer requires that some condition must, be fulfilled before the acceptance of the offer, the offer lapses, if it is accepted without fulfilling the condition.
For example: If A says he will repair B's car if he pay him the half cost for the purpose in advance. If B fails to pay the advance, A is not bound to repair the car.
4. By the death or insanity of the offeror:
For example: If A says he will repair B's car if he pay him the half cost for the purpose in advance. If B fails to pay the advance, A is not bound to repair the car.
4. By the death or insanity of the offeror:
Where, the offeror dies or becomes, insane, the offer comes to an end if the fact of his death or insanity comes to the knowledge of the acceptor before he makes his acceptance. But if the offer is accepted in ignorance of the fact of death or insanity of the offeror, the acceptance is valid. This will result in a valid contract, and legal representatives of the deceased offeror shall be bound by the contract. On the death of offeree before acceptance, the offer also comes to an end by operation of law.
For example: If A offers B to sale 100 bags of sugar. But subsequently become insane. If B knows the fact of his insanity, the offer lapses.
5. By counter offer by the offeree:
For example: If A offers B to sale 100 bags of sugar. But subsequently become insane. If B knows the fact of his insanity, the offer lapses.
5. By counter offer by the offeree:
Where, a counter offer is made by the offeree, and then the original offer automatically comes to an end, as the counter offer amounts to rejection of the original offer.
For example- A offers to sale a factory to B for Rs.1 lac and B offers to purchase it for Rs. 95,000. The original offer comes to end.
6. By not accepting the offer, according to the prescribed or usual mode:
For example- A offers to sale a factory to B for Rs.1 lac and B offers to purchase it for Rs. 95,000. The original offer comes to end.
6. By not accepting the offer, according to the prescribed or usual mode:
Where some manner of acceptance is prescribed in the offer, the offeror can revoke the offer if it is not accepted according to the prescribed manner.
For example: If A gives some offer to B and prescribes acceptance to be given by Fax. But B post the letter of acceptance. In this case, A has the option of revoking the offer.
7. By rejection of offer by the offeree:
For example: If A gives some offer to B and prescribes acceptance to be given by Fax. But B post the letter of acceptance. In this case, A has the option of revoking the offer.
7. By rejection of offer by the offeree:
Where, the offeree rejects the offer, the offer comes to an end. Once the offeree rejects the offer, he cannot revive the offer by subsequently attempting to accept it. The rejection of offer may be express or implied.
For example: If A offers B to sell a painting for Rs.10,000 and B rejects the offer. Then, he cannot accept it later.
8. By change in law:
For example: If A offers B to sell a painting for Rs.10,000 and B rejects the offer. Then, he cannot accept it later.
8. By change in law:
Sometimes, there is a change in law which makes the offer illegal or incapable of performance. In such cases also, the offer comes to an end.
For example: If A offers B to sale 1000 bags of wheat. Subsequently, government made illegal private trading of wheat. Then, the offer comes to an end and it cannot be accepted by B now. Even if he accepted, it will not result into a valid contract.
For example: If A offers B to sale 1000 bags of wheat. Subsequently, government made illegal private trading of wheat. Then, the offer comes to an end and it cannot be accepted by B now. Even if he accepted, it will not result into a valid contract.
Gift🎁🎁
Explanation of the topic
In hindi-Click here
In english- Click here
Thank you for posting such a knowledgeable post...Keep it up!
ReplyDelete