Offer over the telephone | A, a resident of Calcutta made a telephone call from there to B at Delhi and made him an offer for the sale of specified goods. B accepted the offer over the telephone but by then the trunk telephone went dead and A could not hear B. Is the contract complete?

Question: Offer over the telephone | A, a resident of Calcutta made a telephone call from there to B at Delhi and made him an offer for the sale of specified goods. B accepted the offer over the telephone but by then the trunk telephone went dead and A could not hear B. Is the contract complete? Give your reasons. [RJS 1974]

Find the answer to the mains question only on Legal Bites. [Offer over the telephone | A, a resident of Calcutta made a telephone call from there to B at Delhi and made him an offer for the sale of specified goods. B accepted the offer over the telephone but by then the trunk telephone went dead and A could not hear B. Is the contract complete?]

Answer

Section 2(b) defines acceptance as follows:

“When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.

Thus “acceptance” is the assent given to a proposal, and it has the effect of converting the proposal into a promise.

In order to convert a proposal into a promise, the acceptance must—

• Be absolute and unqualified,
• Be expressed in some usual and reasonable manner

“Where, however, the parties are in each other’s presence or, though separated in space”, they are in direct communication, as, for example, by telephone, no contract will arise until the offeror receives the notification of acceptance. This appears from the speeches delivered in Entores Ltd v. Miles Far East Corporation [(1955) 2 QB 327] by Lord Denning J. as follows:

“Let me first consider a case where two people make a contract by word of mouth in the presence of one another. Suppose, for instance, that I shout an offer to a man across a river or a courtyard but I do not hear, his reply because it is drowned by an aircraft flying overhead. There is no contract at that moment. If he wishes to make a contract, he must wait till the aircraft is gone and then shout back his acceptance so that I can hear what he says. …Now take a case where two people make a contract by telephone. Suppose for instance, that I make an offer to a man by telephone and, in, the middle of his reply, the line goes ‘dead’ so that I do not hear his words of acceptance. There is no contract at that moment.”

The facts of the case were that an offer was made from London by telex to a party in Holland and it was duly accepted through the telex, the only question being as to; whether the contract was made in Holland or in England. The Court of Appeal held that telex is a method of instantaneous, communication and the rule about instantaneous communications between the parties, is different from the rule about the post. The contract is only complete when the acceptance is received by the offerer, and the contract is made at the place where the acceptance is received.

Thus, applying the above provisions and logic to the present case at hand, where A, a resident of Calcutta made a telephone call from there to B at Delhi and made him an offer for the sale of specified goods. B accepted the offer over the telephone but by then the trunk telephone went dead and A could not hear B. The contract is not said to be completed because acceptance to offer is not communicated between the parties.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X