The Law of Contract is that branch of law which determines the circumstances in which promise made by the parties to a contract shall be legally binding on them. Each contract creates some rights and duties upon the contracting parties. According to sec 2(h) of Indian Contract Act 1872 , an agreement enforceable by law is a contract. Their must be an agreement between the two parties. An agreement is the result of a proposal or an offer by one party followed by the acceptance of other party.
According to sec 2(a) a person is said to make a PROPOSAL when he signifies to another his willingness to do or to abstain from doing anything with a view to obtaining assent of that other to such act or abstinence.
According to sec 2(b) when to person to whom the offer is made, signifies his assent thereto, the proposal is said to accepted.
Communication of offer, acceptance and their revocation.
An offer, acceptance and their revocation must be communicated to the parties of contract concerned. Following are the points regarding communication of offer, acceptance and their revocation.
1.The communication of an offer is complete when it comes to the knowledge of the person to whom it is made.
2. The communication of acceptance is complete : (a). as against the proposer (offeror), when it is put into the course of transmission to him, so as to be out of the power of the acceptor. (b). as against the acceptor (offeree), when it is received by the proposer.
3. The proposal may be revoked by the offeror, at any time before the communication of its acceptance is complete as against the proposer but not afterwards.
4. An acceptance may be revoked at any time, before the communication of the acceptance is complete as against the acceptor but not afterwards.
Modes of revocation of offer
Sec 6 of ICA 1872 deals with various modes of revocation which are as follows:
1. By notice of revocation: A proposal may be revoked by the communication of notice of revocation by the proposer to the other party. In India the notice of revocation has to be communicated by the offeror but in England the offer stands revoked even though the offeree comes to know about the revocation through some other source.
2. Lapse of time : A proposal is revoked by the lapse of time prescribed in such proposal for its acceptance or if no time is so prescribed, by the lapse of reasonable time without communication of the acceptance.
3. By failure to fulfill a condition precedent : when the offer is subjected to some condition precedent, such condition has got to be fulfilled by the acceptor before making the acceptance.
4. By death or insanity of the offeror : According to english law the position appears to be different, the offeree knows about the offeror,s death, the offer lapses and cannot be accepted. According to indian law an offer is revoked 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. If the fact does not come to the knowledge of the acceptor hence he accepts the offer, the acceptance is valid.
Revocation of Acceptance : The contract is created through post according to section 4 by the posting of letter of acceptance. Proposer becomes bound when the letter of acceptance is posted to him, but the acceptor becomes bound when the letter of acceptance reaches the proposer. An acceptance may be revoked at any time before the communication of acceptance is complete against the acceptor but not afterwards. In england once the letter is posted their is no scope for revocation.