Sec 3-9.pptx
- 1. THE INDIAN CONTRACT ACT, 1872 COMMUNICATION, ACCEPTANCE AND REVOCATION OF THE PROPOSALS SECTION 3-9 PRESENTED BY- MS. GARIMA YADAV ASST. PROFESSOR ICFAI UNIVERSITY
- 2. SECTION 3 Communication, acceptance and revocation of proposals. The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.
- 3. 1. • COMMUNICATION 2. • ACCEPTANCE 3. • REVOCATION (a. proposals b. acceptances) ACT/ OMMISSION INTENTION TO COMMUNICATE EFFECT OF COMMUNICATION
- 4. CASELAW- Carlill v. Carbolic Smoke Ball Company (1892) A company advertised that it would pay 100 pounds to anyone who contacts influenza after using the smoke balls of the company for a certain period according to the printed directions. Mrs. Carlill used the smoke balls according to the directions of the company but subsequently she contacted influenza. She filed a suit for the reward. It was held that she would recover the reward as she had accepted the offer by complying with the terms of the offer.
- 5. SECTION 4 Communication when complete. The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete,— as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. The communication of a revocation is complete,— 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; as against the person to whom it is made, when it comes to his knowledge.
- 6. ILLUSTRATION- (a) A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter. (b) B accepts A’s proposal by a letter sent by post. The communication of the acceptance is complete, as against A, when the letter is posted; as against B, when the letter is received by A. (c) A revokes his proposal by telegram. The revocation is complete as against A when the telegram is despatched. It is complete as against B when B receives it. B revokes his acceptance by telegram. B’s revocation is complete as against B when the telegram is despatched, and as against A when it reaches him.
- 7. EXAMPLE- A of Delhi sends a letter by post to B of Bombay offering to sell his house for Rs. 10 lakh. The letter is posted on Feb 5, and this letter reaches B on Feb 7. The communication of the offer is complete on Feb 7. In the above example, if the letter containing the offer never reaches B, but B comes to know about the proposal from some other source and sends his acceptance, it will not amount to proper communication of the offer and so no contract will arise. EXAMPLE CONTINUED- In the above example, if B of Bombay sends his acceptance by post on Feb 10 the communication of acceptance is complete against A on Feb 10 i.e., when the letter of acceptance is posted, but the communication of acceptance shall be complete as against B only when this letter reaches A. Suppose A receives the letter of acceptance on Feb 12, at 11 a.m. then B will be bound by his acceptance on Feb 12 only.
- 8. The offerer becomes bound by the acceptance as soon as the letter of acceptance is duly posted by the acceptor, but the acceptor is bound by his acceptance only when the letter of acceptance reaches the offerer. EXAMPLE 2- A made an offer to B over telephone. While B was conveying his acceptance, the line suddenly went dead and A could not hear anything. Thus, no contract was concluded. Then, B makes another attempt and this time he could convey his acceptance. The contract is said to be concluded on the second attempt.
- 9. CASELAWS- POWELL v. LEE (1908) In this case P applied for the post of a headmaster in a school. The managing committee passed a resolution appointing P to the post but this decision was not communicated to P. However, a member of the managing committee, in his individual capacity and without any authority, informed P about the decision. Subsequently, the managing committee cancelled its resolution and appointed someone else. P filed a suit for breach of contract. It was held that he was not informed about his appointment by some authorized person, hence there was no communication of acceptance.
- 10. CASELAWS- BROGDEN V. METROPOLITAN RAILWAY CO. (1877) An offer to supply coal to the railway Co. was made. The manager wrote on the letter 'accepted', put it in his drawer and forgot all about it. It was held that no contract was made because acceptance was not communicated. LALMAN SHUKLA V. GAURI DUTT (1913) G sent his servant E to trace his lost nephew. When the servant had left, G announced a reward of Rs. 501 to anyone who traces the boy. L found the boy and brought him home. When E came to know of the reward, he decided to claim it. It was held that L was not entitled to the reward because he did not know about the offer when he found the missing boy. It is also necessary that the offer is communicated by the offerer himself or by his authorised agent. If a person comes to know about the offer from some other source, he cannot make it a binding contract by accepting it.
- 11. FITCH V. SNEDKAR (1868) S offered a reward to any one who returns his lost dog. F brought the dog without any knowledge of the offer of reward. It was held that F was not entitled to the reward because F cannot be said to have accepted the offer which he was not aware of.
