This article is written by Avni Kaushik and further updated by Adv. Devshree Dangi. This article discusses in detail the concept of valid offer and acceptance under the Indian Contract Act, 1872. It also discusses the revocation and different modes of revocation of offer and acceptance under the said Act with the help of landmark cases.

Introduction

Suppose you are on the verge of engaging yourself in an agreement, maybe a business transaction, employment contract or even a sales contract. At the heart of any agreement are two key steps, offer and acceptance. These are the cornerstones of a contract turning an agreement between the parties into an enforceable obligation. 

An offer is the first component that leads to the formation of a contract. It also shows the willingness of the offeror to be in a legal tie with the proposed term which binds the offeree when he/she accepts it. It thus provides continuity and clarity of communication in offers and acceptance under Indian law and offers a party’s intent and willingness. It also forms the basis of consent, which is one of the conditions for the formation of enforceable contracts. 

But then again what happens in the scenario where one of the parties decides that they do not want to go on with the agreement anymore before everything has been signed and sealed? Well, that is where the notion of revocation comes to mind as a solution to the problem.

So let’s see the concept of offer and acceptance under the Indian Contract Act, 1872  (hereinafter referred to as ‘the Act’). 

Offer 

What is an offer 

The Act provides a way of guiding our daily dealings or business transactions with the other parties.

Quite plainly, an offer is best described as one party saying to the other, “I will do this if you do that.” An acceptance by the other party in showing acceptance and an offer would then become a promise during the process. However, either party may terminate their offer/acceptance within certain conditions, comprising added flexibility and security of forming an agreement.

According to Section 2(a) of the Act, an offer can be defined as when one person holds out an offer to another indicating that through his action or inaction, he intends to do something or to refrain from doing something which the other also agrees to have done or avoided.

Simply, it says that an offer, also known as a proposal, is the communication made by one of the parties of his willingness to do or to abstain from doing something as the other party to contract assent. Thus, the term ‘offer’ is the foundation of any agreement. When one person signifies to another his willingness: 

• To do or to abstain from doing anything;
• To get the assent of the other party to such an act or abstinence, he is said to make a proposal.

It is very common to have confusion regarding how the parties involved in an offer are identified. Let’s see how they are recognised under the Act.

Who is a promisor and promisee

The word ‘offer’ is used as synonymous with the word ‘proposal’. According to Section 2(c) of the Act, the person who makes the proposal is called the ‘promisor’ or ‘offeror’ and the person to whom it is made is generally known as the ‘promisee’, ‘acceptor’ or ‘offeree’. 

Consideration of an offer

Section 2(d) of the Act provides the legal meaning of the word ‘consideration‘, which holds more significance in the formation of a contract.

When the promisee does or performs an act or submits to a course of conduct or a relation, or promises to do or to abstain from doing an act, in the event of which the contract basically relies, at the request of the other party (the promisor), this act, course of conduct or relation, or promise is called ‘consideration’ for the promise.

That is to say, consideration is a valuable asset or something that the parties of the contract offer to get an equally valuable asset in return. This could be an action done, a service rendered, money spent or even a promise not to do something that the promisor knows the promisee does not want to be done provided it is done on account of fulfilling the promisor’s request. 

Basic requisites of a valid offer under the Indian Contract Act, 1872

A legally enforceable contract requires a valid offer and the following conditions to constitute an offer under the provision of the Act must be satisfied. These are highly important aspects that make an offer legally enforceable. 

All these aspects are explained below with the illustrations for better understanding:

Parties to an offer

For an offer to be valid and effective, it has to involve two distinct parties, the offeror and the offeree.

The offeror is a person who proposes to enter into the contract with the other party offering the conditions under which he/she is willing to do so.

On the other hand, the offeree is the recipient of the offer, a legal entity empowered to accept or refuse the offer. These two parties are essential for the formation of a contract that is legally binding. 

For example, if A offers B that he would sell his car at rupees 10 lakhs then A is called offeror, while B is called offeree. B could accept the offer and form a contract that is legal and could be enforced while he could refuse the offer and in such case he would not be under any legal relation or duty. But if A thinks of selling his car only and does not intend to make the offer to any particular buyer, then there can be no offer.

Willingness to contract

For an offer to be complete and valid, it must contain the intention of the offeror or the person making the offer to enter into a contract or to supply the product as the case may be. This, therefore, means that for a message to be conveyed by the offeror, it has to be a message intended to be accepted by the offeree for a legal relationship to be created. It should not be mere negotiations or an expression of a casual intention.

Act or forbearance

An offer can be one action done (action performed) or the failure or refusal to do something (action omitted). For example, if the statement is ‘I will sell you my car for Rupees 5 lakhs’, then ‘selling the car’ is an act. Similarly, forbearance can be equity where an offeror declares that he will bring an act, which he is legally entitled to but will not do it for example “I will not sue you if you pay Rupees 50,000”. 

Obtain the assent

Each offer should be made with the purpose of securing the acceptance by the other party known as the offeree. There has to be an assent from the offeree toward the terms of the offer by the offeror. The moment the offer gets accepted, then it transforms into a legally binding offer. 

Intention to create legal relations

Another legal element of the offer which is necessary for its legal validity is the intention to conclude legal relations. In other words, the offeror must intend to make an offer with a view to the formation of a legally valid contract.

If this is not the case, the offer cannot lead to the formation of a contract.

Such as social, domestic or moral for example, a dinner invitation can in no way be legally contracted for as these do not amount to legal offers to enter into a contract in the first place.

Therefore, no genuine intention of entering into a legal commitment is present.

For example, if A makes a promise to B that he will take B out for lunch, this is not a legal offer. On the other hand, in commercial transactions, the principle of law is that the parties do not intend to have a legal relationship unless the contract in question indicates otherwise. The essence of establishing a legal relationship gives the necessary assurance to both parties that they are to act solely within the confines of the legal norm under formation at the present time. 

For instance, A says to B that I am selling my car for Rupees 5 lakh, and if he says I am willing to accept a legally binding agreement, they are under the intention to form legal relations. But if, on one day during a conversation, A jokingly says that they are selling the car for Rupee 1 it is not a legal offer because it lacks the intention required.

Communication of an offer

An offer cannot be legally enforceable or acceptable by the offeree or offeror or a contract can come into formation between the two parties unless the offer has been communicated to the offeree. The communication aspect from one party to the other also helps in harmonising the perceptions and the existence of the offer. 

When the communication of offer details to the offeree is done in such a manner that he cannot deny having knowledge of the proposal in existence, he cannot refuse to assent to a particular thing that he never agreed to in the first instance.

The case of Lalman Shukla vs. Gauri Dutt (1913) is an example of the above said principle. It explains how communication of an offer is crucial. In this particular case, the nephew of the defendant was missing, so, the defendant sent his servant, Lalman Shukla, to find his nephew.

The defendant put up a newspaper advertisement which stated that anyone who brought her nephew to her house and returned him would receive money. Lalman did not see the advertisement but left and searched for the boy and found him.

Some time passed, and when Lalman got information about the reward, he presented his claim, but the defendant never paid him that amount. The court ruled that the plaintiff was unaware of the reward that had been offered to bring in the missing nephew and, thus, was not liable to receive a reward for bringing him in. This is a strong proof that you must relate an offer to the offeree before they move to the stage of acceptance. 

Hence, an offer has to get to the offeree, and he must comprehend the terms of the offer and respond to it in some way or the other to form a contractual relationship. 

Another example, if A writes a letter to B stating his willingness to sell his house and doesn’t post this letter, it is very unlikely that B can accept the offer because it is impossible that the offeree can accept the offer as he never received it. Thus, it was considered that the formation of a contract is conditional on proper communication. 

Offer must be certain and definite 

The terms of the offer ought to be definite and unmistakable in creating a valid contract; they cannot be ambiguous. The offer shall contain terms that cannot be accepted by non-rejection of the offer or acceptance by default. That means the offeree should afford an unmistakable and clear response to the offeror.

Silence does not always mean acceptance and the offer cannot be claimed to have been accepted merely because he/she has done nothing.

This is so because the offer is one that is made by the offeror but the offeree has the right to either accept or reject the offer, and to do this, he or she has to do some act to make his response. If they do nothing it means they have rejected the offer.

For example, if A offers this to B, “If I don’t hear otherwise, I will take it that you agreed to buy my car for Rupees 2 lakh”. This is not a valid offer. This is a case of silence on the part of the offeror, just as he can be relieved to make no positive acceptance of the contract, this is against the law and is required within the law: a positive acceptance by the offeree. 

Yet, if, for example, a consumer receives a free gift attached to a letter stating that if the consumer does not return the gift within 30 days the company assumes acceptance from the consumer such a situation is not offered where goods are given gratis and the law doesn’t countenance negative acceptance. 

Specificity in relation to the offer

An offer is valid if there’s utmost certainty of terms and narrative, specificity in terms of the offer. Many contracts are to be performed at later unspecified times and the lack of specificity of the terms used nonspecific, causes uncertainty and makes the offer invalid.

Therefore, it means that for it to qualify as a valid offer, it has to include the particulars of the contract insofar as price, quantity, and description of the object or subject of the contract respectively. Sometimes, the contract may be void due to uncertainties that exist in the terms offered in the contract.

For instance, an offer to sell rice for some amount at some price or something is not legally an offer to sell on that amount for that price. In Scammell and Nephew Ltd. vs. Ouston (1941), the House of Lords dealt with the problem of uncertainty of terms in a contract. In this case, Ouston had ordered a van from Scammell in lieu of part payment and to clear the balance “on hire-purchase terms over two years”. But no specific terms of hire-purchase were mentioned. In case of dispute, it became necessary for the court to decide whether there was a valid legal contract or not.

In this regard, the House of Lords held that the above agreement was uncertain because the terms of hire purchase were not well articulated. No precise and clear terminologies were defined; therefore, there was no lawful contract that could be legally imposed and implemented. This case explains the importance of certainty in an agreement to gain legal enforceability.

The proposition is specific and unambiguous if A says she’s willing to supply B, 100 kilograms of rice for Rupees 5000. But a sale where A will sell X amount of rice to B at Y price, which is then crossed out and replaced by a sentence that A will sell rice to B at an unspecified price and similarly for the quantity of rice to exchange the offer itself.void due to vagueness.

