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LL.B Ist year

Pradip Kashyap

Kamkus college of Law

LL.B Ist year

Contract I (CODE-102)

Formation of contract-proposal and acceptance, their communication and revocation (sec-1to 10)

UNIT ONE

Formation of contract-proposal and acceptance, their

communication and revocation (sec-1to 10)

Q 1:-Define Contract, what are the essential elements of valid contract? Explain the

various types of contract under Indian contract Act.

Synopsis

a. Introduction

b. Definition of contract

According to Anson

According to Salmond

c. Essentials of a valid Contract

Offer and acceptance

Intention to create legal relationship

Free consent

Capacity to contract

Lawful consideration

Lawful object

d. Different Type of Contracts

Contracts on the Basis of Creation

Express Contract

Implied contract


Quasi contract

Contracts on the basis of enforceability

Void contract

Valid contract

Voidable contract

Ans- Introduction

In our regular day to day life we make several comments and statements. We say several things

to people whom we talk to. Most of these are not with any intention to create any legal

obligation. For example, if we say to someone that we will go to lunch with him, it is not a legal

obligation. But some, which are related to business or civil matters, are understood to be in a

serious mood and have a potential to be legally enforceable. For example, when we hire an Auto

rickshaw for going from point A to point B, we are legally bound to pay and the driver is legally

bound to take us from A to B. Indian Contract Act 1872 defines these activities in terms of

contract.

Definition of contract

According to Anson“A contract is an Agreement enforceable by law made between two or more

persons by whom rights are acquired by one or more to acts or forbearances on the part of the

other or others”.

According to Salmond “Contract is an Agreement, creating and defining obligations between the

parties”

According to Sec.2 (h) of Contract Act “An Agreement enforceable by aw is a contract”.

Essentials of a valid Contract

The essentials of a valid Contract are inherent in the Section 10 of the Indian Contract act.

According to section 10 of Indian Contract Act 1872 “All Agreements are Contracts if they are

made by the free consent of Parties, Competent to Contract, for a lawful consideration and with a

lawful object, and are not hereby expressly declared to be void.”


So the essentials for a valid contract are as follows

a. Offer and acceptance

A contract is formed when an offer by one party is accepted by the other party. One

party, the offeror, makes an offer which once accepted by another party, the offeree,

creates a binding contract. An offer must be distinguished from mere willingness to deal

or negotiate. For example, X offers to make and sell to Y calendars featuring Australian

paintings. Before any agreement is reached on size, quality, style or price, Y decides not

to continue. At this stage, there is no legally binding contract between X and Y because

there is no definite offer for Y to accept until the essential terms of the bargain has been

decided. An offer need not be made to a specific person. It may be made to a person, a

class of people, or to the whole world.

Case: - Carlill V/S Carbolic Smoke Ball Co [1893] 1 QB 2561

1 Retrieved from http://www.lawnix.com/cases/carlill-carbolic-smoke-ball.html.

Essential Elements of a valid contract


Free consent

Capacity to contract

Lawful consideration

Lawful object

Offer and Acceptance


The Carbolic Smoke Ball Co produced the 'Carbolic Smoke Ball' designed to prevent

users contracting influenza or similar illnesses. The company's advertised (in part) that:

“100 pounds reward will be paid by the Carbolic Smoke Ball Company to any person who

contracts the increasing epidemic influenza, colds, or any disease caused by taking cold,

after having used the ball three times daily for two weeks according to the printed directions

supplied with each ball. 1,000 pounds is deposited with the Alliance Bank, Regent Street,

showing our sincerity in the matter”.

After seeing this advertisement Mrs. Carlill bought one of the balls and used it as directed.

She subsequently caught the flu and claimed the reward. The company refused to pay. Mrs.

Carlill sued for the reward.

