Explain the rules as to the communication of proposal, acceptance, and revocation. When is communication complete? Explain in detail

Question: Explain the rules as to the communication of proposal, acceptance, and revocation. When is communication complete? Explain in detail. [MPJS 2017]

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Answer

The provisions relating to communication of proposal, acceptance, and revocation are to be found in Sections 4 and 5 of the Indian Contract Act, 1872.

Communication of Proposal

Section 4 of the ICA provides that the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The section states that a proposal or acceptance may be made by an act or omission, by which the person intends to communicate, or which has the effect of communicating it.

In the case of Williams v. Carwardine, (1833) 2 LJKB 101 where such an offer is accepted with knowledge of the reward, the fact that an informer was influenced by some other motives other than the reward will be immaterial. It will still amount to the communication of proposal. However, an act in ignorance of an offer does not amount to acceptance of that proposal.

So when in case of a specific offer, the offeree or in case of a general offer, any particular public member the proposal comes in to their knowledge, the communication of the offer is said to be complete. In a case where A and B are talking on the telephone, the communication against B is complete as soon as A made the proposal to him.

Now for instance, in a case where A writes to B a letter offering to repair his watch for Rs. 1,000 and posts the letter on 1st July. The letter reaches B on 3rd July. So the communication of proposal is said to complete on 4th July.

Communication of Acceptance

It is necessary to make a binding contract, not only that the proposal be accepted, but also that the acceptance be notified. An acceptance is not complete unless and until it is communicated to the proposer in some perceptible form which may be by speech, writing or other acts or omissions. The reason is that the proposer is entitled to know whether a contract has been concluded by the acceptance, and it would be unfair to hold him bound by an acceptance of which he has no knowledge.

There are two essential factors that determine communication of acceptance:

1) The mode of acceptance and

2) Then the time of acceptance. Acceptance can be by an act which includes communication by words, oral or written through telephone, posts, fax, e-mails, etc., or by conduct like boarding a cab, etc.

When is Acceptance complete?

A proposal can be accepted by the offeree any time before the communication of revocation is complete against him. Once the proposal is accepted by the offeree the communication of acceptance is said to complete:

1. As against the Offeror: For the offeror, the communication of the acceptance is complete when he puts such acceptance in the course of transmission. After putting the acceptance in course of transmission, this becomes out of offeree’s hand to revoke such acceptance, so his communication of acceptance will be completed as soon as it becomes out of his hand to revoke it. So, for example, X accepts the offer of Y via a letter post. He posts the letter on 1st January and the letter reaches Y on 4th January. For Y (the proposer) the communication of the acceptance is completed on 1st January itself.
2. As against the Acceptor: The communication is complete against the acceptor when the offeror acquires knowledge of such acceptance. So, in aforesaid example, against the acceptor Y communication is complete when the letter reaches to X on 4th January.

Communication of revocation

Acceptance is generally revocable. An acceptor may cancel his acceptance by a speedier mode of communication which will reach earlier than the acceptance itself. Section 5 is the relevant provision which states that an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. Thus the communication of revocation should reach earlier than the acceptance itself.

As per Section 4 of the act, the communication of revocation is complete:

1. As against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it;
2. As against the person to whom it is made, when it comes to his knowledge.

For example: “A proposes, by letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post. B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards.”

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