Types of offers 

As mentioned in Section 9, offers or promises can be classified into two types: express and implied. However, in the branch of contract law, there are several other kinds of offers depending upon the nature of the communication and intention. There are different types of offers which are elaborated on below:

Express offer

An express offer is that in which the offeror clearly makes the terms of the offer by using words in the offer directly whether oral or in writing. Simply, an express offer may be referred to as an indication of willingness to make the contract by uttering some words either verbally or in written form. In such conditions, terms should be put in a simple and plain language such that there can be no confusion at all regarding what is offered. 

The basic point in identifying an express offer is that it should not be ambiguous at all. It is crystal clear as to what the offeror wants and, more particularly, what the offeree is supposed to do.

Thus for example, if A orally intends to sell his car to B for Rupees 5 lakhs or in a written document, it comes within an express offer. Express offers are generally used for business interactions and bargaining apart from forming a part of contractual standardization.

An Offer that is made through exchanging communications whereby one of the parties orally makes a business offer is also an expressed offer.

Implied offer

An offer that has to be drawn from the conduct of parties irrespective of any prior communication by the parties whether in writing or orally. This is a situation in which an offer has neither been given verbally nor in writing, yet there still must be an offer drawn out of their actions and the circumstances. In both scenarios, however, parties so wish to contract and may deem no communication necessary or desirable.

Such offers arise according to the facts of the case. Implied offers are readily recognized in normal commercial trades and well established in the law relating to contracts. 

For example, when a person travels in a local bus, and then he pays the fare and the service of transport is being extended in that matter. In this case, it is quite easy to identify an offer even though the parties are not communicating with each other. Boarding a bus presumes that you will pay for transportation on that bus. In the absence of a bilateral contract through oral or written communication, one’s action or behavior can amount to an offer. 

Implied offers are very useful in daily business activities where contract formation is made frequently without express statements. Similarly, if a person gets a taxi and orders the cabby to take him/her to some place, the cabby as well as his conduct towards the passenger are issuing an offer to grant the services of transportation. The steps taken by the passenger constitute acceptance of the latter.

General offer

It is an offer made to an unknown or unidentified person, but not to an identified one. The offer can be accepted by any person who satisfies the conditions of the offer. A general offer is given to the public and every individual who satisfies the conditions stated in the offer. This type of offer can be seen when there is an announcement of any advertisement or notices.

For instance, a general offer would be that a man loses his dog and puts a notice saying he will pay Rupees 10,000 to whoever brings him his dog back. This would be a general offer because it is open to anyone who spots the dog, returns it and gets the reward.

Another example of the general offer’s legitimacy can be understood in the case of Har Bhajan Lal vs. Har Charan Lal And Anr. (1925). Here, in this case, the respondent published in the media regarding his son missing and declared that any person who finds him would be rewarded. The applicant, later on, succeeded in finding the boy, brought him back and claimed a reward. Here, the court held that this was a case of an advertisement open to the general public, and therefore searching for the boy the plaintiff accepted an existing offer. 

The court ruled that the defendant had no option but to pay the reward because there existed a legal offer and acceptance that compelled such action.

This case set a precedent that a general offer can be accepted by anyone who fulfills the requisite. 

The second case is Carlill vs. Carbolic Smoke Ball Co.(1893), and it is another landmark case of a general offer. In this case, the company declared that if the smoke ball was used as indicated and influenza would occur anyway, then the company would pay £100.

This was open to the general public, and anybody who met the condition – that is, using the smoke ball in the specified way – was then given the reward. To prove their valid intention, they deposited £1,000 in a bank for the claim. After the offer, Mrs. Carlill took the medicine but still developed influenza. She claimed to claim the prize, but the company maintained that the prize was not offered to her and since there is no offer that was accepted then there can be no issue of acceptance. 

The court decreed in favour of Mrs. Carlill and held that the advertisement made by the defendant constituted an offer to the general public, and since the plaintiff utilised it as was contemplated by the defendant, she accepted the offer. The offer of money further demonstrates the intention of parties to be legally bound hence their agreement is a contract. 

An offer to the public is held and accepted when at least one member of the public accepts the offer, though the offeror had no knowledge of the latter.

Specific offer

It is directed to one person or a group of people as the case may be. Such offers can only be accepted by the particular person or company to whom the offer was made. A specific offer is made to a specific person and is binding to the person receiving the offer.

For example, if person A agrees to sell his house to B for Rupees 40 lakh, it is B who can accept it and not C or D. This makes the offer exclusive and relevant in a way that is limited to the receiver of the offer only. They are typical for private deals and agreements where terms can refer to a particular person.

Cross offer

A cross offer is where two parties make the same offer to each other but do not know what the other party’s offer is. Since neither offer is accepted by the party it is being made to, there is no meeting of the minds and therefore no agreement or contract. 

Suppose A offers to B to sell a car for Rupees 5,00,000 mentioning the same in the written communication. On the same note, B writes to A stating his intention to buy the car from A at Rupees 5,00,000.

These offers are accepted and made independent of each other and at the same time get to the hand of the other party. Still, since one party never agreed to the offer by the other, then no contract is entered into. Offers simply ‘cross’ each other.

As stated above, mutual offer and acceptance must be made in different ceremonies, so cross offers do not qualify for creating a contract.

In such a situation, a contract is not created unless one party affirms the fact of the offer made by the other party or such an offer.

Counter offer

The moment that the offeree responds to the original offer through an offer different from, or refusal to accept the previous one makes it a counter-offer. Thus, in reality, it is a reply rejecting the previous offer and replacing it with a new one towards the originator of the former.

For instance, if A agreed to purchase a car from B for Rupees 5 lakhs. To this B replied that he would sell the car to A for Rupees 4.5 lakhs, B’s reply amounts to counter offer. When a counter offer is made it rejects the original offer and a new contract can be signed only if accepted by the original offeror. 

Standing offer

A standing offer is one that is made which is available for acceptance on a consistent basis for some time. It is usually applied where the level of performance is expected to be sustained for some time and for a given period.

For instance, the government can invite a standing offer from suppliers to provide a certain good for a year. Each time the government issues an order for goods or services and the supplier accepts, there is the formation of a contract. The case of standing offers is applicable where the buyer has the leaning of sourcing several orders in the future without bargaining on the various supply agreements over and over. 

Conditional offer

This is an offer where the response needed to bring about the contractual relations is contingent and productive on the occurrence of certain events. An offeror comes with certain conditions which the offeree has to meet, in order to respond to the offer. 

An offer is contractual, if it has some conditions, and such conditions have to be complied with to be an offer.

An offer to contract, also more commonly known as conditional contract, is an offer that is subject to certain conditions and if/when those conditions are not met, the contract cannot be enforced by either party.

However, in case such conditions are conveyed to the offeree at the time of offer then the offer will be rendered void or unenforceable if such conditions are not met.

For instance, A offered to sell land to B for Rupees 10 Lakhs on a condition that B has to make the payment on a certain date. Here if B fails to do so in a given time period then the offer can be declined and rendered void.

Similarly, if an employer offers an employee a job, but with a string that the employee has to be certified healthy by a doctor, that job offer is lawful only if the employee successfully completes the precipitated medical tests. But, if the condition isn’t expressed in the offer, your company cannot later enforce it. 

Offer must be distinguished from an invitation to offer

This difference between an offer with an invitation to offer can be considered as the most prominent character of the contract law. The invitation to an offer is somehow like the solicitation of tenders and has not really come in the list of offers. 

Invitation to make an offer

An invitation to offer is a message communicated by one person/organisation to another to let him/her know that it is tender-ready. This is not on the contractual basis type of communication agreement. On the contrary, it usually occurs before bargaining where the parties may formally state an interest to bargain a contract. The main usage of an offer to negotiate is to accept from other parties without tendering an offer until one is acceptable to the party concerned.

It refers to a situation whereby one party invites other parties to tender their proposals that shall be considered and either accepted or rejected. Forums and invitations to treat include; adverts, a catalogue list of products and prices, and posters or notices placed in shops.

For example, where a shop price-labels its products it is not deciding to sell the product at the price marked on the label. In fact, what the shop is doing at present is to instruct customers to make an offer for the products involved, and only under the assumption that the shopkeeper will either accept or decline the offer. 

This was held in the case of The Pharmaceutical Society of Great Britain vs. Boots Cash Chemists (Southern) Ltd.(1953) which observed that goods exposed for sale are an invitation to treat, and acceptance occurs when the sale is made. It was held by the Court of Appeal that something offered at a self-service shop is an ‘invitation to treat’ and not an ‘offer’. Here, the customers picked the medicated products they wanted, from those on the shelves, and then proceeded to the cashier column to make payments.

The Pharmaceutical Society argued that this was illegal since some drugs sold required the services of a pharmacist. However, the court said the display of goods merely invites the customers to make an offer and the sale cannot happen until the cashier accepts that final acceptance that a pharmacist could supervise.

This would leave clear where acceptance occurs and end at the point of sale that would give the retailer control in the process of sale.

Another example is that a local car selling company advertises in the newspaper to sell a car for Rupees 10 lakh. This information is a call for an offer and hence cannot be regarded as a legal offer. When a customer wants to purchase a car, this is an offer and the dealer can either accept or reject the offer.

Characteristics of an invitation to make an offer

Non-binding nature

Merely extending an invitation to make an offer does not create legal rights and responsibilities. It does not mean the inviter will accept all those offers that may result from such willingness on the part of the inviter. For instance, an advertisement for jobs like; “We are hiring a software engineer to work with us in our team” does not obligate the company to hire the applicant.

Facilitates negotiations

At most times, invitations are regarded as an avenue through which people can negotiate the terms of a potential meeting or event. They set the tone of what might in some way be bargained in the possible deals but only at the time when such deals are being offered and taken. For instance, an aspiring real estate agent puts up a house at a specific price and invites people to offer competitively. The result is expected to be a bidding price.

Response generates offers

Making of offers starts with the process of receiving responses from the invitee rather than acceptance or rejection of the offer.

An acceptance of this proposal by the invitee results in sending a response to the offer that in turn can either be accepted or rejected. For instance, a menu for the restaurant could also be defined as a call to invite the guest to make an offer. When any customer orders a meal, it shows that the customer is willing to give up and accept to pay that amount of money as it is without diminution for the meal. 