Held:-

Mrs Carlill was entitled to the reward. There was a unilateral contract comprising the

offer (by advertisement) of the Carbolic Smoke Ball company) and the acceptance (by

performance of conditions stated in the offer) by Mrs Carlill.

b. Intention to create legal relations

There must be an intention among the parties to create a legal relationship. In case of

social or domestic agreements the usual presumption is that the parties do not intend to

create legal relationship but in commercial or business agreements the usual presumption

is that the parties intend to create legal relationship unless otherwise agreed upon.

Example:-A invites B to a dinner and B accepts it. If A fails to serve the dinner, B cannot

go to court. The invitation for dinner is a social agreement

c. Agreement must be made by the free Consent of parties

Another requirement for a valid contract is that the Agreement must have been made with

the free consent of the parties, if consent is not free; the contract becomes voidable In

Mikol Bottlers Ltd. VS. M/S Dillon Kool Drinks AIR 1995, 2the Delhi High Court held

2


that an Agreement to be valid should be made by free consent of the parties apart from

other requirement.

d. Capacity of parties

The Parties to an agreement must be competent to contract. In other words they must be

capable of entering into a contract. According to section 11 of Indian contract act 1872

“every person is competent to contract who is of the age of majority according to the law

to which he is subject and who is of sound mind and is not disqualified from contracting

by any law to which he is subject”.

e. The Agreement must be made for lawful consideration

To constitute a valid contract, it is essential that agreement is made for a lawful

consideration. According to Sec-23 of the Act, if the Agreement is not for a lawful

consideration the agreement is void.

f. The agreement must be made for lawful object

The object of the Agreement must be lawful otherwise the Agreement becomes void and

an important element of a valid contract is that the Agreement is made for a lawful object

Sec-23. Example A promised to pay 1 lakh to B to kill C. The killing of a person is

punishable under the IPC. Therefore, the promise is unlawful and void

g. The agreement must not have been declared to be void by contract Act or any other

Act

Another important element for a valid contract is that the agreement should not be from

amongst, such agreement which have been specifically declared void as per Sec-26, 27,

28, 29, 30 and 56 of the act.

Different Type of Contracts

Contract on the basis of creation

a. Express contract

Express contract is one which is made by words spoken or written. Example X says to

Y, will you buy a car for Rs. 100000? Y says to X, I am ready to buy you car for Rs.

100000.

b. Implied contract


An implied contract is one which is made otherwise than by works spoken or written. It is

inferred from the conduct of a person or the circumstance of the particular case.

Example X, a coolie in uniform picks up the bag of Y to carry it from railway platform

to thewithout being used by Y to do so and Y allow it. In this case there is an implied

offer by the coolie and an implied acceptance by the passenger. Now, there is an implied

contract between the coolie and the passenger is bound to pay for the services of the

coolie.

c. Quasi or constructive contract

It is a contract in which there is no intention either side to make a contract, but the law

imposes contract. In such a contract eights and obligations arise not by any agreement

between the practice but by operation of law. e.g where certain books are delivered to a

wrong address the addresses is under an obligation to either pay for them or return them.

Contracts on the basis of execution

a. Executed contract

It is a contract where both the parties to the contract have fulfilled their respective

obligations under the contract. Example: X offer to sell his car to Y for Rs. 1 lakh, Y

Contracts on the

basis of execution

Executed contract

Executory contract


accepts X offer. X delivers the car to y and Y pays Rs. 1 lakh to X. it is an executed

contract.

b. Executory contract

It is a contract where both the parties to the contract have still to perform their respective

obligations. Example: X offers to sell his car to y for Rs. 1 lakh. Y accepts X offer. It the

car has not yet been delivered by X and the price has not yet been paid by Y, it is an

Executory contract.

