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When the contracting parties are physically present and negotiate in person, an agreement comes into existence the moment, the offeree gives his absolute and unqualified acceptance to the proposal made by the offeror. When the parties are at a distance and the offer and acceptance are exchanged through post, rules contained in section 4 and 5 apply.
These rules are discussed below:
1. Communication of an Offer (Section 4)
Section 4 clearly indicated that actual communication of the offer is not necessary. It is sufficient if the offer comes to the knowledge of the offeror. Then it is for the latter to accept or reject the offer. But when an offer is sent by post, its communication will be complete when the letter making the offer reaches the offeree. The offer is completed not at eh place from where it was sent but where it was received.
For example: ‘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.
2. Communication of Acceptance (Section 4)
When the communication of an acceptance is made by post, it is complete as against the proposer when the letter of acceptance is posted. It means that the offeror cannot revoke the offer when the letter of acceptance is posted. Where a letter of acceptance was duly posted but was delayed in the post and the offeror sought to repudiate the contract it was held that the posting of the letter was an acceptance of the offer. If the letter of acceptance misdirected through the fault of the acceptor, there would be no communication of the acceptance; but if the wrong address is furnished by the offeror himself, he will be bound.
For example: The leading case on this point is DUNLOP V.S.HIGGINS (1848)
‘D’ in an answer to an enquiry as the price of pigeon iron wrote to ‘H’, “we shall be glad to supply you with 2000 tons of iron at 65s per ton” and after further correspondence wrote on the 28th January, that the price was 65s net. ‘H’ received this on the 30th January and on the same day wrote: “we will take the 2000 tons iron you offer us”. The post was then delayed and the acceptance was received six hours later than the scheduled hour. ‘D’ refused to sell the iron. It was held that the posting of the letter was an acceptance of the offer and that ‘D’ could not refuse to supply the iron.
3. Communication of Revocation of Proposal (Section 5)
“A proposal may be revoked at any time before the communication of acceptance is complete as against the proposer but not afterwards.” Hence, once the letter of acceptance is posted, the offer cannot be revoked.
For example: A tender for purchase of Tendu leaves was submitted on 11.1.1993. The letter of acceptance was sent by registered post on 12.2.93. The letter did not reach the plaintiff. He purported to withdraw the offer by fax message on 3.3.93. It was held that a binding contract had come into existence on 12.2.93 and the offer cannot be revoked by fax message. [J.K.Enterprise V.S State of M.P 1997]
4. Communication of Revocation of Acceptance (Section 5)
“An acceptance can be revoked at any time before the communication of acceptance complete as against the acceptor but not afterwards.”
Where an acceptance is sent by post, it stands complete against the acceptor when the letter reaches the offeror. It means that acceptance can be revoked before the letter actually reaches the offerer. Therefore, the communication of revocation of acceptance must reach the offerer before acceptance.
For example: ‘X’ by a letter dated October 5, 1975, accepted the offer of Y. the letter did not reach Y. X on October 10, 1975, revokes the acceptance by a letter which reaches 'Y' on 12th. The acceptance is revoked.
These rules are discussed below:
1. Communication of an Offer (Section 4)
Section 4 clearly indicated that actual communication of the offer is not necessary. It is sufficient if the offer comes to the knowledge of the offeror. Then it is for the latter to accept or reject the offer. But when an offer is sent by post, its communication will be complete when the letter making the offer reaches the offeree. The offer is completed not at eh place from where it was sent but where it was received.
For example: ‘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.
2. Communication of Acceptance (Section 4)
When the communication of an acceptance is made by post, it is complete as against the proposer when the letter of acceptance is posted. It means that the offeror cannot revoke the offer when the letter of acceptance is posted. Where a letter of acceptance was duly posted but was delayed in the post and the offeror sought to repudiate the contract it was held that the posting of the letter was an acceptance of the offer. If the letter of acceptance misdirected through the fault of the acceptor, there would be no communication of the acceptance; but if the wrong address is furnished by the offeror himself, he will be bound.
For example: The leading case on this point is DUNLOP V.S.HIGGINS (1848)
‘D’ in an answer to an enquiry as the price of pigeon iron wrote to ‘H’, “we shall be glad to supply you with 2000 tons of iron at 65s per ton” and after further correspondence wrote on the 28th January, that the price was 65s net. ‘H’ received this on the 30th January and on the same day wrote: “we will take the 2000 tons iron you offer us”. The post was then delayed and the acceptance was received six hours later than the scheduled hour. ‘D’ refused to sell the iron. It was held that the posting of the letter was an acceptance of the offer and that ‘D’ could not refuse to supply the iron.
3. Communication of Revocation of Proposal (Section 5)
“A proposal may be revoked at any time before the communication of acceptance is complete as against the proposer but not afterwards.” Hence, once the letter of acceptance is posted, the offer cannot be revoked.
For example: A tender for purchase of Tendu leaves was submitted on 11.1.1993. The letter of acceptance was sent by registered post on 12.2.93. The letter did not reach the plaintiff. He purported to withdraw the offer by fax message on 3.3.93. It was held that a binding contract had come into existence on 12.2.93 and the offer cannot be revoked by fax message. [J.K.Enterprise V.S State of M.P 1997]
4. Communication of Revocation of Acceptance (Section 5)
“An acceptance can be revoked at any time before the communication of acceptance complete as against the acceptor but not afterwards.”
Where an acceptance is sent by post, it stands complete against the acceptor when the letter reaches the offeror. It means that acceptance can be revoked before the letter actually reaches the offerer. Therefore, the communication of revocation of acceptance must reach the offerer before acceptance.
For example: ‘X’ by a letter dated October 5, 1975, accepted the offer of Y. the letter did not reach Y. X on October 10, 1975, revokes the acceptance by a letter which reaches 'Y' on 12th. The acceptance is revoked.
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