According to contract law, an invitation to make an offer is a fundamental factor as regards the establishment of the possibility of negotiations and potential conditions of contracts. To a party, the line between an offer and an invitation to treat could definitely be such by offering brighter negotiation in which one can appreciate the rights as well as responsibilities.

The Indian Contract Act, 1872 and the cases discussed above can further expound on these concepts with the help of relevant sections of the said Act certain case laws; and a clear cut matrix of different parties who may undertake any contract. For certainty in business and law in case of contractual relationships are useful to avoid confusion and hence, conflicts.

Difference between offer and invitation to offer

Here are some key differences between an offer and an invitation to offer:

S.No.	Aspect	Offer	Invitation to offer
	Definition	It is a statement which has been made by one party to the other by which the offeror intends that the other should agree and become bound by the terms of the statement as a contract.	The invitation to offer is altogether different from the above-mentioned notions as it involves a willingness to negotiate or invite others to offer.
	Legal consequence	Once accepted, it becomes a valid agreement.	An invitation to treat therefore is not acceptance and, consequently, will not cause the creation of a contract unless at the point that the offer is made and accepted.
	Intent	An offer confirms that the party who issues it intends to be bound to the contract if his offer is accepted.	An invitation to offer refers to the situation when one party is soliciting tenders, hence that party is not yet bound unless they formulate or offer for one.
	Response required	An offer requires a reply in either affirmative which is acceptance or negative, which is rejection.	Invitation to an offer does not require a formal response but waits for a response from the other end.
	Formation of contract	Every time an offer is made, there results in the creation of a contract upon acceptance by the offeree.	An invitation to tender does not constitute an offer to contract. For a contract, there has to be an offer and an acceptance.
	Role of the parties	A person who makes the offer is referred to as the offeror, and the one receiving the offer is known as the offeree.	In an invitation to offer, a person calling for offers is making only an invitation and the offering parties become the offeror.
	Communication	One needs to tender an offer to the other party, and the offer should be communicated along with the terms that exist.	An invitation to offer does not strictly speak a condition of communication but only opens the door to new negotiations.
	Freedom to reject	An offeror will not avoid acceptance once they have placed the offer for acceptance as it forms a contract.	On the other hand, a person issuing an invitation to offer can decide to either decline or ignore any offer tendered to him by other people.
	Negotiation process	An offer ends the negotiation process, and by accepting it, the deal is completed.	Invitation to a treat is the first stage of the process of bargaining but is not considered an actual offer until discussion and acceptance are made.
	Examples	An offer includes: An offer to sell A car to B for 5 lakhs rupees.	An invitation to offer consists of an advertisement, catalogue or an auction where the seller invites others to put forward their offer for purchasing but hasn’t made up his mind to sell.

Important case laws

Lalman Shukla vs. Gauri Dutt (1913)

Facts of the Case

In this case, Lalman Shukla was sent by his master Gauri Dutt to search for his nephew who had gone missing. Later, Lalman was posted at Haridwar for which travelling cost were arranged by Gauri Dutt.

Later in the day when Lalman was gone, Gauri Dutt declared that whoever brings the boy back, he would get five hundred and one Rupees. Lalman had no idea of this reward. The boy was traced by Lalman and was brought back to Kanpur.

However, on knowing the reward later, Lalman tried to claim his reward but Gauri Dutt refused to accept saying that Lalman was earning his rewards by being a servant. Lalman filed the suit claiming his rewards as rewards.

Issues of the Case

• Was Lalman Shukla entitled to the reward money on the finding of the boy?
• Was there really a valid contract entered between Lalman Shukla and Gauri Dutt?

Judgment

The Allahabad High Court held that there was no contract between Lalman Shukla and Gauri Dutt, and the reason for the ignorance of Lalman Shukla about the award money in consideration for the act was that there was no contract.

The court also observed that for there to be a valid contract, the offeree must be aware of the offer, and the acceptance can be expressed or implied. Since Lalman was not even aware that there was any reward and since his action was part of being a servant, his argument was turned down.

While determining the case, the court held that an offer cannot be accepted where the offeree does not know of the offer beforehand. Performance of an act with only knowledge that the other party intended to do an act of a different nature which if done would be accepted, under the Indian Contract Act, 1872. 

Har Bhajan Lal vs. Har Charan Lal And Anr. (1925)

Facts of the Case

In this case,  on June 9th, 1924, a boy, Ram Kishen, who was either 13 or 14 years of age, ran away from his father’s house in Baheri. To look for his son, the father issued an advertisement and offered Rupees 500 to whoever could locate the boy and bring him home.

This handbill must have fallen on the eyes of the plaintiff who for one identified Ram Kishen at the Bareilly Junction railway station on 19th July.

As soon as the plaintiff witnessed the boy and on an interchange, he wired for the Railway Police and the father a telegram instantaneously. At the time of the plaintiff for collecting his reward, defendant flatly refused to pay out, which further led into an argument between them whether or not the plaintiff was able to grasp terms of the offer.

Issues of the Case

• Was the plaintiff entitled to the Rupees 500 reward which was promised for finding the boy?
• Were the terms that the offer required the plaintiff to meet carried out to a great extent?

Judgment

The Allahabad High Court judged in favor of the plaintiff, arguing that all the terms and conditions of the reward were substantially satisfied.

This handbill becomes an open invitation to the world, and anyone who meets the laid-down criteria can accept it. It was held that the actions of the plaintiff of identifying the boy, reporting him to the police and informing the father of the report was enough fulfillment of the conditions of the offer even though the boy was not personally handed over to the father.

The court also added that to the person who acted through the agent, the offer was accepted. They called the Small Cause Court decision an artificial decision.

Therefore, the revision application was permitted to accept the file of the previous judgement displaced and the decree for Rupees 500 with costs given in favour of the plaintiff. This judgment aligned itself with the preconceived belief that, under contracts, an offer’s tender of actual performance of what the offer says may legally constitute acceptance.

Carlill vs. Carbolic Smoke Ball Co.(1893)

Facts of the Case

In this case, the Carbolic Smoke Ball Company produced and marketed something known as the “smoke ball,” which they promised would absolutely protect a person from influenza and other diseases.

They claimed they would pay £100 to any person who would catch influenza after using the smoke ball as directed to win people’s minds that the smoke ball would protect against influenza. The company assured them of their integrity in maintaining £1000 deposited in a bank for such cases.

Mrs. Louisa Carlill did exactly as the manufacturer of the product instructed her but still contracted influenza. After claiming for the £100 as they promised, the company refused to pay.  

Issues of the Case

• Was there any intention on the part of Mrs. Carlill to form a contract with the Carbolic Smoke Ball Company?
• Was there any need on the part of Mrs. Carlill to notify the company that she accepted the offer?

Judgment

The court supported Mrs. Carlill on the basis that the advertisement put up by the Carbolic Smoke Ball Company was an offer for an enforcement of a contract. In order to introduce the advertisement, it was held that it was a unilateral offer made to the public which did not require prior communication of acceptance and to which acceptance could only be effected through the performance of the stated conditions.

The court further argued that a deposit of £1,000 in the bank is a very serious step which the company could make to establish the promise good, and it, therefore, manifests an intention to create a legal relationship. Using the smoke ball as the manufacturers advised, Carlill satisfied the terms of the offer, and hence the promise on which she relied was considered.

The appeal by the company was dismissed and the company was ordered to pay £100 to Mrs. Carlill whereby the rules of unilateral contracts were established.

The Pharmaceutical Society of Great Britain vs. Boots Cash Chemists (Southern) Ltd.(1953) 

Facts of the case

In this case, the company was Boots Cash Chemists Ltd, that came with the system of self-service in the drugstore, with clients picking the drugs from the shelves and taking to the cashier. Before then, goods were sold to the client by the pharmacist in the behind counter.

A new form of sale resulted in some kind of disagreement by the Pharmaceutical Society of Great Britain as this is said to contravene Section 18(1) of the Pharmacy and Poisons Act, 1933 which provides that sales of medicines are only made under the supervision of a pharmacist.

The Society contended that display of drugs on shelves would constitute an offer to the buyers and when the buyer is about to touch the goods, they are accepting the offer of sale. The trial court granted the prayer of Boots and the Society appealed.

Issues of the case

• Is the act of signifying in the form of picking up an article in a self-service store, an acceptance of an offer?
• Is it safe for future business to assume that a customer who places an item in the shopping basket is committed to buying it?
• Is there an infringement of the Pharmacy and Poisons Act, 1933 in choosing medicine without a pharmacist present?

Judgment

The Court of Appeal dismissed the appeal in favor of Boots Cash Chemists. They said that goods displayed at the store were not an offer but only an invitation to treatment. The invitation to make an offer when the buyer puts the offered goods in a cashier. The component of the contract of sale comes into existence at the time the cashier hired by the shopkeeper agrees to receive the payment.

Furthermore, it was urged that at the cashier at the time of transaction, there was a registered pharmacist behind the cashier; hence, no breach of Section 18(1) of the Pharmacy and Poisons Act, 1933 was made. Therefore, the court ruled on the self-service system and held that self-service offended no regulation.

Acceptance

What is an acceptance

The definition of acceptance appears under Section 2 (b) of Indian Contract Act, 1872 to mean “when the person to whom the proposal is made signifies his assent thereto, the offer is said to be accepted. Thus the proposal when accepted becomes a promise.” Even an offeror may withdraw its proposal any time prior to its assent. 

As mentioned in the definition, if the offer is accepted unconditionally by the offeree to whom the request is made, it will amount to acceptance. When the offer is accepted it becomes a promise. For example, A offers to buy B’s house for Rupees 40 lakhs and B accepts such an offer. Now, it has become a promise. When an offer is accepted and it becomes a promise it also becomes irrevocable. No legal obligation is created by an offer. 

Thus, from the definition, the term ‘acceptance’ can be understood as:  

• When the person receiving a proposal agrees to it, this agreement is called ‘acceptance’;
• Once a proposal is accepted, it transforms into a ‘promise,’ creating a commitment between the parties.

The offer may be accepted by words or by conduct, and this means the final and unqualified assent to the terms of the offer which make the offeree prepared to be bound by it. In the relationship of the parties, it plays an essential role as a basis for the formation of any contract.

According to the Act, a valid offer has been given then the receipt of acceptance by the other party of the offered terms creates a legally binding contract between two parties. It is acceptance which forms the foundation of a contract stating that no contract can exist without acceptance.

