THE MATRIX GOVERNING THE REVOCATION OF CONTRACTS

“One can’t revoke a true happiness but can do so with a contract”

Revocation in simpler terms means cancellation. The Indian Contract Act lays out the rules of revocation of an offer in Section 5. 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.

It says the offer may be revoked anytime before the communication of the acceptance is complete against the proposer. Once the acceptance is communicated to the proposer, revocation of the offer is now not possible. The main point to note here is that the offer or the proposal can only and solely be canceled out before the acceptance. Once, the acceptance has been made or initiated, there is no chance the contract can further be revoked. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterward.” The bare act meaning of the said provision related to the acceptance is merely as same as that of the proposal, the main difference here is that the acceptance to the contract can only be canceled out before the main communication related to that particular acceptance is completed.

The acceptor can revoke the offer until the communication of the acceptance is complete against the said acceptor. Such communication is complete when the proposer receives the letter of acceptance. So in the time frame between posting the letter and the letter being received by the proposer, the acceptor can revoke the acceptance.

 

METHODS-

Section 6 of the Indian Contract Act lays down different methods and modes for revocation under the head “Revocation how made”. The main contents that govern the revocation are as follows-

  1.   Notice of revocation
  2.   Lapse of time regarding the communication of the acceptance
  3.   Failure on the part of the acceptor to fulfill a condition precedent to the contract 
  4.   Death or insanity of the party making the offer.

In one of the most famous cases related to the notice of revocation i.e. Alfred Schonlank & Anr.  V. Muthunayana Chetti [(1892) 2 MLJ 57], the defendant offered the plaintiff a sale of the indigo proposal and also told him that within eight days he can reply to the proposal. The defendant revoked the offer on the fourth day on the other hand plaintiff on the fifth day accepted the offer. The court held that in case there is no consideration for the promise to keep the offer open for a certain time then it’s nothing but a bare promise only and at the same time, this acceptance was of no use in the eyes of laws. 

An offer may lapse on the expiry of the time period fixed for the acceptance. In case of an agreement where the acceptance has been subjected to a specified period of time, then the inability of the acceptor to provide the acceptance before the expiry of that time will lead to revocation of the offer. In cases where the time has not been fixed for the acceptance to be solicited, the offer is considered to be revoked after a reasonable amount of time. The amount of reasonable time is not fixed and depends upon the facts and the circumstances of each case.

It must be noted that the revocation of either offer or acceptance must take place before the contract comes into existence. However, there is a difference in regards to the point of beginning of contractual obligation of the offeror and the acceptor. An offeror is considered to be bound under a contract, from the moment the acceptance is posted by the acceptor, i.e. the acceptance goes out of the hands of the acceptor. Therefore the proposer must revoke the contract before the acceptance is posted against him and not afterward. On the other hand, an acceptor is considered to be bound in a contract, when the acceptance is brought to the knowledge of the proposer. As a result, he may revoke the acceptance before the offeror receives information about the acceptance and not after it.

 

CONCLUSION-

The versatility of the Indian Contract Act is such that the scope has been widening to extend from entering into a contract to the dissolution and the revocation of the contract itself. From laying down different provisions to stating certain exceptions the Indian Contract Act explains the methods of revocation.

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