Explain communication and revocation of offer with the suitable act, case law, example according to Indian contract act 1872
Introduction
Communication and revocation of offer are essential aspects of contract law in India. The Indian Contract Act, 1872, governs the communication and revocation of offers, which are critical in determining the validity of a contract. This article will explore the concept of communication and revocation of offer in detail, including its essential features, relevant case law, and examples.
Communication of Offer:
Communication of offer is a critical aspect of contract law. Section 3 of the Indian Contract Act, 1872, defines a proposal (offer) as “when one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.” The offeror must communicate the offer to the offeree in order for it to be valid.
The communication of an offer is valid when the offeror expresses his intention to enter into a contract with the offeree. The offeror must indicate the terms and conditions of the offer, including the subject matter, price, time, and place of performance. It is also essential that the offeror communicates the offer to the offeree directly or indirectly. If the offer is communicated indirectly, it must be communicated to the offeree personally, or it must come to his knowledge through a reliable source.
In the case of Lalman Shukla vs. Gauri Dutt, (1913) 11 ALJ 489, the court held that if the offeror communicates the offer to a third party and not to the offeree, it cannot be considered a valid offer. In the case, the plaintiff asked the defendant’s servant to find the defendant and inform him that his uncle was looking for him. The defendant’s uncle had died, and the plaintiff wanted to communicate this news to the defendant. The plaintiff later offered a reward for anyone who could find the defendant, and the defendant’s servant claimed the reward. The court held that the offer was not communicated to the defendant personally or indirectly, and therefore it was not a valid offer.
Revocation of Offer:
Revocation of offer refers to the withdrawal of an offer by the offeror. An offer can be revoked by the offeror at any time before acceptance, and it can be revoked by communicating the revocation to the offeree. The revocation must be communicated to the offeree before he accepts the offer. If the offer is revoked after the acceptance, it is not valid, and the contract becomes enforceable.
The Indian Contract Act, 1872, provides specific rules regarding the revocation of offer. According to Section 5 of the Act, an offer can be revoked at any time before acceptance. The revocation of the offer must be communicated to the offeree, and it can be communicated either orally or in writing. The revocation is effective when it is received by the offeree.
In the case of Byrne & Co. vs. Van Tienhoven, (1880) 5 CPD 344, the court held that revocation of an offer must be communicated to the offeree to be effective. In the case, the defendant offered to sell a quantity of tin plates to the plaintiff by telegram, and the plaintiff replied by telegram that he was interested in buying the plates. Before the plaintiff could accept the offer, the defendant revoked it by telegram. The plaintiff sued the defendant for breach of contract, and the court held that the revocation of the offer was not effective as it was not communicated to the plaintiff before he accepted the offer.
Modes of Revocation of Offer: Sec. 6
Offer revocation or lapses: Section 6 of the Indian Contract Act of 1872 discusses several methods of offer revocation. It states that an offer is withdrawn, expires, or is terminated in the following situations.
1) Through the exchange of written or verbal notice: An offeror may renounce his offer at any moment prior to acceptance by providing a straightforward notice of revocation.
HARRIS (VS) NICKERSON, for instance (1873).
Fact: An auctioneer announced in a newspaper that office furniture would be sold. To attend that auction, a broker travelled a long way, but all of the furniture was removed. The auctioneer was then sued by the broker for his lost time and expenditures.
Conclusion: A statement of intent to do something did not result in a legally binding agreement between the parties involved. to prevent the broker from making a profit.
2) By passing of a reasonable period of time: If an offer is not accepted within the allotted or reasonable period of time, it will be revoked. However, if no time limit is specified, it expires when a fair amount of time has passed.
Example: Monteflore vs. Ramsgate Victoria Hotel Company (1886)
Facts: On June 8th, “M” made an offer to purchase stock in “R” Company. On November 23rd, he got a letter of admission. He objected to taking stock.
Conclusion: “M” had the right to reject his offer because a fair amount of time had passed during which it could have been accepted.
3) By failure to satisfy some requirements: When the offeror has specified some conditions that must be met and the offeree/acceptor does not satisfy the conditions necessary for acceptance. Then the offer will be withdrawn.