According to the law, acceptance is treated as the point at which there is a meeting of minds in a contract. 

Essentials for a valid acceptance under the Indian Contract Act, 1872

This is well established under Sections 7 and 8 of the Act which attempt to define what should constitute legally acceptable terms of contract acceptance. Acceptance therefore constitutes a very central part of any business contract and anyone who intends to undertake a contractual relationship must be fully aware of this.

Altogether these provisions provide clear acceptance and stipulate that no further interpretation is necessary when all of the conditions have been fulfilled, to solve an issue and create an enforceable contract. The essentials of a valid acceptance are as follows:

Acceptance must be absolute and unqualified

According to Section 7 of the Act, an acceptance must be absolute, unqualified and must not be an acceptance of the offer with an addition of more terms.

This implies that in the cases where there is an acceptance offer, then the terms upon acceptance cannot be changed or added to by any other terms. Every time an offeree includes any new term in the process, it indicates that the whole offer is a counter offer and not an acceptance.

According to Section 7, whenever there is communication of any sort, if the form of acceptance by which it shall be accepted is specified by the offeror, such an offer is to be accepted in the same specified manner unless an agreement to this effect has been reached. 

This rule holds a lot of importance as the problem does not arise between the parties who agreed over the same cause.

If the offeree attempts to alter the offer in any way, then this means that he has counter offered and therefore the original offer gets cancelled. The principle is well endorsed and common in Hyde vs. Wrench (1840) to the effect that an acceptance qualified transforms into a counter offer therefore cancelling the original offer. 

Similarly, Felthouse vs. Bindley (1862), pointed out that the communication of acceptance has to be made; withdrawal or inactivity cannot be deemed as acceptance unless the two parties concerned had made it a rule that withdrawal would be treated as acceptance. 

The offeree’s acceptance cannot be subject to a condition. To illustrate, suppose ‘A’ wishes to sell her car to ‘B’ for Rupees 2 lakhs, ‘B’ cannot turn round and say she accepts the offer but will purchase the same at Rupees 1 lakh.

Acceptance has to be communicated

Another important criterion to form a contractual relationship is that there is communication of acceptance of the offer by the offeree. If the acceptor just accepts the offer in his head and does not mention the same to the offeror, it can not be called an acceptance, whether in an express manner or an implied manner.

The acceptance must be communicated to the offeror, an acceptance that is not communicated does not take effect by law. This rule is important since it avoids cases where one of the parties is not aware that the contract has been accepted, eliminating legal cases.

In Brogden vs. Metropolitan Railway (1877), the problem of constructive acceptance was considered, and the Court stated that written or verbal conduct may indeed indicate acceptance but it must be communicated to the offeror. The Court also observed that even though acceptance may be communicated by words or by conduct it should be communicated in a clear manner to the offeror in order to constitute the formation of a contract.

In the case of Bhagwandas Goverdhandas Kedia vs. Girdharilal Parshottamdas and Co. and Anothers (1965), the Supreme Court of India held that for a contract to be valid, acceptance has to be communicated to the offeror. If the contract pertains to messages which are characterised by instantaneous modes of communication, for instance, a telephone call or telegrams, the contract is made at the place of acceptance. 

This case helped in realising the fact that communication is key to acceptance, particularly in a commercial business more so as it has legal implications where there is a delay.

In the case of Entores Ltd. vs. Miles Far East Corporation (1955), the English case addresses the issue of when and where acceptance takes place with contracts made by instantaneous communications such as telex, email and text messages. However, the court ruled that acceptance takes place where it is received by the offeror and not where it was posted. 

This principle is of great importance where jurisdiction and time of the formation of the contract are a concern in today‘s digital communication. 

The case of Haji Mohammed Ishaq Md. Sk. Mohammed & 3 others vs. Mohamed Iqbal & Mohamed Ali & Ors. (1978), raised an issue of the clarification of the communication of acceptance. The court stressed specific importance to the question of the clear and precise terms which might be invoked for acceptance in contract law. 

The judgement was useful in substantiating the fact that acceptance has to not only be made effectively but also be communicated if the latter was to be equally effective, just as efficient communication is necessary for the success of contractual relations.

Acceptance must be made in a prescribed manner 

Section 7(2) of the Act states that If the offeror has communicated that the acceptance must be done in a particular manner then only, the acceptance is valid if it is as prescribed by the offeror. If the offeree employs a different method to respond to the offer, then the offeror either accepts the new method or rejects it. However, if no such mode is specified, acceptance may be communicated in any reasonable and usual manner. 

The case of Eliason vs. Henshaw (1819) is a good example of this principle that where the offeree has not complied strictly with the methods provided for acceptance, he or she is deemed to have committed an actionable wrong and the acceptance is not valid since the offeror has not accepted it.

If the offeror has specified how he/she wants the acceptance then the offeree should conform to it so that the acceptance is valid. If the prescribed mode is not followed then the acceptance is assessed as invalid unless the offeror has excluded the condition.

Acceptance must be made within a reasonable time

One of the important factors that can be utilised in understanding the features of contracts is time.  Where the act of acceptance has not been tied to any time limit, the acceptance has to be done within a reasonable time bearing in mind the circumstances surrounding a particular offer. 

When a person delays to accept an offer, he/she might find the offer is no longer available for acceptance. 

As can be seen in the case of Ramsgate Victoria Hotel vs. Montefiore (1866), the Court of Common Pleas laid down that an offer reverts if it is not accepted within a reasonable time, which in this case depends on the circumstances surrounding the offer.

Acceptance of an offer has to be immediate where the offer was made on condition that it was temporary, expiring or made on goods that have a short shelf-life.

Acceptance must follow a proposed offer

Acceptance of an offer is the final stage in the formation of a contract provided that an offer exists. The principle which states that acceptance cannot occur before an offer goes to the very basics of the contract law. This means that any action done before an offer cannot be referred to as acceptance since there was no offer made in the first instance. 

Types of acceptance

Express acceptance

If the acceptance is written or oral, it becomes an ‘express acceptance’. Simply, an express acceptance is reached when the offeree verbally or in writing states to accept the offer. It is the most initial type of acceptance and normally does not generate much question on the parties’ expectations. For example, an individual might answer an offer of employment with a statement like, “I take the job as per your offer.” 

In express acceptance, it is rather easy to identify and uphold terms since each party accepts the propositions offered by the other.  

Sometimes the express acceptance and an implied acceptance operate together for example in auctions. 

Let’s take an example where the Arts Museum holds an auction to sell a historical book to collect charity funds. In the media, they advertise the same. This is a mere invitation to an offer as per Indian Contract Act, 1872. The invitees offer the same. Offer is expressed orally, so the offer to buy is an express offer, but by striking the hammer thrice the final call made by the auctioneer will be ‘implied acceptance’. 

Implied acceptance or acceptance by conduct

Section 8 of the Act states that it is not necessary that with acceptance an express communication has to be made; it can be implied by the conduct of the offeree. This kind of acceptance takes place when the offeree has done what the offeror wanted him/her to do or has received the benefit or consideration as stated in the offer. 

There is an implied acceptance, which is deduced from the conduct of the offeree or the transaction, and circumstances leading to the agreement. Here, the conduct of the offeree would indicate his/her acceptance of the terms of the offer despite the fact that he/she may not state so in words. 

For instance, if a person boards a bus and drops the fare this is considered acceptance of the transport service. Implied acceptance is categorised as holding actions that give optimum evidence, and typically, it will be relied upon in normal business and other trading transactions where express acceptance cannot be legally made.

Similarly, consider an offer to supply goods on receipt of payments and if the offeree pays without expressing his assent, then such act constitutes an implied acceptance. The same is also true if an individual begins to engage in the use of a service or product extended to him or her; this means acceptance by conduct, among other things.

In both cases, the conduct of the offerees communicates acceptance of the utterance proffered by the offeror, which then creates a legally enforceable contract without utterances of acceptance.

Conditional acceptance

A conditional acceptance also referred to as an eligible acceptance, occurs when a person to whom an offer has been made tells the offeror that he or she is willing to accept the offer provided that certain changes are made to the condition of the offer. This form of acceptance operates as a counter-offer. The original offeror must consider a counter offer before a contract can be established between the parties.

Conditional acceptance occurs when the offeree accepts the entire offer but on some other additional terms. But this is not acceptance; this is a counteroffer. The new terms can only be binding if the original offeror agrees to them in order to form the contract. A good example is “when a buyer takes goods but on condition that they will be delivered at a certain time only”. 

In Jordan vs. Norton (1838), it has been held that conditional acceptance becomes not actual acceptance where conditions offered are not satisfied.

Acceptance by performance

Section 8 of the Act offers acceptance by performance as a contract. Acceptance in this case happens in formal unilateral contracts where the offeree is called upon to perform an act by the offeror for the consideration. When the offeree does the act requested by the offeror then it is accepted. For example, if one puts up a reward for lost property then acceptance takes place when somebody brings back the lost property.

Acceptance is one of those factors that go into the making of a contract. It is crucial that every agreement that is to be legally binding must meet this factor. The rule of law that any contract cannot be performed without proper acceptance was too laid down.

Sections 7 and 8 of the Act define that the parties have the knowledge of their obligations and they do not force into the contract. If acceptance is express, implied or even conditional the form of acceptance has legal repercussions which must be averted. 

Interpreting elements of valid acceptance such as communication, the mode, and the times when acceptance has to be given for contracts makes contracts real and capable of protecting the parties’ rights. 

The principles outlined above in the key case laws also reveal small details about acceptance which make the idea far from unimportant to those engaged in contractual processes.

Important case laws

Hyde vs. Wrench (1840)

Facts of the case

It was a case that involved an issue of the sale of a farm. Wrench, (the defendant) at the outset, proposed to sell his farm to Hyde, (the plaintiff) for £1200. Hyde rejected this offer. Then Wrench countered offering to sell the farm for £1000 but with added words ‘this is our final offer’. 

Wrench rejected the offer and Hyde later countered by increasing his bid to £950 for the farm. Hyde then attempted to agree to Wrench’s initial offer of £1000 some weeks later but Wrench declined. 

The case was called for trial, as to whether a contractual relationship had been lawfully established.