Contracts on the basis of enforceability

a. Valid contract

A contract which satisfies all the conditions prescribed by law is a valid contract. E.g. X

offers to marry y. y accepts X offer. This is a valid contract.

b. Void Contract

The term void contract is described as under section 2(j) of I.CA, 1872, A contract which

cases to be enforceable by law becomes void when it ceases to be enforceable. In other

words, a void contract is a contract which is valid when entered into but which

subsequently became void due to impossibility of performance, change of law or some

other reason. E.g. X offers to marry Y, Y accepts X offer. Later on Y dies this contract

was valid at the time of its formation but became void at the death of Y.

c. Void Agreement

According to Section 2(g), an agreement not enforceable by law is said to be void. Such

agreements are void- ab- initio which means that they are unenforceable right from the

Contracts on the basis of

enforceability

Valid contract

void contract

voidable contract

unenforceable

contract


time they are made. E.g. in agreement with a minor or a person of unsound mind is void –

ab-initio because a minor or a person of unsound mind is incompetent to contract.

d. Voidable contract

According to section 2(i) of the Indian contract act, 1872, arrangement which is

enforceable by law at the option of one or more of the parties thereon but not at the

option of the other or other, is a voidable contract. In other words, A voidable contract is

one which can be set aside or avoided at the option of the aggrieved party. Until the

contract is set aside by the aggrieved party, it remains a valid contract. For e.g. a contract

is treated as voidable at the option of the party whose consent has been obtained under

influence or fraud or misinterpretation. E.g. X threatens to kill Y, if the does not sell his

house for Rs. 1 lakh to X. Y sells his house to X and receives payment. Here, Y consent

has been obtained by coercion and hence this contract is void able at the option of Y the

aggrieved party. If Y decides to avoid the contract he will have to return Rs. 1 lakh which

he had received from X. If Y does not exercise his option to repudiate the contract within

a reasonable time and in the meantime Z purchases that house from X for 1 lakh in good

faith. Y can not repudiate the contract.

e. Illegal Agreement

An illegal agreement is one the object of which is unlawful. Such an agreement cannot be

enforced by law. Thus, illegal agreements are always void – ab- initio (i.e. void from the

very beginning) e.g. X agrees to y Rs. 1 lakh Y kills Z. Y kill and claims Rs. 1 lakh. Y

cannot recover from X because the agreement between X and Y is illegal and also its

object is unlawful.

f. Unenforceable contract

It is contract which is actually valid but cannot be enforced because of some technical

defect (such as not in writing, under stamped). Such contracts can be enforced if the

technical defect involved is removed.

Q.2. Define the “proposal” and “acceptance”. Explain the essentials of valid acceptance.

Synopsis

a. Introduction

b. Legal Rules For a valid offer


Proper communication


Certain and unambiguous offer

May be express and implied

c. Essential of Acceptance

Communication

Express or implied

Absolute and unqualified

By acceptor or Authorized agent

d. Conclusion

Ans: - According to Sec 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 or hat other to such act or

abstinence, he is said to make a proposal.

The word “proposal” is equivalent the term “offer” under the English contract act.

Legal Rules For a valid offer

Legal rules for a valid offer

intention to create legal relationship

certain and unambiguous

offer

may be express and implied

proper communication


a. Communication of offer is Necessary – (Sec.4)

The Communication of a proposal is complete when it comes to the knowledge of the

person to whom it is made, It is to be remembered that there is no offer till it is

communicated to the offeree as otherwise he cannot accept it, being completely unaware

of it, it is, therefore – Necessary that a person must have knowledge of the offer at the

time of its acceptance, doing anything in ignorance of the offer can never be treated as its

acceptance.

In Lalman Shukal vs. Gauri Dutt (1913)” A.L.J. 489 3– In this case the plaintiff Lalman

Shukla, was serving as a munim in the firm of defendant Gauri Dutt. The Nephew of

Gauri Dutt ran away from his house and no trace of him was found for some time. On

21st Jan.1912 defendant sent the plaintiff to Hardwar for tracing the boy and paid him his

travelling expenses. After sending the plaintiff to Hardwar the defendant by hand bills

advertised that a reward of Rs.501 would be paid to anyone who would find the boy. The

plaintiff had no knowledge of the reward advertised, he found the bay at Rishikesh and

brought him back on 25th of Jan.1912.The plaintiff filed a suit for the recovery of the

reward advertised, it was held that since the plaintiff was ignorant of the offer of reward

his act of bringing the last boy did not amount to the acceptance of the offer and

therefore, he was not entitled to claim the reward.

b. Intention to create legal relationship

It is necessary that the offer should be made with an intention to create legal relationship,

Promise in the case of social engagements is generally without an intention to create legal

relationship, such an agreement cannot be considered to be a contract, so an agreement to

go for a walk, to go to a movie, to play same game or entertain other person with a dinner

cannot be enforced in a court of law.

