The first step for any proposal to become a contract is that when one person signifies his willingness to do or abstain to do an act against another person, then he is said to make a proposal. Then, comes the assent to such a proposal by the other person i.e., acceptance. Acceptance refers to the acceptance of a proposal made by one person towards the other person and when the proposal is accepted it becomes a promise. The person who makes the proposal is the promisor and the person accepting the proposal is the promise. When at the mutual desire one party does an act or abstains to do an act is said by giving consideration for the promise. After the consideration is made the parties are said to be in an agreement. And thus, an agreement enforceable by law is a contract. Thus, this whole process is clearly mentioned in the Indian Contract Act, 1872 under section 2 from Clause (a) to (j).
In order to give rise to a valid contract, the contract must be an agreement which is enforceable by law and for a valid agreement, the acceptance given by the promise must fulfill the following conditions under Section 2(b):
Acceptance must be communicated to promisor
Acceptance must be absolute and unconditional
Acceptance must be communicated before the lapse of offer
Acceptance must be made by the acceptor alone
As per Section 5 of the Indian Contract Act, an acceptance can be revoked any time before the communication of acceptance reaches the offeror but not afterwards. Thus, an acceptor can revoke the acceptance any time before the communication of acceptance of the offer reaches to the offeror. In Municipal Corporation v. Pasupathi Muthuraj (1969) 1 MLJ 394, it was held that there was no acceptance to offer by the plaintiffs before the revocation of the proposal and hence, there was no contract which could have possibly breached by the defendants.
REVOCATION OF ACCEPTANCE
Under English law, acceptance is irrevocable as when there is consensus ad idem then there is no question of revoking after sometime or changing of mind. English law does not give the acceptor the option of revocation of his acceptance.
But Indian Law is contrary to the English Law and lets the acceptor revoke his acceptance any time before the communication of acceptance reaches the offeror. Thus, when the acceptor changes his mind after the communication of acceptance to the offeror, the acceptor is at his choice to revoke his acceptance. But it is necessary that the knowledge of revocation of acceptance is posted before the offeror gets to know about the acceptance from the acceptor. For instance, if the acceptor communicates his acceptance through post but changes his mind and the acceptor decides to revoke his acceptance and he communicates his revocation through telephonic conversation. Thus, his revocation of acceptance is communicated before the communication if acceptance and hence, it is a valid revocation.
Thus, let it be the communication of acceptance of the offer or the revocation of such acceptance is complete only when the other person who is bound to get to know such communication has the knowledge of the same.
MODES OF REVOCATION OF ACCEPTANCE
The modes of revocation of acceptance are as same as that of revocation of offer. According to Section 6 of the Indian Contract Act, 1872. The Section 6 deals with the Revocation of proposal.
6. Revocation how made. – A proposal is revoked: -
1) by the communication of notice of revocation by the proposer to the party;
2) by the lapse of the time prescribed in such 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 fulfill 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.
Hence, the acceptance can be revoked in the following ways:
By notice of revocation: Revocation of acceptance can be informed to the offeror through notice. But the notice of revocation of acceptance must be made before acceptance of the offer reaches the offeror.
By lapse of the time prescribed: The offeror during the proposal must have set a time limit of the acceptance of the offer and if not so then the acceptor must send his reply for such proposal within reasonable time. And if the acceptor fails to do so then the acceptance is by default revoked and the offeror is free to make any other proposal to any other person. In Barrick v. Clark where the case was that Party B proposed to get the land from Party A. Party A sent a counteroffer by asking Party B reply as soon as possible. Party B took time to reply and which was out of reasonable time. So, Party A sold their land to Party C. The Court held that A is not legally bound to wait for Party B to reply as there was a lapse of time which led to the revocation of offer. In Hindustan Aluminum Corporation v. U.P. State Electricity Board, AIR 1973 All. 263 where the court held that an offer is revoked due to lapse of time there it is at the option of the offeror to keep it alive even after the lapse.
By non-fulfillment of conditions prescribed by the proposer: If the offeror during the proposal itself states any condition which will mark the acceptance of the offer by the acceptor, then it must be fulfilled by the acceptor. If the acceptor doesn’t fulfill such a condition, then that marks the revocation of the acceptance. For instance, Party A proposing Party B to sell his land asks Part B to give his assent through written with his signature. But Party B instead of following such conditions directly calls Party A and gives his assent. Here, in this case, Party B has not followed the condition and thus, the acceptance lapses by the non-fulfillment of conditions thereby prescribed.
Death or Insanity of the proposer: According to the English Law, the death of the offeror marks the end of the acceptance even though the acceptor is not aware of the death of the offeror. In Dickinson v. Dodds 1876 (2) Ch.D. 463 at 475 where Mellish, L.J., held that if the man who makes an offer dies, then it cannot be accepted after such man’s death. But according to Indian Law, which is contrary to the English Law states that the acceptance lapses only when the acceptor gets to know about the death of the offeror. If the acceptor is unaware of the fact about the offeror’s death and sends his acceptance to the offeror then such acceptance is valid. But if the acceptor is aware about the death of the offeror and sends his acceptance then such acceptance is revoked and such acceptance is no acceptance.
If the offeror after making the offer becomes insane. According to English Law, in such conditions the acceptance to such an offer will give rise to voidable contract only i.e., the contract can be declared void by the court at the option of the parties to such contract. But Indian Law differs in these terms and declares such a contract as void contract i.e., no contract at all.
To put it in a nutshell, according to Section 2(h), of the Indian Contract Act, 1872 defines a contract as an agreement which is enforceable by law or only those agreements which are being made enforceable in court of law are alone which means that all contracts are agreements but not all agreements are contracts. The reason is that contracts are enforceable by law but agreements can be voidable and thus, cannot be enforced by law. A contract is initially a proposal made by one party to another party, say Party X and Party Y respectively. When Party Y assents to the proposal made, then the proposal is accepted. Then both the parties will have an act to do or an abstain to do something which is known as consideration for the promise. After the performance of consideration, the parties are said to have formed an agreement. And once such an agreement is enforceable by law then that constitutes a contract. And an offer or an acceptance can be revoked with several modes under Section 6 of the Indian Contract Act, 1872. And also, the law of contracts in respect to revocation of offer or acceptance is different under English Law and Indian Law.
This article is written by Anjanah G J of Sastra Deemed to be University.