Revocation of Acceptance in a Contract

Revocation of Acceptance

The Indian Contract Act defines Contracts as an agreement enforceable by law.   If we deconstruct the term agreement, it necessarily involves free consent of both parties for the performance of a promise, competent to contract with each other, in return for a lawful consideration and with a lawful object.  In order to enter into an agreement or contract, one party must make an offer or proposal and the other must convey their acceptance for the same either express or implied. However, sometimes either of the two parties might want to revoke the contract. The revocation may be made by the party making the offer or the party accepting such an offer.

In the simplest of terms to revoke means ‘to cancel’. If I say ‘I revoke’ I simply, mean that I take it back. Section 5 of the Indian Contract Act,1872 says that,  an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but no afterwards.

 Legal Definition of Revocation of Acceptance

In legal terminology Revocation of Acceptance refers to the following

  1. Proposer makes an offer.
  2. Acceptor accepts the same and communicates the same to the proposer.
  3. Acceptor revokes/cancels this acceptance before the communication reaches the proposer.

The Revocation of Acceptance is complete ONLY at any time before the communication of acceptance is complete as against the acceptor, but not afterwards. Revocation of Acceptance too can be either oral or written. Acceptance has to be revoked mandatorily before the same reaches the Offeror.

Examples are the best way to understand these concepts. So let us look at a few scenarios which shall make the concept of ‘Revocation of Acceptance’ clearer.

Scenario #1

Mr. Shasikant wants to sell his furniture. He writes about the same and makes an offer to his friend Mr. Krishna to buy the same. Mr. Krishna has just bought another house for which this furniture would be useful. So after going through the details he likes the same, writes to Mr. Shasikant stating that he has accepted the offer, and posts it to him. Mr. Krishna’s family is not OK with this second-hand furniture. Hence, they convince him to refuse Mr. Shasikant’s offer. Mr. Krishna then sends in a fax to Mr. Shasikant stating that he has revoked his acceptance. In normal circumstances, a fax works faster than regular post. If Mr. Shasikant receives the fax first then we say that this is considered as proper, legal Revocation of Acceptance.

 

Scenario #2

Let us consider the same scenario stated above. Maybe the fax sent out for Revocation of Acceptance was much later than the Acceptance post. Unfortunately, if the post reaches Mr. Shasikant before the fax, the fax sent for ‘Revocation of Acceptance’ does not hold good. This is because the Revocation of Acceptance reached after the actual Acceptance.

∗ We need to consider 2 aspects in any Revocation, whether it is Revocation of Offer or Revocation of Acceptance. They are:

  1. Time Limit
  2. Completion of Communication

Let us understand the above with the same example stated above.

Step #1: Mr. Shasikant posts his offer on 1st of April 2021 at 4 PM

Step #2: Mr. Krishna receives the offer on 4th of April 2021 at 2 PM

Step #3: Mr. Krishna posts his acceptance on 5th of April 2021 at 12 PM

Step #4: Mr. Shasikant received the acceptance letter on 7th of April 2021 at 3 PM

Step #5: Mr. Krishna faxes his revocation on 5th April 2021 at 5:30 PM

Step #6: Mr. Shasikant receives this revocation fax on 5th April 2015 at 5:45 PM

 

  1. Time Limit: Shasikant can revoke his acceptance anytime between 5th of April 12 PM to 7th Of April 2021.

 

  1. Completion of Communication: The communication of the Revocation of Acceptance is completed against Mr. Krishna on 5thApril 2015 at 5:30 PM when he posts the Acceptance Revocation Letter and the same is completed against Mr. Shasikant when he receives the same on 5th April 2015 at 5:45 PM.

The Indian Contract Act, 1872 was created an amended at regular intervals. But technology and its speed has still not paved its way inside the law. With technological advancements, situations are not as simple as a post, a telegram, or a fax. It is easy to compare the timelines of the same but with business going totally on emails and messages; it has become very difficult to understand the same. It is difficult because technology has become as fast as the speed of lightning. The difference between one party sending out an email/smart-phone message and the counter-party receiving the same is mere Nano-seconds. Moreover, the party receiving the communication can claim that they have not opened the post/email/message.

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