In Balfour v. Balfour4: - An intention not to create legal relationship was implied. It was

held that in this case, there being no intention to create legal relationship, the husband

was not liable.

c. Offer must be certain

3 Retrieved from < http://www.indiancaselaw.com/lalman-shukla-v-gauri-datt-1913/>.

4 Retrieved from < http://indiancaselaws.wordpress.com/2013/01/14/balfour-v-balfour-1919-2-kb-571/>.


An offer must be certain and definite .Its terms should not be so vague so as to prevent a

contract being formed. Example –

A. Agree to sell to B. a Hundred tons of oil. There is nothing whatever to show

as to what kind of oil was intended, hence the agreement is void for

uncertainly.

B. agrees to sell B. “My white horse for five hundred rupees or one thousand.

The agreement will be void because there is nothing to show which at the two

Prices were to be given”.

Acceptance

According to Sec-2 (b) When the person to whom the proposal is made signifies his assent

thereto, the proposal is said to be accepted, A proposal when accepted, become a promise. A

person, when accepted results in an agreement, after the acceptance of the proposal a contract

between two parties can arise.

“Effect of Acceptance”

A contract is created only after an offer is accepted. Anson explained the effect of acceptance as

“Acceptance is to an offer what alighted is to a train of Gunpowder.”

Essentials of a Valid Acceptance


a. Acceptance should be Communicated

It means that the offree must signify his assent or communicate the acceptance. The

communication of acceptance is deemed to be made by any act or omission of the party

accepting, by which he intends to communicate such acceptance Sec 3. Communication

may be oral, by post, by telegram, by a massage on phone, through a messenger or in any

other reasonable manner; sometimes the conduct of a person might indicate his assent

E.g. a passenger travels in bus.

Felt house V. Bindley (1862) 142 ER 1037 5 – it was held that since the nephew had not

communicated the acceptance to Felt House, no contract had arisen in this case and

therefore felt house had not become the owner of the horse, [this is absence of

acceptance,]

b. Acceptance may be express or implied

An acceptance of an offer may be express or implied, where an offer is accepted by

words, written or oral, the acceptance is called express. When an offer is accepted by

conduct, the acceptance is called implied.

c. Acceptance must be absolute and unqualified

5 Retrieved from< http://www.australiancontractlaw.com/cases/felthouse.html>.

Essential of Acceptance

Express or implied

Absolute and unqualified

By acceptor or Authorized

agent

Communication


The first and foremost essential of a valid acceptance is that it must be absolute and

unconditional. In this regard Sec-7 says that in order to convert a proposal into a promise

the acceptance must be absolute and unqualified.

In Hyde vs. Wrench (1840) 3 Beav.334 6

The defendant offered to sell his farm to the plaintiff for £ 1000 only. But the plaintiff

said he would buy it for £ 950 only. Later on he agreed to buy the farm for £ 1000. But

then the defendant refused to sell the farm. The plaintiff sued the defendant for specific

performance of contract. The court dismissed his suit by holding that no contract is made

because the plaintiff’s offer for £ 950 was in fact a counter offer which destroyed the

original offer.

d. Communication of acceptance must be made by the acceptor or his authorized agent

A communication of acceptance to be made valid must be either by the offeree himself or

his authorized agent. A communication of acceptance by any other person will not be

valid.

e. The acceptance must be expressed in some usual and reasonable manner

Sec-7 the acceptance must be expressed in some usual and reasonable manner. Unless the

proposal prescribes the manner in which it is to be accepted, If the proposal prescribes a

manner in which it is to be accepted and the acceptance is not made in such manner – the

proposer may, within a reasonable time after the acceptance is communicated to him,

insist that his proposal shall be accepted in the prescribed manner, and not otherwise If he

fails to do so, he accepts the acceptance.

