Acceptance

&
Revocation
Acceptance
Anson says ‘ when a lighted match is applied to a gunpowder, an explosion occurs. It produces something which cannot
be recalled or done”
Section 2(b); When the person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A
proposal, when accepted, becomes a promise;
Acceptance should be absolute and unqualified.. If the parties are not concurred on all matters concerning the offer and
acceptance, there is no valid contract. For example, "A" says to "B" "I offer to sell my car for Rs.50,000/-. "B" replies "I will
purchase it for Rs.45,000/-". This is not acceptance and hence it amounts to a counter offer.
It should be Communicated to the offeror. To conclude a contract between parties, the acceptance must be communicated in
some prescribed form. A mere mental determination on the part of offeree to accept an offer does not amount to valid
acceptance.
Acceptance must be in the mode prescribed. If the acceptance is not according to the mode prescribed or some usual and
reasonable mode (where no mode is prescribed) the offeror may intimate to the offeree within a reasonable time that acceptance
is not according to the mode prescribed and may insist that the offer be accepted in the prescribed mode only. If he does not
inform the offeree, he is deemed to have accepted the offer. For example, "A" makes an offer to "B" says to "B" that "if you
accept the offer, reply by voice. "B" sends reply by post. It will be a valid acceptance, unless "A" informs "B" that the
acceptance is not according to the prescribed mode.
Acceptance must be given within a reasonable time before the offer lapses. If any time limit is specified, the acceptance must be
given within the time, if no time limit is specified it must be given within a reasonable time.
.
It cannot precede an offer. If the acceptance precedes an offer it is not a valid acceptance and does not result in contract.
For example, in a company shares were allotted to a person who had not applied for them. Subsequently, when he applied
for shares as he was unaware of the previous allotment . The allotment of share previous to the application is not valid.
Acceptance by the way of conduct.
Mere silence is no acceptance

Acceptance must be absolute and unconditional sec 7

It is another important essential element of a valid acceptance. A valid contract arises only if the acceptance is absolute
and unconditional. It means that the acceptance should be in total (i.e. of all the terms of the offer), and without any
condition.
Thus, an acceptance with a variation is no acceptance. It is simply a counter offer. A counter offer puts an end to the
original offer, and it cannot be revived by subsequent acceptance.
If the terms differ, this will amount to a counter offer. A counter offer does not constitute acceptance; it is the making of a
new offer which may be in turn be accepted or rejected.
Similarly, a request for further information does not amount to acceptance.
In Hyde v Wrench, The defendant offered to sell a farm to the claimant for £1,000. The claimant in reply offered £950 which the defendant
refused. The claimant then sought to accept the original offer of £1,000. The defendant refused to sell to the claimant and the claimant brought an
action for specific performance. It was held that there was no contract. Where a counter offer is made this destroys the original offer so that it is no
longer open to the offeree to accept.
Neale v Merrett; M offered to sell N land for £280.00 in one payment. N accepted the offer by correspondence and enclosed £80 with the letter
promising to pay the balance in £50 monthly instalments. Held: The purported acceptance was not in fact acceptance but a counter offer

