Revocation of Proposal & Acceptance Under Indian Contract Act

Typically, an agreement is considered closed when and when the offeree declares that the consent is constrained by the offeror's proposal. It is by no means as easy to determine the correct time of determination of an agreement as it might initially seem. The possibility for persons to back out of or repudiate their proposals for concluding an agreement makes this problem worse.

Meaning of Revocation

Revocation in the legal sense refers to the withdrawal of an offer made by the offeror/proposer immediately before the acceptor/offeree acknowledges it. Revocation in the literal sense is to negate anything. After the offeree has acknowledged the offer, the offeror may withdraw the equivalent, but this does not fall under the definition of "revocation."

The rule of withdrawal and revocation of offer and acceptance plays a crucial role in determining not just when to decide on an agreement, but also in maintaining smooth interactions between people. Thus, it aids in keeping exchange charges to a minimum at gatherings. No agreement has been reached among legal instruments regarding this fundamental issue up until this point. This made the process of harmonization improbable as different legislation approached the problem from their points of view.

What is a Contract?

When one person indicates his readiness to conduct or refrain from doing an act against another person, that person is said to make a proposal, which is the first stage in any proposition becoming a contract. After then, the other person must consent to the proposition, or accept it. When a proposition is accepted, it turns into a commitment and is made by one person to the other. This is what is meant by acceptance. The promise is the one who accepts the proposition, while the promisor is the one who makes the offer.

According to the promise, an action is said to be taken or not taken when both parties agree to it. The parties are considered to be in an agreement after the consideration is given. Therefore, a contract is any arrangement that is enforceable by law. The Indian Contract Act of 1872, namely Section 2, Clauses (a) to (c), makes precise mention of the entire process (j).

What is Revocation of Proposals and Acceptance?

Section 5 of the Indian Contract Act specifies the rules for revoking an offer and acceptance. According to Section 5, the offer may be withdrawn at any moment prior to the completion of the communication of acceptance against the proposer/offeror. Revocation of the offer is no longer available when the proposer receives the notification of the acceptance.

Example − On July 10, A posts the letter after accepting the offer. B receives the letter on July 14. However, B (the proposer) was informed of the acceptance on July 10th. Therefore, the offer can only be revoked before July 10th.

Ways of Revocation

As per Section 6 of the Indian Contract Act, an offer is revoked either by

Notice-based withdrawal of the offer

Before the acceptor can accept the offer and take action on it, the one making the offer must inform them of its cancellation. This regulation primarily refers to and concerns written correspondence sent through the mail or post, one of the oldest and most formal means of communication.

Withdrawal of the offer due to the passage of time

Once the deadline for acceptance has passed, an offer may expire. If an agreement stipulates that the acceptance must be given within a certain window of time, the offer will be revoked if the acceptor is unable to do so before the window of time has passed.

When a prerequisite is not met, the offer expires.

Any acceptance made in a circumstance where the offer is made subject to the satisfaction of a condition precedent will result in the offer's immediate withdrawal if the condition's requirements are not met.

Revocation due to the offeror's dying or insanity

In the sad event of the offeror's death or insanity, the offer may likewise expire, provided that the acceptance is made prior to the fact of the offeror's death or insanity being known.

Difference Between English and Indian Law

Acceptance is considered irrevocable in English law because there is no possibility of revoking it afterwards or changing one's mind once consensus has been reached ad idem. Under English law, the acceptor does not have the opportunity to revoke his acceptance.

Indian law, however, differs from English law in that it permits the acceptor to withdraw his acceptance at any moment before the offeror receives notification of it. As a result, the acceptor has the option to withdraw his acceptance if his decision changes after communicating it to the offeror. But before the offeror learns of the acceptance from the acceptor, it is important that the knowledge of revocation of acceptance be publicised.

Case Laws

• Henthorn v. Fraser 1862 − A property was offered for sale to a person. It required a response from this person within 14 days. He resided in a different town, and at 3.50 PM he posted his acceptance, which was received at 8.30 PM by the offerer. At 1 PM, the offerer posted a letter of cancellation, which was received by the person at 5.30 PM. As a result, the offeree did not receive the revocation before the offerer had received full notice of the acceptance. The revocation was therefore deemed to be invalid.

• Union of India vs. Bhimsen Walaiti Ram 1969 − The defendant won an auction for a liquor store and paid 1/6 of the price up front in the case. The financial commissioner was, however, expected to have finalised the proposal, which he had not yet done. In the meanwhile, the defendant did not make the final payment, therefore the commissioner mandated a new auction.

  Less money was raised in the re-auction, and the plaintiff filed a lawsuit to recoup the difference. The message of acceptance was not entirely in the defendant's favour, but the SC ruled that as the commissioner had not granted his final permission for the bid, the defendant was still entitled to withdraw or rescind his offer.

Conclusion

The foundation of common law's understanding of agreements and contracts is their acceptance and revocation. The Indian Contract Act of 1872's continued applicability even 150 years after its enactment shows how good its guiding ideas are and how widely accepted, they are on both a legal and economic level. One-sided contracts that lead to conflicts and ultimately end up in court would be less common if people were generally aware of the concepts and principles of the Indian Contract Act, 1872.

Frequently Asked Questions (FAQs)

Q1. After mailing the letter of acceptance, can the acceptor revoke the acceptance?

Ans. Yes. Up to the notification of the acceptance is finished against the mentioned acceptor, the acceptor may renounce the offer. When the proposer receives the letter of acceptance, the communication is finished. The acceptor can therefore cancel the acceptance throughout the period of time between mailing the letter and when the proposer receives it.

Q2. Can an offer be revoked after it has been accepted?

Ans. No, once an offer has been accepted and a contract has been established, it cannot be reversed. Only mutual consent, performance, breach, or other events specified in the contract may result in the termination of the agreement.

Q3. Are there any exceptions to the rule of revocation before acceptance?

Ans. Yes, there are some exceptions. Revocation is not an option, for instance, in the event of a firm offer—an offer provided by a merchant that guarantees to remain available for a predetermined amount of time.