Issues of the case

• Is a counter offer a rejection of the offer?
• Is it possible to accept the original offer once the reversing offer, or counter-offer has been rejected by the offeror?
• Was there any contract between Hyde and Wrench contemplating the sale of the farm?

Judgment

The court said the case was in favour of Wrench because there was no valid consideration formed in a contract. The majority which included Lord Langdale made it clear that a counter offer works as a rejection of the initial offer. Hyde made an offer of £950 which was a counter offer and once it had been made the original offer of £1000 could not be implemented. 

Hyde could not later bring back the initial offer in an effort to accept it after his counter offer had been rejected. Therefore, there was no formation of the contract since the original offer became void. So it means that even if Hyde tried to accept the initial offer after putting forward a counter offer, he was legally wrong.

This case is remarkable in contract law because it confirms the principles that a counter offer brings to an end the initial offer, and prevents the offeror from accepting it at a later date.

FeltHouse vs. Bindley (1862)

Facts

In this case, the discussion was between Paul Felthouse (the plaintiff) and his nephew John Felthouse (the defendant), and the issue of contention arose when he sold a horse. While arguing, Paul mentioned to his nephew that he was interested in buying the horse and told him, “If I do not hear from you, I shall take the horse and will assume that I own it”. 

John was preoccupied with other matters, such as attending auctions, and did not respond to the letter his uncle had sent him. 

Mr. Bindley was the respondent who conducted the auction, and because of his ignorance he sold the horse contrary to the instruction that had been given, and thus it was sold to another owner. Paul later sued Bindley for conversion of the horse, because he kept insisting that the horse belonged to him.

Issues of the case

• Is there acceptance where an offer has been accepted by silence or by failing to respond to the offer negatively?
• Is one party entitled to enforce against the other a contract without having received a clear indication of acceptance of the offer?

Judgment

Mr. Bindley won the case, and the claim was dismissed. This also operated on the basis that non-communication cannot be regarded as acceptance of an offer. Communication of acceptance to form a contract must be mutual and intention should be clear and ascertainable. 

In this case, although the nephew intended to sell the horse, his non-response to his uncle’s offer amounted to no acceptance of the offer.

The court also emphasized that silence cannot be translated as acceptance, and actions have to reveal acceptance. Therefore, there could be no contract between Paul Felthouse and his nephew for the sale of the horse, and thus no action of conversion can be sought.

Still, this case became important as it relates to the fact that nonaction or failure to respond does not amount to acceptance of the offer in contract law.

Brogden vs. Metropolitan Railway (1877)

Facts of the case

In the case, Mr. Brogden, the defendant had an oral contract with the Metropolitan Railway Company, the complainant in delivering coal all the time. There was however no written contract between them. Earlier on, at one point, the two parties decided to write the observance of the agreement.

The agents of Metropolitan drew up a typical form of contract which Mr. Brogden completed and then signed as “approved.” Later, despite that the document was returned to Metropolitan’s agents who filed it but caused no further action to be taken thereon.

Both parties continued their business as usual even though no signed contract existed. The Metropolitan Railway Company received from Brogden coal which they couched in terms of payment, and they did not raise any qualms with regard to the terms in the draft agreement made.

The cooperation existed for several years until an issue arose and then Brogden attempted to appeal on the fact that there was no signed agreement.

Issues of the case

Was a contract formed if there was no signed document?

Is it possible to regard the contract concluded with the help of certain activities carried out by the parties and signed in writing or at least one of them stating that there was no signed contract and ceased to be valid?

Is an affirmation of the terms that are revealed through conduct enough to make contractual terms binding?  

Judgment

The House of Lords ruled that the contract must have been formed and thus upheld the contract in favor of the Metropolitan Railway Company. The court observed that the parties had acted in a manner showing agreement to the terms of the draft agreement. 

Even though no actual signature was made, through his actions, Brogden had accepted the terms of the draft agreement. He kept delivering the coal, and the Metropolitan Railway Company paid him as agreed; no one ever complained.

The court of law has pronounced that even though Brogden did not sign the agreement, and all he did was receive payments and provide coal, still, he had accepted the terms of the agreement. It is noted that according to the House of Lords, for many years, the defendant had been carrying out obligations under the contract in conformity with the terms of the draft agreement.

This is a classic case of ‘accepted by conduct, within the body of the laws of contract’ to mean that despite the fact the parties did not sign on, they are still within the ambit of the contract validity since they were behaving in such a manner considered acceptable according to the provisions of the draught.

Bhagwandas Goverdhandas Kedia vs. Girdharilal Parshottamdas and Co. and Anothers (1965)

Facts of the case

In this case, Messrs Girdharilal Parshottamdas & Co., the plaintiffs, filed the suit against the defendants Kedia Ginning Factory Oil Mills for Rupees 31,150 for the specific performance of an oral contract concluded over the phone for the supply of cotton seed cake as per a bargained for exchange.

It is further submitted that the present action is instituted before the Court at Ahmedabad, since the offer was made at Ahmedabad, and the performance of the contract is connected with Ahmedabad. In this context, it has been contended by the defendants that the place of performance of the contract was at Khamgaon.

Issues of the case

• Whether this present suit could be entertained by the Ahmedabad Civil Court, holding in view the fact where the contract is entered?
• Whether the telephone conversation lead to establishing the place where the contract has been entered?

Judgement

It is correct that the contract was made at Khamgaon where the offer was accepted, and the court has also considered the rule that where acceptance by telephone made the contract, it makes the contract place where the acceptance was made. On appeal, it was dismissed with costs, where the court clarified jurisdictional issues in the case of a telephone-based contract on whether the acceptance was received by the offeror.

Haji Mohammed Ishaq Md. Sk. Mohammed & 3 others vs. Mohamed Iqbal & Mohamed Ali & Ors. (1978)

Facts of the case

In this case, the plaintiff, being a registered partnership firm, sold 630 bags of tobacco to the defendants for a total consideration of Rupees 1,21,154.12,9. The defendant parties made some partial payments but remained due to the plaintiff an amount of Rupees 75,477.12 including charges in respect of interest. The plaintiff attempted to bring an action for the recovery of the balance.

The defendants however on their part dismissed the allegations of offering direct payments to the plaintiff and forcefully argued that payments were made to another person referred to as Abdul Rahim Nabisaheb Bagwan.

Issues in the case

• Whether the defendants knew or ought to have known of the plaintiff’s reliance on the representations complained about and therefore was there an implied contract between the plaintiff and the defendants contrary to their account that they never dealt directly with the plaintiff.
• Whether, after the trial has begun, the defendants by amendment of their written statement adduced new matters.
• Whether the defendants are bound by an agreement entered into with the plaintiff or with the intermediary.

Judgement

Regarding the issue of an implied contract between the plaintiff and the defendants, the Karnataka High Court has made its statement. In this tort of deceit, it held as follows: By accepting the goods and making part payment, they entered an implied contract with the plaintiff. This was a ground by which the issue of lack of privity of contract defended by the defendants became dismissed since the products were taken and partly compensated for.

The court had shifted their application to leave to file additional written statements and tendered new evidence; they claimed the amendment to have been incongruous with testimony and, thereby rejected the application.

The appellate court affirmed the judgment of the trial court and directed the defendants to pay the balance amount of Rupees 75,477.12.9 with interest charges, as per the terms of the contract.

Errington vs. Errington and Woods (1952) 

Facts of the case

In the case, facts involved a promise made by a father to his son and a daughter-in-law. Mr. Errington was willing to hand over a house to his son and his son’s wife if they would continue making the mortgage payments. Later, the father died and took his house with him; on his death, he had bequeathed his house to his son.

On the death of his husband, the wife wanted the house for herself. Both the son and the daughter-in-law demanded to be given the house as it was explicitly promised by the father and they accepted the mortgage ever since.

Issues of the case

• Whether the words spoken by the father when he promised his son and daughter–in–law financial support, amounts to a consideration and therefore may be classified as a contract or if it was a mere family promise which being a family promise has no legal tender.
• The extent to which the carrying out of the actions, for instance making payments for the mortgage, could transform an offer into a contract.

Judgement

The court favoured the son and daughter-in-law and held the promise of the father effective in favour of the son and daughter-in-law. The court had favoured the son and daughter-in-law.

The court also considered the mortgage payment as the part performance by the son and daughter-in-law indicated their intention to form the contract. It was considered enforceable because the respondents, the son and daughter-in-law, honoured this promise by paying a certain amount and their actions were in terms of the promise. 

Part performance was highlighted in the contract law as a consideration where the actions by a party in a contract could make an agreement enforceable even though there was no writing of the deal. Therefore, it agreed with the decision that this property would transfer to the son and the daughter-in-law as settled by the words of the father.

Communication of an offer, acceptance and revocation 

Communication of an offer, acceptance and revocation holds a great significance in contract law. 

Section 3 of the Act reflects the way in which offer, acceptance, and revocation of a contract can be communicated. 

The making of an offer, the acceptance or the revoking (cancelling) of a proposal or an acceptance, is deemed to be done by any action or even inaction on the part of the person making the proposal or the person accepting it or the person revoking it. This means that communication may be made either expressly or thereby implied. 

Communication is deliberate when the person wishes to convey the proposal, acceptance or even rejection through an action such as writing a letter, or verbally or through a letter electronically written and dispatched or otherwise. It arises where the circumstances are such that a particular act or omission would constitute the making of a proposal, acceptance or rejection of the same.

Therefore, communication can be either expressed in the sense of actual words or tangible expressions or where the intention of the party can be inferred from the conduct of the party or an omission.

Communication when complete

Section 4 gives an exact point of time in the opinion of which communication is made for the purpose of an offer, acceptance, or revocation. The notion of completion differs depending on whose point of view it is: whether it is of the offeror or acceptor. Communication of an offer is complete when it reaches the knowledge of the person to whom it is made.

A proposal can be withdrawn at any time before the communication of its acceptance is complete as against the offeror but not thereafter.

Communication of an offer

The communication of a proposal is said to be effective when the offeree gets knowledge of the above-mentioned offer. Suppose A proposes to sell his car to B by sending him a letter of the proposal; then, communication of the proposal is said to be complete when B knows about it. The mere posting of the letter is not sufficient; it has to be received and known by legal person B.

Communication of an acceptance

The law distinguishes between the point of time, where acceptance is considered to be completed for both the offeror and the acceptor.

