How can an offer be made, revoked or accepted? What rules.....an offer is made through post or over the telephone? Discuss.

Question: How can an offer be made, revoked or accepted? What rules apply when an offer is made through post or over the telephone? Discuss. [UPJS 2015]

Find the answer to the mains question of the Law of Contract only on Legal Bites. [How can an offer be made, revoked or accepted? What rules apply when an offer is made through post or over the telephone? Discuss.]

Answer

An offer is a proposal made by one party to another with the intention to create a legal obligation upon acceptance. The process of making, revoking, and accepting an offer is governed by contract law, specifically by the Indian Contract Act, 1872. The rules regarding how an offer can be made, revoked, or accepted are essential to forming a valid contract.

Making an Offer [Section 2(a)]

An offer (or proposal) is the expression of willingness by one party to do or abstain from doing something, with the intention to obtain the assent of the other party.

Written or Oral: An offer can be made either orally or in writing. It must be communicated clearly and precisely, and it must express a willingness to enter into a contract upon acceptance by the offeree.

Acceptance of an Offer [Section 2(b)]

Acceptance is the expression of assent to the terms of the offer in the manner prescribed or customary. It must be communicated to the offeror.

Manner of Acceptance: Acceptance must be communicated. If no mode of communication is prescribed, any reasonable manner (including oral, written, or implied actions) is valid.

Communicated Effectively: The acceptance is valid only when the offeree communicates it to the offeror, and not before. Silence does not constitute acceptance.

Example: A offers to sell goods to B for a specified price. If B agrees and communicates the acceptance to A, the offer is accepted.

Revocation of an Offer (Section 5)

An offeror has the right to revoke the offer at any time before acceptance. However, revocation must also be communicated to the offeree.

Before Acceptance: An offer can be revoked at any time before the offeree has communicated acceptance. Once acceptance is communicated, the contract becomes binding, and the offeror cannot revoke it.

Revocation in Writing: If the offer is made in writing, the revocation must also be communicated in writing.

Example: A offers to sell a car to B, and before B accepts, A decides to revoke the offer by sending a letter. The offer is effectively revoked once B receives the letter.

Rules when an Offer is Made by Post (Section 4)

When an offer is made through post, specific rules apply under Section 4 of the Indian Contract Act.

Communication of Offer: An offer made by post is considered to be communicated when the letter containing the offer reaches the offeree.

Acceptance by Post: In case of acceptance by post, the contract is formed when the letter of acceptance is posted, and not when it is received by the offeror. This is called the "Postal Rule."

Revocation by Post: A revocation of an offer is not effective until the offeree receives it. If the revocation reaches the offeree after the offer has been accepted (e.g., the offeree posts the acceptance before receiving the revocation), the contract is formed.

Example: A sends an offer to B by post. B sends an acceptance letter, and the acceptance is effective when B posts the letter, even before A receives it.

Rules when an Offer is Made Over the Telephone

An offer made over the telephone is a form of communication where the offeror and offeree are engaged in real-time conversation. The rules are as follows:

Immediate Communication: An offer made over the phone is deemed to be communicated at the time it is made, and acceptance must be communicated immediately. There is no "Postal Rule" in the case of telephone communication.

Acceptance: The offeror and offeree must be in mutual agreement, and acceptance must be conveyed clearly during the telephone conversation.

Revocation: A revocation made during a telephone conversation is effective as soon as the offeree is informed about the revocation.

The rules governing offers, acceptances, and revocations ensure clarity and certainty in contractual relations.