For example: - A offers to B to sell his watch for Rs. 100/- ‘B’ may accept this offer

orally or by writing a letter or by sending a telegram. But if A says in his offer that

acceptance is to be communicated only by a telegram then ‘B’ should accept it by

sending a telegram, if ‘B’ sends a post card for acceptance. A can object to it and insist

that his offer shall be accepted only by a telegram, but if A does not insist upon it, he

accepts the acceptance as actually communicated.

f. Acceptance should be made while the offer is still subsisting

6 Retrieved from< http://www.australiancontractlaw.com/cases/hyde.html>.


It has already been noted that the offeror is free to withdraw the offer or the offer is

revoked under various circumstances mentioned in Sec-6. After the offer has been

withdrawn or has lapsed, there is nothing which can be accepted it is therefore necessary

that the acceptance should be made while the offer is still alive and subsisting.

Acceptance of the offer is deemed to have ended by rejection of the original offer or a

counter offer. In such a case also, once the offer has lapsed, an attempt to accept the same

would not give rise to any legal obligation.

Q.3 what are the various kinds of offer? Explain with the help of leading cases.

Synopsis

a. Cross offer

b. counter offer

Hyde vs. Wrench (1840. 3 Beav. 334)

c. Specific and General offer

. Carlill vs. Carbolic Smoke Ball Co. (1893 (1) Q.B 256)

d. Standing offer

e. Invitation of offer

f. Express or Implied

Cross offer

counter offer

Standing offer

invitation of offer

Specific and General offer

Express or Implied


a. Cross Offers

When the offers made by two persons to each other. Containing similar terms of bargain

cross each other in post they are known as ‘Cross Offers” Example – On 11th

Oct. A

offers to sell his house to ‘B’ for Rs.50,000/- through a letter sent by post on the same

day i.e. on 11th

Oct. ‘B’ also writes to ‘A’ making an offer to purchase ‘A’s house for

Rs.50,000/- either. ‘A’ or ‘B’ does not know about the other’s offer. No contract arises

between A and B. The contract can be completed only when A accepts ‘B’s offer or ‘B’

accepts ‘A’s offer,

b. Counter offer or Counter Proposal.

An offer or Proposal is made by the Promisor. The person accepting the proposal is called

the ‘Promisee. A proposal when accepted becomes a promise. In Order to convert a

proposal into a promise, the acceptance must be absolute and unqualified for a valid

contract. The Promisee must accept the terms and conditions of the proposal of the

promisor if any term is refused or varied or added or deleted by the offeree (Promisee),

his acceptance merely operates as a counter offer. When a Counter-offer is made by the

promisee. There could not be a contract between the offers. When a Counter- offer is

made by the promisee, there could not be a contract between the parties.

Hyde vs. Wrench (1840. 3 Beav. 334)

This case-law is a good example for the counter offer. In this case the defendant offered

to sell his estate or £1000 on June 6th

on June 8, the Plaintiff made a reply offering to

purchase it for £950, it was refused by defendant on June 27. On June 29, the plaintiff

wrote that he prepared to pay £1000. The defendant refused. The court of Appeal held

that the plaintiff’s letter expressing his willingness to purchase for £950. It was not an

acceptance; it was a counter-offer which terminated the original offer.

c. Specific Offer

Specific offer is also known as ‘offer to an individual’ when the offer is made to a

specific or an ascertained person, it is known as a ‘Specific offer’ or ‘offer to an

individual. Example of ‘Specific Offer’:- ‘A’ offers to sell his car to ‘B’ for Rs. One

Lakh. This is specific offer offered to an ascertained person, i.e. ‘B’.


