2.5 Communication of Offer and Acceptance
A contract comes into existence only after the offer has been accepted by the offeree that is when the acceptance of the offer has been communicated by the offeree to the offeror. Communication of offer and acceptance is instantly done when the offeror and the offree are face-to-face. The problem of communication arises when the parties are separated due to distance. If the parties are at a distance and the offeror makes the offer through a telephone the contract is concluded as soon as the offeror hears the acceptance from the offeree.
2.5.1 Communication of Offer
According to Section 4 “communication of offer or proposal is complete when it comes to the knowledge of the offeree, that is the person to whom the offer is made. In case the communication is made by post the communication of offer is complete when the letter containing the offer reaches the offeree”.
Illustration
Neha in Gwalior offers by a letter on 18th June 2008 to sell her house to Aparna in Delhi for rupees ten lakh. The letter reaches aparna on 21st June 2008. The communication of offer is complete on 21st June.
2.5.2 Communication of Acceptance
Communication of acceptance is complete against the offeror and the offeree in two stages, which are as follows:
Communication of acceptance is complete against the offeror (proposer) when the letter of acceptance is put in course of transmission by the offeree (acceptor) to the offeror so as to be out of the power of the offeree (acceptor) to withdraw it.
Illustration
Aparna has readily agreed to accept the offer to buy the house after receiving the letter of offer from Neha, so she writes a letter of acceptance to Neha and posts the letter on June 23, 2008. On 23 June, the acceptance notification against the offeror (Neha) is complete.
Communication of acceptance is complete against the offeree (acceptor) when the letter of acceptance comes to the knowledge of the offeror.
Illustration
The letter of acceptance posted by Aparna on 23rd June 2008 reaches Neha on 26th June 2008. The communication of acceptance against the offeree (Aparna) is complete on 26th June 2008.
2.6 Communication of Revocation / Withdrawal
Communication of revocation is complete against the person who makes it and the person to whom it is made in two different ways, which are as follows:
The person making the revocation: The communication of revocation is complete against the person making the revocation (withdrawal) when he / she sends the letter of revocation.
Illustration
After posting a letter of offer, Neha feels she no longer wants to sell her house to Aparna and decides to withdraw her offer. She wrote a letter of revocation of the offer on 19 June 2008 and sent it to Neha. The notice of revocation of the offer is complete against Neha on 19 June.
The person to whom the revocation is made: The communication of revocation is complete against the person to whom the revocation is made when the letter of revocation comes to his/her knowledge.
Illustration
The letter of revocation sent by Neha reaches Aparna on 20th June 2008. The communication of revocation of offer is complete against Aparna on 20th June.
2.6.1 Time for Revocation / Withdrawal of offer
According to Section 5, “a proposal / offer can be revoked by the offeror any time before the communication of acceptance is complete against him / her but not afterwards”. Thus the offer can be withdrawn anytime before the acceptor sends the acceptance.
In the example given above the communication of acceptance against the offeror (Neha) is complete on 23rd June 2008. Therefore if Neha decides to revoke her offer she can do so before 23rd June and not afterwards.
Similarly, the acceptance may be revoked at any time by the offeree before the acceptance communication is complete against him / her and not afterwards. This means that acceptance may be revoked at any time before the acceptance comes to the knowledge of the offeror. The letter of revocation should therefore be sent to the offeror before the letter of acceptance.
In the example the communication of acceptance is complete against the offeree (Aparna) on 26th June 2008. Therefore, if Aparna wants to withdraw / revoke her acceptance she can do it before 26th June and not afterwards. Her letter of revocation should reach Neha before the letter of acceptance.
2.6.2 Communication of Offer, Acceptance and Revocation on Telephone
The contract made by telephone is different from the contract made by post. Contract by telephone has the same effect as an oral agreement. In this case, a binding contract arises when the offeror has heard the acceptance. If the offeror has not heard the acceptance made by the offeree, there will be no binding contract. In such cases, the question of revocation does not arise because a specific offer has been made and accepted at the same time.
Illustration
Ramu called up Shyamu his brother on his mobile and asked him to accompany him on a tour to Gujarat. Shyamu agreed to accompany Ramu. Thus the contract was made instantaneously. Ramu called up Shyamu his brother on his mobile and asked him to accompany him on a tour to Gujarat. Before Shyamu could give his reply the phone was disconnected. Hence there was no contract made.
2.7 Termination / Lapse of an Offer
An offer or proposal can either be accepted, rejected or revoked or it might just lapse. The offer when accepted becomes a valid agreement. If the offeree does not like the offer he or she may choose to reject the offer. The offeror also has an option to revoke or withdraw the offer.
Section 6 of the Indian Contract Act deals with various circumstances in which an offer lapses, which are as follows:
- Rejection of Offer: The offeree may choose to reject an offer if he or she does not like the offer. Once the offer is rejected it comes to an end. The offer once rejected cannot be revived by the offeree. It is only upto the offeror to decide if he or she wishes to renew the offer.
Illustration
Aradhna is making an offer to Sadhna. She says, "Are you going to buy twenty thousand rupees from my computer?"Sadhna refuses to buy the computer from Aradhna. The offer is rejected.
- Counter-offer: This means an offer in response to an offer. Once an offer is made by the offeror to the offeree it is upto the offeree to accept or reject the offer. Sometimes the offeree neither accepts nor rejects the offer but makes his or her own offer to the offeror. When this is done the first offer which was made by the offeror lapses or comes to an end. If later the offeree decides to accept the offer he or she cannot do so. ullamcorper mattis, pulvinar dapibus leo.
Illustration
Aradhna is offering to sell her computer to Sadhna for twenty thousand rupees. Sadhna makes a counter offer by saying that she is willing to buy the computer if Aradhna would sell it for rupees fifteen thousand. Thus the offer initially made by Aradhna comes to an end and it is now up to her to accept or reject the counter offer made by Sadhna.
- Revocation of offer: An offer can be withdrawn anytime by the offeror before the communication of acceptance of offer is complete against him. He cannot revoke or withdraw his or her offer once the offeree has sent his or her acceptance. A general offer must be revoked using the same channel and mode in which the original offer was made.
Illustration
Aradhna offers to sell her computer to Sadhna for rupees twenty thousand. Sadhna makes a counter offer by saying that she is willing to buy the computer if Aradhna would sell it for rupees fifteen thousand. Thus the offer initially made by Aradhna comes to an end and now it is upto her to accept or reject the counter offer made by Sadhna.
- Offer not Accepted in the Prescribed Mode: : If the offeror has prescribed a mode in which the offeree has to accept the offer and the offeree does not give his or her acceptance in the prescribed mode then the offer comes to an end.
Illustration
Aradhna makes an offer for selling her computer for rupees twenty thousand to Sadhna in writing and mentions in the offer that if the offer is acceptable to her then she should give her acceptance only in writing. Sadhna however conveys her acceptance through telephone. Thus the offer comes to an end.
- Failure of the Acceptor / Offeree to Fulfill a Condition Precedent to Acceptance: Sometimes the offeror may ask the offeree to fulfill certain conditionsbefore acceptance. If the offeree does not fulfill these conditions then the offer comes to an end.
Illustration
Aradhna makes an offer of selling her computer to Sadhna for rupees twenty thousand and mentions in the offer that if the offer is acceptable to Sadhna then she should send an advance cheque of rupees five thousand. Sadhna does not send the cheque. Thus the offer comes to an end.
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