To the offeror, the communication of the acceptance is complete when the offeree (acceptor) has transmitted the acceptance: the acceptance cannot be recalled. For example, if B accepts A’s offer by posting a letter, then for A the communication of acceptance is complete once B puts the letter in the post even if A has not yet received the letter. The acceptance becomes effective as soon as B posts it.

From the acceptor, communication of acceptance is complete when the offeror gets informed of the offer. That is to say, that acceptance is complete for the acceptor only when the offeror has received it. For example, if B accepts A’s offer by a letter, then acceptance is complete for B when A receives and knows of the acceptance. While the strategic difference between the two is that the offeror becomes committed as soon as the acceptance is transmitted to the acceptor, the acceptor becomes committed only when the message is received by the offeror.

Communication of a revocation of an offer and acceptance

Section 4  shows when a revocation (cancellation of an offer or acceptance) is effective. The revocation can be made by the offeror or acceptor, depending on the circumstances. The communication of revocation is complete when the person revoking has put it into post, in other words, sent it so that it cannot be recalled. 

For example, if A accepts B’s offer and resolves to revoke the same whereby he writes a letter to B indicating his withdrawal of the said offer, then the withdrawal is completely made by A from the very moment of the post of the letter.

Time of revocation of an offer

• Revocation of the offer

Section 4 states that a proposal can be revoked at any time before the communication of its acceptance is complete as against the offeror but not afterwards.

• Revocation of the offer by the offeror

He may withdraw his offer even prior to its acceptance “The bidder may withdraw (revoke) his offer at an auction sale before being accepted by any auctioneer using any of the customary methods. For example, ‘A’ agreed to sell the property to ‘B’ by a written document that said “This offer is to be left over until Friday 9 AM”. 

On Thursday ‘A’ made a contract to sell the property to ‘C’. ‘B’ heard of this from ‘X’ and on Friday at 7 AM he delivered to ‘A’ acceptance of his offer. Held ‘B’ could not accept A’s offer after he knew it had been revoked by the sale of the property to C.

For a person to whom the revocation is made, communication of revocation becomes effective when the person to whom it is made becomes aware of it.

For example, if there is a revocation letter from A to B then the revocation is complete when B receives and is aware of the revocation. The main distinction is that for the person who cancels (revokes), the revocation is done the moment such a notice is sent. While for the person who receives a revocation notice, the process is complete only when such a person becomes aware of the revocation.

Section 4 determines when communication is considered complete. In a proposal, it is complete where the offeree is aware of it. Acceptance is completed against the offeror when the acceptance is posted and for the acceptor when it is received by the offeror. Revocation is effective as against the person revoking it upon the making of the revocation, and as against the person to whom the revocation is tendered whenever he receives actual notice of it.

These clauses protect both parties interested in a particular contract, regarding the time when the offer or acceptance becomes definitive and when it is possible to revoke it.

Revocation of an offer and acceptance under the Indian Contract Act, 1872

Section 5 of the Act provides for the revocation of proposals and acceptance. 

Revocation of offer

An offer may be withdrawn at any moment before the acceptance of the offer by the offeree.

In other words, an offer once made can be withdrawn so long as the offeror has not received the acceptance from the offeree. Where an acceptance has been transmitted and has been accepted, the offer cannot be withdrawn again. 

In the same way, acceptance of an offer can be withdrawn by both the offeror and offeree as and when warranted by circumstances even before acceptance reaches the hands of an offeror. Therefore acceptance becomes operative, and the acceptor would not be allowed to revoke it. 

As in the case of Byrne & Co. vs. Van Tienhoven (1880) the defendants, in their case, dispatched written acceptances of the request made by plaintiffs for selling the goods. One week after the letter, the defendants wrote to the plaintiffs a retraction of their offer; however, the offer was already accepted by the plaintiffs.

The Court held that the offer is revoked only when the revocation reaches the offeree and not when it is being sent. This is because the succeeding decision establishes that an offer revoked by notice shall be operative only before the offeree accepts the offer.

Revocation of acceptance 

An acceptance can be withdrawn before the proposer learns about it but not after that. For instance, Rahul wants to sell the bike to Priya for a price of Rupees 50,000. In a letter that Priya writes to Rahul, she accepts the offer but later, Priya backs off and decides not to send the letter to Rahul. So till date, Priya can withdraw Rahul’s offer by calling/ texting Rahul to communicate his refusal of the said offer. But when the letter reaches Rahul the acceptance offered by Priya cannot be revoked. 

This rule leads towards more definition in communication but not for the ground that there is absolutely no scope of the said process getting complete! 

The Act however provided for cases where an offer could be revoked at certain stages prior to acceptance.

Modes of revocation of an offer 

Section 6 of the Act provides the ways of revocation of an offer. Understanding these modes is essential in order to determine whether or not the contractual relations were fully formed or whether commitments were actually entered into.  

Revocation by notice  

An offeror can withdraw his offer by giving notice to the offeree before the offeree can accept the offer. For example, if organization A was willing to supply its car to organization B, the law may require that to withdraw the offer A has to inform B that A is no longer willing to supply in the same manner B had agreed to receive it.

The communication may be in the form of a letter written to B, an email sent to B, or in the form of verbal communication to B. Thus the communication gets to B before B accepts the offer. This is where timing comes into the picture. But if B accepted the offer before notice of withdrawal of an offer by A and even before realizing that the time taken has been beyond the stipulated time stated in the offer and has complied with conditions laid down in the offer, then the offer cannot be withdrawn by A at a later date. 

Such a type of revocation also protects them from unfavourable change and appears to recognise what has been done in the faith of the contract.   

In the case of Henthorn vs. Fraser (1892), Fraser had agreed to sell his house to Henthorn, but within a certain time period for acceptance. After some time, however, Fraser wrote a letter of revocation of the offer to Henthorn. On the other hand, Henthorn, who was not aware of the revocation, sent his acceptance in writing through the post before the letter of revocation got to him. The Court held that the revocation of an offer is not effective when the offeree has not received the notice of revocation.

This is to say that once the offeree receives the notice of revocation then the contract is terminated. This case establishes that the offers revoked by the notice have legal back provided that the revocation must reach the offeree before he accepts the offer.  

Revocation by lapse of time

Equally important to state here is the point that the passage of time can sometimes prove to be a critical factor, in reading into the validity of an offer. There is legal justification behind making an offer only for a limited time so that, in case no acceptance is made within such a given time, it renders the offer itself invalid automatically. 

For example, if A proposes to sell his bicycle to B, but then adds the condition that such an offer shall exist for only ten days unless accepted by B within the ten days, the offer shall be null and void. In such cases, A is relieved of no liability to respond to the offer and can, therefore, formulate an alternative agreement, owing to the offeree’s failure to prove interest within the stipulated period. This principle is useful to obtain the necessary action and input regarding the issues of contracts and other correspondences. 

In Ramsgate Victoria Hotel Co. vs. Montefiore, (1866), facts involved the fact that Montefiore had made an offer in June to buy certain shares in the Ramsgate Victoria Hotel. The hotel accepted the offer, yet it never gave a response before November. By the time they accepted, Montefiore no longer wanted to carry through with the purchase of the shares. 

The court therefore came to the conclusion that owing to the delay in the acceptance by the hotel, Montefiore’s offer had run out. It further gave the opinion that the acceptance of the offer would come within a reasonable time frame. Since the delay in the case was deemed to be excessive, it found the offer to be revoked. 

Revocation before expiration of time and notification of revocation by third party

In Dickinson vs. Dodds (1876) Dodds agreed to sell his house to Dickinson and stated that the offer would remain valid for a certain period of time. However, before the date when the offer would be valid, Dickinson comes to know that Dodds had already sold that house to someone else. The court held that the acceptance took place as soon as Dickinson knew that Dodds did not wish to sell his house to him. 

The court laid down the rule that the offer can be withdrawn before the expiry of time, under facts where the offeree is made aware of its revocation before the acceptance. 

Termination for breach of a condition precedent

There are cases where, for the offer to be accepted, there are conditions that must be met before the acceptance can be made. Such conditions are termed as condition precedent. There are still, however, some rules laid down with which if the offeree fails to compile the offer is automatically withdrawn. 

For instance, A agrees to sell his apartment to B on the basis that B will obtain a mortgage loan in one year, and if B fails to obtain the loan, the offer is revoked.

Where the terms of the offer are not fulfilled, failure is more symptomatic of an inability to enter into a contract. The mode of revocation by choice would require clearly worded contractual terms allowing parties to know what is expected of them before they accept.

In the case of Satyabrata Ghose vs. Mugneeram Bangur & Co., And Another. (1954) the defendant agreed to sell his land to the plaintiff on such terms that depended upon the completion of some development work on the land undertaken by the defendant. Thereafter, when the said development work was not undertaken the plaintiff brought the present action to recover the money paid under this contract. 

This was taken to the Supreme Court. The Supreme Court decided that the contract could not be acted upon because it was subject to a condition precedent and since the condition had not been met, it could not be acted upon.

Revocation by death or insanity of the party offering 

The mental capacity and life of an offeror form part and parcel of the offeror’s power of granting a contract. In case of an offeror’s death or loss of his mental faculties before the acceptance of the offer, it automatically results in a revocation. 

For instance, A is offering to sell his car to B and before he accepts, he dies; his offer now ends. This revocation will occur precisely when the offeree becomes aware of the death or insanity of the offeror. 

This was provided to further the interest of both parties so that only capable persons are contracted because they can perform their obligations. The law also recognizes that a contract where such a person entered into the contract cannot be legally enforced.

But there is a principle that the revocation of the offer in case of death or insanity of the offeror comes with certain limitations if the performance by the offeree has begun.

In Errington vs. Errington and Woods (1952), a man communicated his decision of passing the house’s title deed to his son and his son’s wife saying he would offer the house on certain conditions that they clear the monthly mortgage payment of his house. The man died while the wife had taken back his word. The court ruled that since the couple has accepted the first amount, revocation is not possible; hence, the couple must proceed to pay the mortgage as agreed in the contract. 

This case dealt with the unilateral offer, that is, an offer upon which an offeror has no option of withdrawing when calls have been made on the offer. 

Other modes of revocation of an offer in diverse situations

Revocation of offer in unilateral contracts

There should be a justification for how the offer can be withdrawn in unilateral contracts. Traditionally, the right of the offeree to withdraw at any given time before accepting such an offer was recognized. However, with unilateral contracts, he can withdraw at any given time before the offeree commences doing the desired performance.

