Definitions & Communication & Acceptance & Revocation of Proposals
Section 2: Interpretation Clause.
(a). Proposal/Offer
A proposal or an offer is made when one person expresses to another that he is willing to do something or not do something, in order to get the other person’s agreement.
The idea of willing to not do something is called abstinence.
Therefore , when someone offers to do or not do an act, hoping the other person will agree, that communication is a proposal or an offer.
(b). Promise
When the person receiving the proposal shows that he agrees to it, the proposal becomes accepted.
Once a proposal is accepted, it turns into a promise.
(c). Promisor & Promisee
The person who makes the proposal is the promisor.
The person who accepts the proposal is the promisee.
(d). Consideration
Consideration is something given or done in return for a promise. It must be done because the promisor wanted it. If it is not at the promisor’s desire, it is not consideration.
The promisee or even any other person can give the consideration. It doesn’t have to come only from the promisee.
Consideration can be of different types:
a. Doing something
b. Not doing something (Abstaining / Stopping an act)
c. Promising to do something in the future
d. Promising not to do something in the future
If any of the above is done at the request of the promisor, it becomes valid consideration.
Without consideration, a promise generally cannot be enforced as a contract.
(e). Agreement
Every promise or group of promises made in return for each other is an agreement.
(f). Reciprocal Promises
Reciprocal promises are promises made by two parties where each person’s promise is the reason the other person gives their promise.
It means Both sides agree to do something for each other, and each promise supports the other.
These promises are connected and one promise is given because the other promise is also being given.
For example:
If A promises to sell his bike to B, and B promises to pay A ₹10,000 for it, both promises depend on each other.
A’s promise to give the bike is because B promised to pay the money.
B’s promise to pay the money is because A promised to give the bike.
Since each promise is made in return for the other, they are called reciprocal promises
(g). Void Agreement
An agreement that cannot be enforced by law is called void.
A void agreement has no legal effect and cannot be enforced in court.
(h). Contract
An agreement that is enforceable by law is a contract.
Only agreements that the law recognizes and can enforce are contracts.
(i). Voidable Contract
A voidable contract is an agreement that is enforceable by law, but only at the option of one party.
The other party does not have the right to enforce it.
One party can choose to either enforce or cancel the contract and the other party has no choice.
(j). Void Contract
A contract becomes void when it stops being enforceable by law.
Something may start as a valid contract, but later, due to certain events or changes, it may become unenforceable and therefore void.
Section 3. Communication, acceptance and revocation of proposals.
When someone wants to communicate a proposal (offer), an acceptance, or a revocation (cancellation), the communication can be done in any way that shows their intention.
It doesn’t matter whether the person uses words, writes a letter, sends a message, or acts in any way.
Any method that is used, it should effectively communicate the person’s intention to the other party.
The communication is considered complete if the person does something that either actually communicates the message or is meant to communicate it.
Even not doing something, an omission can count, if it shows the intention to communicate.
Section 4. Communication when complete.
Communication of a proposal (offer) is complete only when the person to whom it is made actually becomes aware of it.
This simply jus means that the offer is communicated only when the other person knows about it.
Communication of acceptance works differently.
It has two sides:
As against the proposer (the one who gave the offer)
As against the acceptor (the one accepting)
Acceptance is complete as against the proposer the moment the acceptor sends it in a way that is beyond the acceptor’s control.
For example: Posting a letter, sending an email, handing over a courier.
Once sent, the proposer is legally bound, even if he hasn’t received it yet.
Acceptance is complete as against the acceptor only when the proposer actually receives it or becomes aware of it.
This means the acceptor becomes legally bound only when the proposer knows of the acceptance.
Communication of revocation (cancellation) also has two sides:
As against the person who is revoking
As against the person receiving the revocation
Revocation is complete as against the person who makes it the moment they send it in a way that is out of their control.
Example: once a revocation letter is posted, the sender cannot take it back.
Revocation is complete as against the person receiving it only when they actually come to know of it.
Until the revocation reaches them or they become aware, the revocation does not bind them.
Illustrations:
(a).
A sends a letter to B offering to sell his house.
The proposal is considered communicated only when B actually receives the letter and reads it.
Therefore , the offer becomes known to B only when the letter reaches him.
To understand Acceptance:
B accepts A’s offer by sending a letter through the post.
