Q. Explain the law relating to communication of offer, acceptance and revocation. When may an offer and acceptance be revoked?
Definition of Communication (Easy for Exams)
According to the Indian Contract Act, 1872, communication plays an important role in the formation of a contract.
Communication means making known one’s intention to another person.
An offer, acceptance, and revocation are valid only when they are properly communicated.
In simple words,
Unless the other party knows about the offer, acceptance or revocation, no legal effect is created.
Law Relating to Communication
The law relating to communication is explained under Sections 3, 4 and 5 of the Indian Contract Act, 1872.
Communication is of three types:
Communication of Offer
Communication of Acceptance
Communication of Revocation
Communication of Offer
Communication of offer is complete when the offer comes to the knowledge of the person to whom it is made.
An offer may be communicated by:
Words spoken or written
Conduct of the parties
The offeree must know about the offer. Without knowledge, there can be no acceptance.
Rule:
An offer is complete only when the person to whom it is made becomes aware of it.
Example:
Ravi writes a letter to Suresh offering to sell his car for ₹3,00,000.
The communication of offer is complete only when Suresh receives and reads the letter.
If Suresh does not know about the offer, he cannot accept it.
So, knowledge of the offer is necessary.
Communication of Acceptance
Acceptance means giving assent to the offer.
Communication of acceptance is complete at two stages:
As against the proposer
As against the acceptor
As against the proposer:
Communication is complete when the acceptance is put into a course of transmission to the proposer, so that it is out of the power of the acceptor.
As against the acceptor:
Communication is complete when the acceptance comes to the knowledge of the proposer.
Rule:
Acceptance must be communicated properly, clearly and unconditionally.
Example:
Ravi offers to sell his bike to Suresh by letter.
Suresh posts his letter of acceptance.
Against Ravi (proposer):
Communication is complete when Suresh posts the letter.
Against Suresh (acceptor):
Communication is complete when Ravi receives the acceptance letter.
Thus, acceptance is complete at different times for proposer and acceptor.
Communication of Revocation
Revocation means cancellation of offer or acceptance.
Communication of revocation is complete:
As against the person who makes it, when it is put into transmission.
As against the person to whom it is made, when it comes to his knowledge.
Revocation must be communicated before the communication of acceptance is complete.
Example:
Ravi offers by letter to sell his house to Suresh.
Before Suresh posts acceptance, Ravi sends a telegram cancelling the offer.
When Suresh receives the telegram, the revocation becomes complete.
Therefore, the offer stands cancelled.
When May an Offer Be Revoked?
An offer may be revoked in the following cases:
Before acceptance is complete as against the proposer.
By lapse of time prescribed in the offer.
By failure of a condition precedent.
By death or insanity of the proposer.
By rejection or counter-offer by the offeree.
By change in law making the offer illegal.
Example:
Ravi offers to sell land to Suresh and gives 5 days time.
If Suresh does not accept within 5 days, the offer lapses.
So, offer can be revoked before valid acceptance.
When May an Acceptance Be Revoked?
An acceptance may be revoked before the communication of acceptance is complete as against the acceptor.
That means, the acceptor can revoke his acceptance before it reaches the proposer.
Rule:
Acceptance can be revoked before it comes to the knowledge of the proposer.
Example:
Ravi offers to sell a laptop to Suresh.
Suresh posts his acceptance letter.
Before Ravi receives it, Suresh sends a faster telegram cancelling acceptance.
If Ravi receives the telegram first, the acceptance is revoked.
So, acceptance can be cancelled before it becomes binding on the acceptor.
Important Points on Communication
Offer must be communicated to be valid.
Acceptance must be absolute and communicated.
Silence is not acceptance.
Revocation must reach before acceptance becomes complete.
Once acceptance is complete against the acceptor, it cannot be revoked.
Difference Between Offer, Acceptance and Revocation
Offer means proposal made to create legal relations.
Acceptance means agreeing to the proposal.
Revocation means cancellation of offer or acceptance before completion.
Conclusion (For Scoring)
To conclude, communication of offer, acceptance and revocation is governed by Sections 3, 4 and 5 of the Indian Contract Act, 1872. An offer is complete when it comes to the knowledge of the offeree, acceptance is complete at different stages for proposer and acceptor, and revocation is valid only if communicated in time. An offer may be revoked before acceptance is complete against the proposer, and acceptance may be revoked before it comes to the knowledge of the proposer. Proper communication is essential for the formation of a valid contract.
One-Line Exam Memory Tip
Communication creates binding contracts, and offer or acceptance can be revoked only before they become legally complete against the parties.