Page 31 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes The communication of acceptance is complete (i) As against the offeror when it is put into a course
of transmission to him so as to be out of the power of the acceptor; (ii) As against the acceptor,
when it comes to the knowledge of the offeror. Thus, in the above example, if B accepts A’s offer
by sending a letter through post, then the communication of acceptance is complete (i) As against
A when the letter is posted by B; and (ii) As against B when the letter is received by A.
Revocation of offer and acceptance [S.5]. It is possible for the offeror to revoke the offer before
it is accepted by the offeree but not later. Similarly, the offeree may revoke acceptance, till the
communication of acceptance is complete as against him but not later. Thus, in the above example
A may revoke his offer at any time before or at the moment, when B posts his letter of acceptance,
but not afterwards. B may revoke his acceptance at any time before or at the moment when
the letter communicating it reaches A, but not afterwards. The communication of a revocation
(of an offer or an acceptance) is complete (i) As against the person who makes it when it is put
into a course of transmission to the person to whom it is made so as to be out of the power
of the person who makes it; (ii) As against the person to whom it is made, when it comes to
his knowledge. In the above example, A may revoke his offer by telegram. The revocation is
complete (i) As against A when the telegram is dispatched; (ii) As against B when B receives it.
B may revoke his acceptance by a telegram. B’s revocation is complete as against B, when the
telegram is dispatched, and as against A when it reaches him.
Contracts over telephone or through telex, fax/e-mail. One may enter into contracts either
(i) When he is face to face with another person, or (ii) Over telephone, or (iii) through telex,
or (iv) through post office. When one is face to face with another person, the contract comes

into existence immediately after the negotiations are completed with the process of offer and
acceptance. Contracts over telephone are just like contracts face to face. But the offeree must
make it sure that his acceptance is received by the offeror otherwise there will be no contract, as
communication of acceptance is not complete.

2.8 Summary

Offer is not only one of the essential elements of a contract but it is the basic building
block also. An offer is synonymous with proposal. The offeror or proposer expresses his
willingness “to do” or “not to do” (i.e., abstain from doing) something with a view to
obtain acceptance of the other party to such act or abstinence [S.2 (a)]. Thus, there may be
‘positive’ or ‘negative’ acts which the offeror is willing to do.
If the terms of the offer are loose, vague, ambiguous or uncertain, it is not a valid offer.
The communication of offer is complete only when it comes to the knowledge of the offeree.

If the offer is lost on the way in transit it is no offer. This is true of specific as well as general
offers.
The offer must be made with a view to obtain acceptance thereto.
The offer must be made with the intention of creating legal relationship. An offer of a
purely social or domestic nature is not a valid offer.
The offer must be communicated to the offeree before it can be accepted. This is true of both

specific and general offers.
If no time is fixed by the offeror within which the offer is to be accepted, the offer does

not remain open for an indefinite period. Where no time is specified, then the offer is to be

accepted within a reasonable time. Thus, if no time is specified then the offer lapses after
a reasonable time. What is a reasonable time is a question of fact and would depend upon
the circumstances of each case.

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