This principle can be understood by the case of Daulia Ltd vs. Four Millbank Nominees Ltd (1978), in which the defendant offered to the plaintiff the property sale, implying that the plaintiff had to do some acts that would have sought to be performed before the defendant agreed on the transfer of the property. Before the above steps were achieved, the defendant tried to withdraw the offer. 

The court held that once the plaintiff had started to perform the acts that were required under the offer, the defendant could not back out of it. In all cases, a unilateral offer cannot be revoked once the offeree begins the performance of the contract, relating to the terms offered.

Revocation by counter offer

When the offeree responds to an offer with a counter offer an original offer is considered revoked.

A counter offer is when the offeree resubmits terms or conditions that are unlike those which were first offered to it. A typical illustration of a counter offer arises if A offers to sell his laptop to B for Rupees 30,000 and B counters that by offering to buy the laptop from A for Rupees 25,000. But once this new offer is presented, A’s original offer no longer stands on the table because what it tells B is that B hasn’t agreed to take on A’s terms as stipulated.

Hyde vs. Wrench (1840) is still one of the leading cases in contract law regarding offer and acceptance. In this case, Wrench was the defendant and Hyde was the plaintiff. He accepted an offer made by Hyde to sell him his farm for £1000. This offer Hyde accepted, but then tried to negotiate a condition of adjustment by offering to buy the farm for £950. Wrench refused this counter offer and sold the farm to another party. 

When Hyde tried to actualize the original offer, the court declared that his counter offer to the original offer cancelled the acceptance of the offer and thus rejected the offer. 

This case explained the term that a counter offer rejects the offer because the contract requires that there be an unconditional acceptance of the proposition as offered by the offeror which has not been fulfilled in this case as the offeree responded with a counter-offer.

This case is actually referred to in contract law because of the relative importance of analyzing terminations of offers and general requirements of certainty in the formation of contracts.

This principle is very important in assessing negotiations since it gives the understanding that offers are not stagnant and may change with time. In negotiating, these parties have to be very conscious that any alteration may make the standing offer meaningless.

Revocation by death or insanity of the offeree

For specific offers, the scenario is reversed, the death or insanity of the offeror revokes the offer and the same is applicable to the offeree.

Where the offeree has died or become insane, then the offer lapses even before acceptance of the offer made by the offeror. The relevance of revocation in this regard comes up because it acknowledges the point that for contract creation there must be both parties sane and living. Consider a situation where A proposes to sell a rare coin to B and before B can accept, B experiences a mental breakdown then the offer lapses. The law thus keeps fair contractual dealings as regards imposing contractual obligations upon only those who are capable of performing them for it is then contractual dealings that must be fair. 

Revocation by destruction of other subject matter

If the subject matter itself is destroyed before its acceptance is communicated, then the offer is revoked automatically.

In the case where the specific item or service that the offer is concerning does not exist regardless of what the reason is, such a situation is present as an example. This can be understood as, if A decides to sell a painting to B, and while on his way to B, the painting is lost in fire before B accepts, the offer has become void. 

The basic principle underlying it is that an agreement must have a tangible subject matter that exists at the time of acceptance. Where the subject matter ceases or becomes impossible to perform, the offer fails against performance – it is void.  

Revocation by the change in law

An offer can be withdrawn if, due to a change of law which renders the acceptance illegal or impossible before the offeror accepts.

It is the case because this respects legal integrity of the contract so that contracting parties must not be compelled to comply with a contract that does not suit newly enacted legislations.

For instance, suppose A offers to buy a commodity type that is later outlawed by the law but before B can accept the offer, it becomes void due to legal prohibition. This reminds parties that they need to be aware of what the applicable laws and regulations are, and if there is actual change, then there is actual consequence to the validity of their contracts.

Revocation by non-acceptance in the prescribed mode

Last but not least, an offer that reserves a specific method through which acceptance may be manifested and the offeree has not accepted, can still be revoked if the terms in the offer are otherwise unambiguous and clear.

The conditions for acceptance should allow an individual to choose how an offer should be acknowledged. Let’s take an example. Suppose A agrees to sell his smartphone to B on the condition that B accepts him in writing. So, if he accepts by telephonic means, then definitely no way he wants to uphold the offer. 

The requirement here is that such acceptance should respect the interest of the offeror along with the acceptance of an offer in a manner that the offeror intended. This factor is better known to the offerers, as without their acceptance it could not be treated as valid and binding.

The Indian Contract Act, 1872 lays down the basic modes of revocation of an offer and that of fundamental importance to the formation and execution of contracts. The knowledge of these provisions enables parties to draft more intelligibly when doing contractual negotiations. There are different revocation modes each intended for different purposes so that offers can stay valid only in the right setting thus bonding fairness and integrity for lawful agreements. 

This knowledge is what enables people to educate themselves on their rights and obligations in contractual relations.

Withdrawal or revocation of an offer in auctions

Perhaps the most significant role of offer and acceptance in tenders is to determine the rights and obligations of the parties concerned.

In contract law, a tenderer is allowed to withdraw his offer at any time before the auctioneer accepts his offer. This acceptance is often coupled with the knocking of the hammer by the auctioneer thus bringing the sale to a close. Till date, the principle governing the situation that the bidder can withdraw his bid without any responsibility for it in law has been very well recognized by a number of important cases of both English and Indian jurisprudence. 

One of the most renowned cases is  Payne vs. Cave (1789). Here, the last and highest price was offered by the defendant, Cave, but he backed out and refused to buy at the auctioneer’s knock of the hammer.

The Court has given a verdict on Cave’s side saying that any proposal can be retracted any moment before its acceptance.

Acceptance takes place just like in the case of an auction, where the hammer falls when the auctioneer clinches the deal. Cave was justified to withdraw his offer before it could be accepted. This case laid down the rule that an offer is open until accepted, this is more specific in sales by auction since acceptance is more defined. The court noted that when an offer is revoked, it cannot be accepted. 

Therefore, the principle that remains consistent is that an offer is open until such a time the offer is either accepted or declined. It focuses on the legal relationship with respect to the fact that an auctioneer can withdraw the offer at any time prior to acceptance. 

Acceptance occurs in an auction when the hammer is hammered in by the auctioneer. So far, the tenderer has maintained an open right to withdraw the offer; therefore, it highlights the requirement of suitable acceptance in the law of contracts.

Scenarios that regard silence as if it is acceptance of an offer

A key fact that needs to be clarified here is that acceptance does not equate to silence.

In general, no reply either the offeree keeps mum or fails to say a word about an offer constitutes no acceptance. The acceptance of the terms of an offer must be a clear and willing assent to the offer. This has the legal justification that a party cannot be made to enter a contractual agreement when they did not give their consent for the kind of deal.

In Felthouse vs. Bindley (1862), Felthouse offered to purchase a horse from his nephew and expressed his intention by letter which mentioned that, in case no acceptance or rejection was received by his nephew within such a time then, the horse would be considered to be sold to him. His nephew neither accepted the proposal nor asked Bindley, an auctioneer, not to sell him the horse, but he sold it to some third person.

The court commented that there can be no acceptance out of silence. There is no agreement as the nephew had not replied to the offer. 

This case created a precedent for the rule of law wherein in a contract, acceptance needs to be communicated; where the law extends even to include silence or inactivity, they are still not enough. This case demonstrates how an offer and acceptance have to be suitably communicated emphasising the formation of a contract cannot solely rely on intention to create one. 

But there are a few exceptions to this rule which state that non-response can be construed as consent. They are listed below: 

Receiving benefits from the goods or services as a tester in order to be accepted 

Generally, one needs to get some benefits from the goods or services as a tester to gain acceptance.

Such silence on the part of the offeror may have enjoyed or used in having any reasonable opportunity to reject goods and services once offered. It may be attributed to the inability to reject where the offeror has had the opportunity. The delivery of goods and services under circumstances without express agreement may be held under such a course.

For example, if an organization is willing to sell some particular software to its potential customer. If the customer does not refuse or notify his organization about his unwillingness to use the software for the trial period and keeps on using the software beyond that time, then he can be called accepting the above said offer to buy a subscription although the trial period is over.

It is that the silence of the customer gives a connotation of implied consent to software license conditions since he is benefitting from the exploitation of the software.

Previous conduct by way of silence that manifests acquiescence

Another example where silence may be considered as acceptance is where it occurs in continuation of previous dealings between the parties. Silence must be presumed as acceptance if the offeror had dealings prior with the offeree in a manner to reasonably create an impression that such silence is acceptance.

For example, if there is a long-term agreement between a supplier and a retailer, which arises when the repeated receipt by the retailer of the earlier deliveries. Even though the supplier hasn’t sent a written confirmation, it is accepted by the latter. The supplier then should infer that the failure of the retailer to respond to another shipment a little further into the life of that agreement shows that they accept the shipment of the goods.

In this context, the supplier is justified to think that a failure to reject would constitute an acceptance on the basis of past conduct of the retailer.

Statutory provisions on offer and acceptance via post

On these facts, the supplier has a right to believe that rejection on the part of the supplier would be an acceptance on account of past conduct of the retailer.

Section 4 of the Act states that communication of an offer is complete as regards the offeree when the offer reaches the knowledge of the offeree. The knowledge of the offeree is made compulsory to have an effective offeree.

Section 4 deals with the position at which a proposal is communicated. It concerns knowledge of information regarding the offeree if the communication of the proposal is compulsory.

This Section is basic in the formation of the sequence of the offer and acceptance. It is concerned with the word of consciousness in the contract-making process.

The offeree cannot either accept or refuse the offer unless and until the offeree receives notice of the same. Therefore, reasonable communication forms the core basis of acquiring any contract. For example, where a letter of offer is mailed to the offeree and for postal related reasons, the same never reaches the offeree then an offer does not bind the offeree.

Communication of acceptance when complete

The communication of acceptance works otherwise in the case of the offeror and the offeree.

Communication of acceptance as against the offeror

According to this, when an offeree puts his letter of acceptance in the course of transmission to the offeror, then his communication of acceptance is complete. An offeree cannot withdraw its acceptance and the acceptor is liable for its offer to perform.