- 12. DIFFERENCE BETWEEN COMMUNICATION OF OFFER AND ACCEPTANCE. Communication of offer is complete when it comes to the knowledge of acceptor only. It is not sufficient if it is simply posted. It must be received by the offeree and then only offer is complete. On the other hand, the Contract Act differentiates between communication of acceptance as against the offeror and acceptor. The communication of acceptance is complete as against the offeror the moment the letter of acceptance is properly stamped, addressed and posted. It does not matter whether it reaches the offeror or not. As against the acceptor it will be complete only when the letter reaches the offeror.
- 13. SECTION 5- Revocation of proposals and acceptances A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
- 14. ILLUSTRATION- A proposes, by a letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post. A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards. B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards.
- 15. For example- Ram offers by a letter dated February 2, sent by post, to sell his house to Shyam at a certain price. Shyam accepts the offer on February 6 by a letter sent by post. The letter reaches Ram on February 8 at 2 p.m. Here, Shyam may revoke his acceptance at any time before 2 p.m. on February 8, but not afterwards.
- 16. SECTION 6- REVOCATION HOW MADE A proposal is revoked— (1) by the communication of notice of revocation by the proposer to the other party; (2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance; (3) by the failure of the acceptor to fulfil a condition precedent to acceptance; or (4) by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.
- 17. CASELAW- LAPSE OF TIME- RAMSGATE VICTORIA HOTEL & Co. v. MONTEFIORE (1866) M applied for shares on 28th June. But shares were allotted on 23rd November. M, therefore, refused to take shares. The court held that M was entitled to refuse as the offer had lapsed by delay in acceptance. DEATH OR INSANITY OF THE OFFEROR- REYNOLDS v. ANTHERTON (1922) It was laid down that “an offer ceases by operation of law on the death of the offeree because after the death there is no longer an offer at all.”
- 18. By death or insanity of the offerer or the offeree before acceptance: An offer lapses by the death or insanity of an offerer if the fact of his death or insanity comes to the knowledge of the acceptor before he makes his acceptance. But if the offer is accepted in ignorance of the death or insanity of the offerer, there will be a valid valid contract. This means that the death or insanity of the offerer does not terminate the offer automatically. The offer lapses only when this fact comes to the knowledge of the offeree before acceptance. Our law is different in this respect from English law where the death of the offerer terminates the offer even if acceptance is made in ignorance of the death.
- 19. MODES OF COMMUNICATION Non-instantaneous mode (Section 4 & 5 are applicable) 1. Communication through post 2. Communication through Telegram Instantaneous mode (Same effect as of face to face. The offeree must make sure that the acceptance is heard, understood and received by the offeror. Otherwise there is no binding contract.) 1. Telephone/ telex/ fax 2. E-mail 3. Computer internet
- 20. CASELAWS- DUNLOP v. HIGGINS (1848) HOUSEHOLD FIRE INSURANCE Co. v. GRANT (1879) HENTHORN v. FRASER (1892) BHAGWANDAS GOVERDHANDAS KEDIA V. GIRDHARILAL PARSHOTTAMDAS (1966) HELD- “Ordinarily, it is the acceptance of offer and intimidation of that acceptance which results in a contract. This intimation must be by some external manifestation which the law regards as sufficient. Hence, even in the absence of any specific legislation validating e- contracts cannot be challenged because they are as much valid as a traditional contract is.”
- 21. SECTION 7- ACCEPTANCE MUST BE ABSOLUTE In order to convert a proposal into a promise the acceptance must— (1) be absolute and unqualified; (2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance.
- 22. ESSENTIALS OR REQUISITES OF VALID ACCEPTANCE Acceptance must be- 1. Absolute and unconditional 2. In the mode prescribed 3. Communicated 4. Given within reasonable time 5. Given only by offeree {BOULTON v. JONES (1857)} 6. Made while the offer is still subsisting 7. There should be no revocation of acceptance. 8. Acceptance by performing conditions, or receiving consideration {section 8}
- 23. CASELAWS- HYDE v. WRENCH (1840) H offered to sell his property to W for 1000 pounds. W in reply made an offer of 950 pounds. He refused this offer. Subsequently W wrote that he was prepared to pay 1000 pounds. It was held that no contract had been made between the parties because W had rejected the original proposal. A counter-offer is thus no acceptance of original offer. NEALE v. MERRET (1930) M offered his land to N for 280 pounds. N accepted the offer. He sent a cheque for 80 pounds along with letter of acceptance to M. He further promised to pay the balance by monthly installments of 50 pounds. It was held that the acceptance was qualified or conditional and hence not binding.
- 24. SECTION 9- PROMISES, EXPRESS AND IMPLIED In so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.