Page 21 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes 10. If the terms of the offer are loose, vague, ambiguous or uncertain, it is not a ……………offer.
11. When the person to whom the offer is made signifies his assent thereto, the offer is said to
be…………….

12. The acceptance of an offer cannot be implied from the ……………..of the offeree or his
failure to reply.

1.6 Completion of Communication of Offer and Acceptance [S.4]

It is necessary to communicate offer to the offeree and the acceptance to the offeror. When is it
that the communication is considered to be completed? The communication of an offer is complete
when it comes to the knowledge of the person to whom it is made. Where A proposes by a letter
to sell his car to B at a certain price, the communication of the offer is complete when B receives
the letter. The completion of communication of acceptance has two aspects, viz.; (i) As against the
offeror and (ii) As against the acceptor. 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.

Self Assessment

Fill in the blanks:
13. It is possible for the offeror to revoke the offer before it is ………………by the offeree but
not later.
14. It is necessary to communicate offer to the offeree and the acceptance to the……………….

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