d. General offer

We come to know that when the offer is made to a specific or an ascertained person, it is

known as a ‘Specific Offer’. When the offer is not made to any particular person, but it is

made to the public at large, it is known as ‘General Offer’. Carlill vs. Carbolic Smoke

Ball Co. (1893 (1) Q.B 256) 7

Brief Facts – The defendant company which manufactured smoke balls advertised that

they would pay £100 to anyone who would be caught influenza after using their smoke

ball thrice daily for two weeks. They stated that a sum of 1000 pounds was also deposited

in a bank to show their sincerity. Mrs. Carlill, relying on the advertisement, used the

smoke ball for the period prescribed by the company. She was affected by influenza, she

sued for the rewarded. The company contended that their offer was specific offer and

they did not offer to a particular person, that is Mrs. Carlill, and that she did not signify

her acceptance to them, hence no contract was arisen between them and her.

Judgment – The house of Lords gave the judgement in favour Mrs. Carlill and opined

that the company was held liable, it held that the declaration was a true offer, it was not a

mere advertisement, it was a general offer. The deposit in the bank itself was the

evidence of the sincerity of the company. The offer was open to anybody who would

perform the conditions mentioned in the advertisement. No special acceptance from the

individual was necessary. In such cases performance of the conditions was sufficient to

show the acceptance from that individual.

e. Invitation to offer

Where a party without expressing his final willingness, proposes certain terms on which

he is willing to negotiate. He does not make an offer but he only invites the other party to

make an offer an terms, it is called ‘Invitation to offer’.

Examples –

An advertisement in the newspaper ‘House to let’ or ‘House for sale’ etc.

A Shopkeeper’s catalogue of prices, Hotel menu cards etc.

A Tender

7


f. Standing offer

An offer of a continuous nature is known as standing offer. A standing offer is in the

nature of tender.

g. Express or implied offer

An express offer is one which is made by words spoken or written and an implied offer

is one which is made otherwise than in word such as from the conduct of the person.

Q.4 Describe the law relating to communication of proposals, acceptance and their

revocation.

Synopsis

a. Communication

b. Communication

c. Revocation of offer

d. Revocation how made

Notice of Revocation

Lapse of Time

Failure to fulfill a condition precedent

Death or Insanity of the proposer

By counter offer

Ans:-Section 3 defines how a communication, acceptance, or revocation can be signified:

The communication, acceptance, and revocation are deemed to be made by an 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.

Thus, a proposal may be made by any way, which has the effect of laying before another person

his willingness to do nor not do something. The acceptance can be signified similarly. Section

9 specifies that a promise (i.e. a proposal and its acceptance) can be formed either by words,

written or oral, is which case it is called express or by action, in which case it is called implied.


In the case of Haji Mohd Ishaq vs Mohd Iqbal SCC 19788, the defendants accepted the goods

supplied by the plaintiff through a go between man and also paid part of the price. It was held

that the defendants were liable to pay the remaining balance because the proposal and its

acceptance were signified by their actions.

Section 4 specifies when a communication is complete:

Communication of a proposal is complete when it comes to the knowledge of the party to whom

the proposal is made.

For example, if A sends a proposal in the mail to B and if the mail is lost, it can be held that the

communication of the proposal is not complete.

In the case of Lalman vs Gauri datta 19139, it was held that the reward for the missing child

cannot be claimed by a person who traced the child without any knowledge of the

announcement. There was no contract between the two in the first place because the proposal

never came to the knowledge of the person who found the child and thus he could never accept

it.

Communication of the acceptance is complete, as against the promisor, when it is put in

course of transmission to the promisor so as to be out of the power of the acceptor, as

against the acceptor, when it comes to the knowledge of the promisor.

For example, as soon as B drops a letter of acceptance in mail back to A, A is bound by

the promise. However, B is not bound by it unless A receives the acceptance letter.

In the case of Adams vs Lindsell 1818,10

it was held that a contract arose as soon as the

acceptance was posted by the acceptor. In this case, the plaintiff received the offer to sell

wool on 5th and they posted an acceptance, which was received on 9th by the defendants.