Conclusion: “M” had the right to reject his offer because a fair amount of time had passed during which it could have been accepted.
4) By the offeror’s demise or insanity: The offer is not automatically withdrawn upon the offeror’s demise. If the offeree learns of the offeror’s demise or insanity before to accepting it, the offer will be cancelled. Otherwise, the acceptance is legitimate if the recipient does not know that the offeror is deceased or insane.
5) When making a counter offer, the offeree or acceptor proposes to condition acceptance of the offer on changes and additions to the original offer’s terms. Consequently, a counter offer is the same as rejecting the initial offer.
Example: Hyde Vs. Wrench (1840)
Facts: “W” proposed to “H” that he pay L 1000 for a farm (pounds). ‘H’ made an offer of L 950 (pounds), but ‘W’ declined. Then “H” made an offer to buy the farm for L 1000. (pounds).
Conclusion: Since “H” rejected the initial offer by giving L 950 (ponds), there was no contract. because a proposal is rejected when a counter offer is made.
6) By change in the law: An offer expires if the law is altered in a way that renders the contract envisioned by the offer invalid or unenforceable.
7) An offer is not accepted in accordance with the prescribed (or usual) way: In this case, the offeror must notify the offeree in a timely manner that the offer is not accepted in accordance with the prescribed/normal mode. The offer is assumed to have been accepted if the offeror remains silent.
8) The offeree or acceptor’s demise (or insanity).
9) Through the obliteration of the subject.
Essentials of Communication and Revocation of Offer:
To summarize, the following are the essentials of communication and revocation of offer under the Indian Contract Act, 1872:
- Communication of offer must be clear, unambiguous, and complete.
- The offer must be made with the intention to create a legal relationship.
- The offer must be communicated to the offeree.
- The offeree must have the knowledge of the offer.
- The offeree must have the capacity to accept the offer.
- The acceptance of the offer must be communicated to the offeror.
- The offer can be revoked by the offeror at any time before the acceptance.
- The revocation of the offer must be communicated to the offeree.
- The offer cannot be revoked after the acceptance.
- The acceptance must be communicated before the offer is revoked.
- The communication of the revocation must be received by the offeree before the communication of the acceptance.
Case Laws:
Lalman Shukla v. Gauri Dutt (1913): This case is an illustration of the principle that an offer can be revoked only if the revocation is communicated to the offeree. In this case, Lalman Shukla was sent to look for his uncle Ganga Ram who had left the house for a pilgrimage. Before he could find him, Gauri Dutt, the defendant, sent a telegram to Lalman offering a reward for the return of Ganga Ram. Lalman, who had no knowledge of the offer, returned with his uncle after the offer had already been revoked. The court held that since the offer was not communicated to Lalman, he could not have accepted it, and hence, there was no contract.
Byrne v. Van Tienhoven (1880): In this case, the defendant sent a telegram to the plaintiff offering to sell goods. The plaintiff sent an acceptance the same day. However, before the acceptance reached the defendant, he sent a revocation of the offer by a telegram. The plaintiff later received the revocation but claimed that the contract had already been concluded. The court held that since the acceptance was sent before the revocation was received, the contract was concluded, and the defendant was liable for breach of contract.
Shuey v. US (1875): In this case, the defendant, Shuey, offered to sell a horse to the government for a certain price. The offer was made through an agent, who was authorized to receive the acceptance on behalf of Shuey. The government sent an acceptance to the agent, but before the acceptance was communicated to Shuey, he revoked the offer. The court held that since the acceptance had been communicated to the authorized agent, there was a binding contract between the parties, and the offer could not be revoked.
Conclusion:
Communication and revocation of offer are essential components of a valid contract. The offeror must communicate the offer clearly, and the offeree must have the knowledge of the offer. The offeror can revoke the offer at any time before acceptance, but the revocation must be communicated to the offeree. If the acceptance is communicated before the revocation, a binding contract is formed. The communication of offer and revocation is crucial in determining the validity of a contract, and failure to follow the rules can result in a breach of contract.