Article on Revocation of Contract

Introduction

In the law of contracts, revocation is a type of remedy for buyers when the buyer accepts a nonconforming good from the seller. Upon receiving the nonconforming good, the buyer may choose to accept it despite the nonconformity, reject it (although this may not be allowed under the perfect tender rule and whether the Seller still has time to cure), or revoke their acceptance. Under Article 2 of the Uniform Commercial Code, for a buyer to revoke, he must show:-

(1) the goods failed to conform to the contract and (2) it substantially impaired the value of the goods.

To constitute a valid contract, a valid offer and valid acceptance of offer is pre-requisite. In the commercial world, time of communication of offer and acceptance has significant role to play.

Communication of Offer and Acceptance

One of the fundamentals of contract law is that an offer cannot be revoked after the offeror has communicated it to the offeree. Thereupon, the offer becomes legally binding on the two parties. So when is the communication complete? Effective communication of the offer and a clear understanding of it is important to avoid misunderstanding between all the parties.

No difficulty shall arise when the parties are communicating face-to-face. This is primarily because communication takes place in no time. The offer and its acceptance is communicated on the spot, creating no confusion. However, in practically, the situation is quite complex. The communication takes place via letters, emails etc. So, for these cases, timeline of the communication is important.

Communication of Offer

Section 4 of Indian Contract Act 1872, states that the communication of the offer is complete only when it comes to the knowledge of the person it has been made to. So when the offeree (in case of a specific offer) or any member of the public (in case of a general offer) becomes aware of the offer, the communication of the offer is said to be complete.

Communication of Acceptance

Mode of Acceptance

In the case of communication of acceptance, there are two factors to consider, the mode of acceptance and then the timing of it. Let us first talk about the mode of acceptance. Acceptance can be done in two ways, namely

Communication of Acceptance by an Act: This would include communication via words, whether oral or written. So this will include communication via telephone calls, letters, e-mails, telegraphs etc.

Communication of Acceptance by Conduct: The offeree can also convey his acceptance of the offer through some action of his, or by his conduct. So say when you board a bus, you are accepting to pay the bus fare via your conduct.

Revocation of Offer

The Indian Contract Act lays out the rules of revocation of an offer in Section 5. It says the offer may be revoked anytime before the communication of the acceptance is complete against the proposer/offeror. Once the acceptance is communicated to the proposer, revocation of the offer is now not possible.

Revocation of Acceptance

Section 5 also states that acceptance can be revoked until the communication of the acceptance is completed against the acceptor. No revocation of acceptance can happen after such a date.

The modes of revocation of offer

Section 6 of the act states various modes of revocation of offer . A proposal is revoked-

a. By the communication of notice of revocation by the proposer to the other party.

b. By the lapse of time described in such proposal for its acceptance or if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance

c. By the failure of the acceptor to fulfill a condition precedent to acceptance

d. By the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.

Conclusion

The Indian Contract Act, 1872 provides both provisons to enter into a valid contract and the provisions to get free from the existing contract by the way of revocation of contract under section 5 of the said act.

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