The defendants, however, had already sold the wool on 8th. The court observed that the

contract must arise as soon as the acceptance is posted and is gone out of the reach of

acceptor otherwise this will result in an infinite loop.

Communication of a revocation is complete as against the party who makes it when it is

put in course of transmission to the party to whom it is made, so as to be out of the power

8 Retrieved from< http://indiankanoon.org/doc/1891159/>.

9 Retrieved from< http://www.indiancaselaw.com/lalman-shukla-v-gauri-datt-1913/>.

10 Retrieved from< http://www.bailii.org/ew/cases/EWHC/KB/1818/J59.html>.


of the party who makes it; as against the party to whom it is made, when it comes to the

knowledge of the party to whom it is made.

For example, if A sends a letter revoking his proposal, it will be complete against A as

soon as the letter is dropped in the mailbox and is out of his control. However, the

revocation will be held complete against B only when B receives the letter.

Further, if B revokes his acceptance by telegram, it will he deemed complete against B as

soon as he dispatches the telegram. It will be held complete against A, when A receives

the telegram

Revocation of offer

Revocation refers to the withdrawal of an offer. An offer may be withdrawn any time before

acceptance. To be valid, a revocation of an offer must be communicated to the offeree.

According to section 5 of Indian Contract Act 1872 A proposal may be revoked at any time

before the communication of its acceptance is complete as against the proposer, but not

afterwards.

Illustration

A proposes, by a letter sent by port, to sell his house to B. B accepts the proposal by a letter sent

by post. A may revoke his proposal at any time before or at the moment when B posts his letter

of acceptance, but not afterwards.

Routledge v Grant (1828)11

An offeror may withdraw the offer any time before the offeree has accepted it. It would be unfair

to expect the offeror to wait indefinitely for an offeree's response.

Payne v Cave (1789)12

An offer made in response to an invitation to treat may also be withdrawn if not yet accepted

Dickinson v Dodds (1876)13

11

Retrieved from< http://www.supplymanagement.com/law/court-reports/routledge-v-grant-1828>. 12

Retrieved from< http://swarb.co.uk/payne-v-cave-2-may-1789/>.


The revocation need not be made personally. It can be made by a reliable third party, i.e. one

known to both parties so that the offeree can rely on the revocation

Revocation how made (Sec-6)

Section 6 provides that a proposal is revoked in the following situations

a. By notice of revocation.

Offer may be revoked by a communication of a notice of revocation by the offeree to the

other party before acceptance is complete against the offeror himself. An offer made in

writing may be revoked by words of mouth. The notice of revocation may not always be

express. A notice of revocation to be effective must be communicated to the offeree.

b. By lapse of time.

A proposal will come to an end by the lapse of time prescribed in such proposal for its

acceptance or, if no time is so prescribed by the lapse of time of reasonable time is a

question of fact depending upon the circumstances of each case.

c. By non-fulfillment of condition precedent.

13

Retrieved from< http://www.lawnix.com/cases/dickinson-dodds.html>.

Revocation how made

Lapse of Time Failure to fulfil

a condition precedent

Death or Insanity of the

proposer

By counter offer

Notice of Revocation


A proposal is revoked when the acceptor fails to fulfill a condition precedent to the

acceptance of the proposal which was conditional offer. Thus, X may offer to sell certain

goods to Y on condition that Y pays a certain amount before a certain date.

d. By death or insanity.

A proposal is revoked by the death or insanity of the proposer if the fact of his death or

insanity comes to the knowledge of the acceptor before acceptance.

e. By counter offer.

An offer comes to end when the offeree makes a counter offer or rejects the offer. Where

an offer is accepted with some modification in the terms of the offer or with some other

condition not forming part of the offer, such qualified acceptance amount to a counter

offer.

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

sThe offer will also stand revoked if it has not been accepted according to the prescribed

Revocation of the Acceptance (Sec-5)

An acceptance may be revoked at any time before the communication of the acceptance is

complete as against the acceptor, but not afterwards.

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