The acceptance becomes complete in two different ways:
As against A (The proposer): The moment B posts the letter, A becomes bound.
As against B (The acceptor): The acceptance is complete only when A receives the letter.
Therefore , once B posts the letter, A is bound and once A receives the letter, B is also bound.
To understand Revocation:
If A revokes:
A cancels (revokes) his proposal by sending a telegram.
As against A (The proposer) : The revocation is complete as soon as he sends the telegram.
As against B (The Acceptor) : It becomes complete only when B receives the telegram.
If B revokes:
B revokes his acceptance by telegram.
As against B : The revocation is complete the moment he sends the telegram.
As against A: It becomes complete only when A receives the telegram.
Section 5. Revocation of proposals and acceptances.
Revocation by the Proposer
A proposal (offer) can be cancelled by the proposer any time before the acceptance becomes complete against him, but not after that.
Acceptance becomes complete against the proposer the moment the acceptor sends it.
So once the acceptor has posted/sent the acceptance, the proposer can no longer revoke the offer.
Revocation by the Acceptor
An acceptance can be cancelled by the acceptor any time before the acceptance becomes complete against the acceptor, but not after that.
Acceptance becomes complete against the acceptor only when it reaches the proposer or comes to his knowledge.
So the acceptor can cancel his acceptance until the proposer receives it, but not after.
Illustration:
A sends a letter offering to sell his house to B.
B sends a letter accepting the offer.
A can cancel his proposal only before B posts the acceptance letter. Once B has posted it, A cannot revoke the offer.
B can cancel his acceptance any time before his acceptance letter reaches A. Once the acceptance reaches A, B cannot revoke it.
Section 6. Revocation how made.
6(1).
A proposal is revoked when the proposer informs the other party that he is cancelling the offer.
If the proposer directly communicates that the offer is withdrawn, then the proposal ends.
6(2).
A proposal is revoked when the time given in the offer for acceptance passes without acceptance.
If no time is mentioned, then after a reasonable amount of time passes without acceptance, the proposal automatically ends.
Offers do not stay open forever and they end when time runs out.
6(3).
A proposal is revoked if the acceptor does not fulfil a condition that must be completed before acceptance.
If the offer had a required step to be done first, and the acceptor does not do it, the offer is cancelled.
6(4).
A proposal is revoked if the proposer dies or becomes insane, and the acceptor comes to know about it before accepting the offer.
So, If the acceptor learns that the proposer has died or lost mental capacity before accepting, the proposal ends automatically.
Section 7. Acceptance must be absolute.
7(1).
Acceptance must be absolute and unqualified.
Acceptance should match the proposal exactly, without adding new conditions or changing anything.
If the acceptor tries to change terms, it is not acceptance, then it becomes a counter-offer.
So , the acceptor must say “yes” to the offer exactly as it is.
7(2).
Acceptance must be expressed in a usual and reasonable manner, unless the proposer has clearly mentioned a specific way to accept.
If the proposer has stated a particular method of acceptance (for example: “accept by email only”), then the acceptance must be given in that manner.
If the acceptor uses a different method, the proposer can object within a reasonable time and insist that acceptance must follow the prescribed method.
However, if the proposer does not object within a reasonable time after receiving the acceptance, then the proposer is considered to have accepted that method of acceptance.
Section 8. Acceptance by performing conditions, or receiving consideration.
Sometimes you don’t need to say “I accept” in words.
Acceptance can also happen through actions.
If a proposal contains certain conditions that must be performed, and the other person actually performs those conditions, then that action itself counts as acceptance.
Similarly, if the proposer offers some consideration (something of value) as part of the proposal, and the other person accepts or receives that consideration, then that also counts as acceptance.
Therefore:
If you do what the offer asks you to do, that means you have accepted the offer.
If you take or accept something that the offer gives you in return for your promise, that also means you have accepted the offer.
Section 9. Promises, express and implied.
A promise can be made in two ways either Express or Implied.
Express Promise
A promise is express when the proposal and acceptance are made using words.
These words can be spoken or written.
So, if someone clearly says or writes the offer and the acceptance, the promise is express.
Implied Promise
A promise is implied when the offer and acceptance are not made through words but are shown through actions or conduct.
In this case, No one says or writes the acceptance, but their behaviour clearly shows agreement.
Example: A gets into a taxi and the driver starts driving and this behaviour shows an implied promise to pay the fare.