For example, it means that, if the letter of acceptance were posted by an offeree on a Monday but posted, posting the letter of acceptance is deemed complete. Subsequent to this has been made the offeror shall not refuse to accept on grounds the acceptance was not delivered.

In Dunlop vs. Higgins (1848), Higgins accepted the offer by post but the letter of acceptance was received after the time prescribed in the offer in effect because of postal delay.

Dunlop argued that there was no contract as it was an acceptance that had been done in time but late. The case was held on postal rule principles where the court declared that the acceptance is effected at the moment when it is posted and not at the moment when it is received.

It is the offeror who takes the risk of postal delay and the contract is formed at the time when acceptance is posted. 

The case  Byrne & Co. vs. Van Tienhoven & Co. (1880) discusses the revocation by post. In this case, the defendants were Van Tienhoven & Co. The defendants wrote to the plaintiffs in Byrne & Co. and said they would quote the plaintiffs’ goods. A week later, they sent a letter of withdrawal to the plaintiffs; however, the offer had already been accepted by the plaintiffs. It would mean that for revocation to be effective, it has to reach the offeree. Since revocation was not received before acceptance, legal relations were formed based on the terms of the offer. 

Similarly, in Henthorn vs. Fraser (1892), it considered postal rule regarding acceptance of offer. The Defendant, Fraser proposed the sale of property and Plaintiff Henthorn accepted the offer by the post. Still, before plaintiff’s letter of acceptance reaches the defendant, Fraser retracts his offer of selling the said property. On such a question, the Court ruled that the acceptance took place on the date when it was posted. 

In that case, the offer could never have been withdrawn since the letter of withdrawal would have reached him after posting his letter of acceptance. This means that, so far as the postal rule goes, what is accepted is held to have been done when it has been posted. The above cases explain how the postal rule applies to acceptance or revocation of the offers.

It is understood that acceptance of an offer through communication becomes effective once posted. In that case, an obligation to perform the contract is placed on the offeror. 

Acceptance of communication as against the offeree 

It would be enough to the offeree if there was knowledge on the part of the offeror concerning the acceptance in communication. The offeree thus stands not under the obligation of acceptance before knowledge concerning the acceptance has arrived at the offeror. 

Thus, for example, A proposed a trip into space to B for $20,000. B writes a letter of acceptance on Tuesday. Then, the acceptance letter must reach B so that in any case of the date his letter was posted, then only the acceptance can be confirmed. On Wednesday, in case B learns that offer has been accepted and extended up to Thursday, it would mean only that contract became legal on Wednesday when A got acquainted with the fact of its acceptance.

In the case of Tenax Steamship Co. Ltd. vs. Owners of the Motor Vessel Brimnes (1975), on business days the defendants had sent a withdrawal notice of a vessel by telex, however, the plaintiffs did not notice that until the following day. The court also agreed that the revocation was effective from the time of dispatch and not from the point of reception. 

Where notice is given by telex or email then this has to be treated as sufficiently served when it was received by the recipient though the recipient has not read the message.

The requirements concerning the completion of communication of offers and acceptances and those special circumstances where failure to respond to an offer would amount to acceptance are fundamental to anything in the law of contract.

These principles make the contracts leave no doubt in the minds of the parties as to their rights and their duties. Extending norms of communication already reduces crises and enables parties to exercise contract terms properly.

Communication in employment offers 

In employment law, a contract is formed through offer and acceptance. Communication plays an important part in that. In case there is an offer and acceptance for the employment contract, there ought to be a valid offer presented by an authority. The offer presented by any unauthorized person isn’t considered lawfully valid. 

Proper communication about the offer has to be conducted by an offeror to an offeree. In return, the offeree should also appropriately accept the employment offer from the offeror.

This principle is very well established in the case of Powell vs. Lee (1908). This principle suggests that a proposal and its acceptance can only be treated as enforceable if it was made through an authorized agent. Powell had gone for an interview for the headmaster. He personally received news from one of the members of the committee that he got selected for the headmaster’s position, but the whole committee ultimately opted for another man.

The court held there was no meeting of the minds to form a contract since the communication was informal and unauthorised therefore the contract was void.

The conditions pertaining to proper adequate methods of communication before entering an agreement, the employment agreement as well come before such an entry are brought forth. A communication may be formal or informal but may not be taken as a real offer if that is not a business offer letter itself. 

This is indeed one of the better examples, whereby it explains what is important that proper communication by an authority through proper and authorized channels can serve as an aid in job offer processes.

Important provisions of the Indian Contract Act, 1872

S.No.	Provisions	Section	Details
	Definition of offer	Section 2(a)	Defines what is a valid offer
	Definition of promisor and promisee	Section 2(c)	Defines the terms promisor and promisee
	Consideration of an offer	Section 2(d)	Consideration is a valuable asset or something that the parties of the contract offer to receive an equally valuable asset in return.
	Communication of an offer, acceptance and revocation	Section 3	It provides the manner in which proposals, acceptances and revocations of contracts are communicated.
	Communication of offer and acceptance  when complete	Section 4	It identifies the exact points in time at which communication is deemed to have occurred for the purpose of offer, acceptance, or revocation.
	Revocation of an offer and acceptance	Section 5	It provides for the revocation of proposals and acceptance.
	Modes of revocation of an offer	Section 6	It provides for the modes of revocation of an offer
	What should constitute legal acceptance	Sections 7	It says, an acceptance must be absolute, unqualified and must not be an acceptance of the offer with an addition of more terms.
	Prescribed manner of acceptance	Section 7(2)	It states that If the offeror has communicated that the acceptance must be done in a particular manner then only, the acceptance is valid if it is as prescribed by the offeror.
	Acceptance by performing conditions, or receiving consideration	Section 8	It states that it is not necessary that with acceptance an express communication has to be made; it can be implied by the conduct of the offeree.
	Express and implied offer	Section 9	It says offers can be of two types: express or implied

Conclusion

In conclusion, it may be asserted that offer and acceptance are regarded as the foundations of the formation of legally binding contracts according to the Act. A legally acceptable offer with an equally clear and unequivocal acceptance forms the elementary basis of a contract. Such elements help to clarify rights and limitations allowing the absence of misunderstanding between the parties and the possible conflict.

Legal awareness of the provisions of offer and acceptance helps people to get into contracts with less danger by knowing that the law backs them up. Finally, this clarity enhances the good legal order of contracts and thereby improves the fairness and effectiveness of business transactions.

Thus, offer, acceptance, and revocation must also be clearly understood either in a business deal or simple exchange of goods and services. These principles are not bound by a changing commercial environment because these have been in existence forever; the role of clarity in communicating and agreeing on any contract relationship is certainly crucial.

Frequently Asked Questions (FAQs)

A proposes to B to sell him his bike at Rupees 50,000. B agrees but this is on the condition that A brings the bike in the first place. Is this a valid acceptance?

No, this is not a valid acceptance. An acceptance must have to be unconditional and absolute. As the condition is set by B that A has to deliver bikes first, does not mean that the offer has been accepted. While this may seem like acceptance of the offer it is, in fact, a counter offer which means rejection of the original offer. This means that a contract will only form if, in answer to B’s new terms, A agrees.

Is it possible to withdraw an offer after the latter has been accepted though before the acceptance is relayed back to the offeror?

An offer cannot be withdrawn once the acceptance has been effected and communicated to the offeror. In respect of the Indian Contract Act, 1872, it is supplemented that the acceptance of an offer brings about the conclusion of a contract as soon as it is communicated by the offer. But where the acceptance has not been communicated, the offeror can still revoke the offer. 

However, if the acceptance has already been communicated to the offeree the offer becomes irrevocable.

What if the offer is accepted but the circumstances of the acceptance are stated somewhat differently than what was offered?

If the proposed change has occurred with the acceptance of the terms, it is not considered an acceptance but a counter-offer. As per the Indian Contract Act, 1872, acceptance should not be qualified and must be unconditional. Difference in any terms of an offer is treated as rejection of the original offer and presentation of a new and different offer which the original offeror can accept or reject. 

Is an offer still valid for acceptance even when the offeror has died before the offer’s acceptance?  

Yes, an offer can remain valid even after the death of the offeror but not if the offeree becomes aware of the fact that the offeror has died. There are situations where the offeree may not know that the offeror has died and accept the offer in such circumstances it shall lead to the formation of a contract. However, if the offeree is aware of the fact that the offeror has died, then the offer is considered to have been revoked and cannot be accepted. 

Can an offer be accepted by a third party on behalf of the offeree?

Acceptance by a third party for an offer is only valid if the third party has been given authorization by the offeree to do so. According to the provisions of the Indian Contract Act, 1872, the person to whom the offer is made has to accept the offer or where such acceptance cannot be made by him, he has to authorise a third party to accept the offer on his behalf. 

If it is done by a third party without the consent of the offeree, then such acceptance is unlawful and no contract materialises. 

When an offeree sends an acceptance and subsequently sends a rejection, is the acceptance or the rejection valid?

If the acceptance reaches the offeror before the rejection,  the acceptance is deemed valid and there is formation of a contract. If the rejection is conveyed to the offeror before the acceptance reaches the offeror, then the offer is deemed rejected and the subsequent acceptance amounts to nothing. 

There is only one important rule in this regard, and that is whoever communicates an acceptance or rejection to the other first,  gets to determine the communication.

What if the offeree in the course of sending an acceptance, makes the mistake of sending the acceptance to the wrong person?

In the event that the offeree erroneously conveys the acceptance to the offeror then the acceptance was never proper. If the acceptance is to lead to a contract, it has to be communicated effectively and get to the offeror. The acceptance to the wrong party does not form a valid communication; hence no contractual relations are reached until the offeror receives the communication. 

References

• https://www.jetir.org/papers/JETIREO06191.pdf 
• https://books.google.co.in/books?hl=en&lr=&id=F-QEEQAAQBAJ&oi=fnd&pg=PR9&dq=offer+under+contract+law&ots=VQJlOBOgml&sig=pR2HHy3V0u6DkgfnhQG-673DQDQ&redir_esc=y#v=onepage&q=offer%20 under%20 contract%20 law &f=false 
• https://www.taxmann.com/post/blog/faqs-offer-and-acceptance-under-indian-contract-act-1872 
• https://www.taxmann.com/post/blog/faqs-offer-and-acceptance-under-indian-contract-act-1872 
• Serato DJ PRO Crack
• Serato DJ 2025 Crack