According to the provisions of Indian Contract Act, 1872, an agreement enforceable by law is a contract. So to make a contract there has to be (i) an agreement and (ii) it must be enforceable by law.

Contract- According to Section 2 (h) Indian Contract Act, 1872 an agreement enforceable by law is called as contract.

Proposal- In English common law a proposal is known as an offer. According to Section 2(a) of Indian Contract Act, 1872 when a person signifies to another his willingness to do or to abstain from doing anything, with a view to obtain the assent of the other to such act or abstinence, he is said to make a proposal.


An offer, its acceptance and their revocation to be complete when it must be communicated.
The following are the rules regarding communication of offer:
i) The communication of an offer is complete when it comes to the knowledge of the person to whom it is made.
ii) An offer may be communicated either by words spoken (or) written (or) it may be inferred from the conduct of the parties.
iii) When an offer is made by post, its communication will be complete when the letter containing the proposal reaches the person to whom it is made.
For example: ‘A’ makes proposal to ‘B’ to sell his house at a certain price. The letter is posted on 10th July. It reaches ‘B’ on 12th July. The communication of offer is complete when ‘B’ receives the letter (i.e.., on 12th July).


Offer or proposal may be withdrawn at any time before it is accepted. Section 6, of the Indian Contract Act, 1872 deals with various modes of revocation of offer. According to it, an offer is revoked or comes to an end under following circumstances:

1. By Communication of Notice: An offeror may revoke his offer at any time before the acceptance by giving a simple notice of revocation, which can be either oral or written.

2. By Lapse of Reasonable Time: An offer will revoke if it is not accepted within the prescribed/reasonable time. If, however, no time is prescribed it lapses by the expiry of a reasonable time.

3. By Non-Fulfilment of Some Conditions: When offeror has prescribed some conditions to be fulfilled and offeree fails to fulfil the conditions required to acceptance. In such a case offer will be revoked.

4. By Death of the Offeror: The death of the offeror does not automatically revoke the offer. When the death of the offeror provided the offeree comes to know before its acceptance it will be revoked. Otherwise if he accepts an offer in ignorance of the death of the offeror, the acceptance is valid.

5. An Offer is not Accepted According to the Prescribed Mode: If the offer is not accepted according to the prescribed mode, provides offeror gives notice to the offeree within a reasonable time that the offer is not accepted according to the prescribed/usual mode. If the offeror keeps quite, he is deemed to have accepted the offer.

Acceptance- According to Section 2(b) of the Indian Contract Act, 1872 when the person to whom the proposal or offer is made signifies his assent thereto, the proposal is said to be accepted.

An offer, its acceptance and their revocation to be complete when it must be communicated.
The following are the rules regarding communication of acceptance:

1. Communication of an Acceptance is Complete: a) As against the proposer/offeror when it is put into the certain course of transmission to him, so as to be out of the power of the acceptor.
b) As against the acceptor, when it comes to knowledge of the proposer.

2. When a Proposal is Accepted by a Letter Sent by the Post the Communication of Acceptance will be Complete: a) As against the proposer when the letter of acceptance is posted and
b) As against the acceptor when the letter reaches the proposer.


In India, acceptance can be withdrawn at any time (Sections 4 and 5 of Indian Contract Act, 1872) before the acceptance is complete as against the acceptor i.e., before the acceptance is actually communicated to the proposer. For example: A accepted through a letter a proposal from B. As soon as A puts the letter of acceptance in the post box, it is binding on B and he cannot thereafter withdraw his proposal. But as far as A is concerned it is still not binding because as against. The acceptance is complete only when the letter reaches B. If A sends another letter through speed post and that letter reaches B earlier than the letter of acceptance, the second letter withdrawing the acceptance is valid and binding. According to Section 5 letter of revocation is complete against the revoker as soon as it is posted and against the other party when it reaches. So, A’s withdrawal letter is required to be posted before his letter of acceptance reaches B. The reason for giving an opportunity of revoking the acceptance is perhaps an equitable one. While the proposer has a reconsideration time between his proposing the issue and acceptor’s putting in his acceptance, acceptor is given a breathing and rethinking time between putting in a letter of acceptance and its reaching the proposer. This is perhaps, a demand of equality of opportunity.

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