Communication :The general rule is that the offeror must receive acceptance before it is effective. Communication by acceptor himself or
acceptance can be given by the offeree and no one else
Section 3 in The Indian Contract Act, 1872
3. Communication, acceptance and revocation of proposals.—The communication of proposals, the acceptance of proposals, and the revocation of
proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he
intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it. —The communication of proposals,
the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the
party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of
communicating it.“
Section 4 in The Indian Contract Act, 1872
4. Communication when complete.—The communication of a proposal is complete when it comes to the knowledge of the person to whom it is
made. —The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made." The communication of
an acceptance is complete,— as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor;
as against the acceptor, when it comes to the knowledge of the proposer. The communication of a revocation is complete,— as against the person
who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes
it; as against the person to whom it is made, when it comes to his knowledge
Boulton v Jones , 1857 The defendant sent a written order for goods to a shop owned by Brocklehurst and which was
addressed to him by name. Unknown to the defendant, Brocklehurst had earlier that day sold and transferred his
business to Boulton. Boulton fulfilled the order and delivered the goods to the defendant without notifying him that
he had taken over the business. The defendant accepted the goods and consumed them in the belief that they had been
supplied by Brocklehurst. When he received Boulton’s invoice he refused to pay it, claiming that he had intended to
deal with Brocklehurst personally, since he had dealt with him previously and had a set-off on which he had intended
to rely.
Held: The defendant was not liable for the price. There was no contract.
Pollock CB said: ‘Now the rule of law is clear, that if you propose to make a contract with A, then B cannot substitute
himself for A without your consent and to your disadvantage, securing to himself all the benefit of the contract.’
Bramwell B said: ‘I do not lay it down that because a contract was made in one person’s name another person cannot
sue upon it, except in cases of agency. But when any one makes a contract in which the personality, so to speak, of
the particular party contracted with is important, for any reason, whether because it is to write a book or paint a
picture, or do any work of personal skill, or whether because there is a set-off due from that party, no one else is at
liberty to step in and maintain that he is the party contracted with, that he has written the book or painted the picture,
or supplied the goods; and that he is entitled to sue, although, had the party really contracted with sued, the defendant
would have had the benefit of his personal skill, or of a set-off due from him.’
Powel v Lee, 1908
Facts of the case: –
Powell referred to as the plaintiff, applied for the post of headmastership of a school. The manager hereby referred to as the appointing
authority passed a resolution of appointing him; however, no formal acceptance was conveyed to him. One of the board members overheard
the discussion and, in his individual capacity, informed the same to the plaintiff. However, later the manager cancelled the resolution,
aggrieved by the decision of the authority plaintiff sued the school for breach of contract.      
Judgment: –The Hon’ble Court held that there was no breach of contract between the plaintiff and the defendant as the acceptance was never
conveyed by someone authorized by the school board; The Hon’ble Court further stated that in order to render a valid acceptance the same
must be conveyed to the offeror by the offeree or someone authorized on his behalf. The Hon’ble Court opined, there must be notified of
acceptance from the contracting party in some way information by an unauthorized person will not form a valid contract. 
Silence will not amount to acceptance.
Communication of Acceptance
Mode of Acceptance
In this 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.
The acceptance may be by express words, by action or inferred from conduct.
Brogden v Metropolitan Railway – The claimants were the suppliers of coal to the defendant railway company. They had been dealing for
some years on an informal basis with no written contract. The parties agreed that it would be wise to have a formal contract written. The
defendant drew up a draft contract and sent it to the claimant. The claimant made some minor amendments and filled in some blanks and sent
it back to the defendant. The defendant then simply filed the document and never communicated their acceptance to the contract. Throughout
this period the claimants continued to supply the coal. Subsequently a dispute arose and it was questioned whether in fact the written
agreement was valid. It was held that the written contract was valid despite no communication of the acceptance. The acceptance took place
by performing the contract without any objection as to the terms.
In Felthouse v Bindley,
The complainant, Paul Felthouse, had a conversation with his nephew, John Felthouse, about buying his horse. After their discussion, the uncle replied by letter
stating that if he didn’t hear anymore from his nephew concerning the horse, he would consider acceptance of the order done and he would own the horse. His
nephew did not reply to this letter and was busy at auctions. The defendant, Mr Bindley, ran the auctions and the nephew advised him not to sell the horse.
However, by accident he ended up selling the horse to someone else.
Issues; Paul Felthouse sued Mr Bindley in the tort of conversion, with it necessary to show that the horse was his property, in order to prove there was a valid
contract. Mr Bindley argued there was no valid contract for the horse, since the nephew had not communicated his acceptance of the complainant’s offer. The issue
in this case was whether silence or a failure to reject an offer amount to acceptance.
Held;It was held that there was no contract for the horse between the complainant and his nephew. There had not been an acceptance of the offer; silence did not
amount to acceptance and an obligation cannot be imposed by another. Any acceptance of an offer must be communicated clearly. Although the nephew had
intended to sell the horse to the complainant and showed this interest, there was no contract of sale. Thus, the nephew’s failure to respond to the complainant did not
amount to an acceptance of his offer. Silence does not amount to acceptance
Acceptance must be made within the prescribed time or reasonable time
Acceptance must be given before the offer is revoked or offer lapses
Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109
Contract – Shares – Offer – Acceptance – Specific performance – Time Lapse – Reasonable Time
Facts
The defendant, Mr Montefiore, wanted to purchase shares in the complainant’s hotel. He put in his offer to the complainant and paid a deposit to his bank account
to buy them in June. This was for a certain price. He did not hear anything until six months and later, when the offer was accepted and he received a letter of
acceptance from the complainant. By this time, the value of shares had dropped and the defendant was no longer interested. Mr Montefiore had not withdrawn his
offer, but he did not go through with the sale.
Issues
The complainant brought an action for specific performance of the contract against the defendant. The issue was whether there was a contract between the parties
after the acceptance of the original offer six months after it was made.
Held
The court held that the Ramsgate Victoria Hotel’s action for specific performance was unsuccessful. The offer that the defendant had made back in June was no
longer valid to form a contract. A reasonable period of time had passed and the offer had lapsed. The court stated that what would be classed as reasonable time for
an offer to lapse would depend on the subject matter. In this case, it was decided that six months was the reasonable time before automatic expiration of the offer for
shares. Yet, for other property, this would be decided by the court in the individual cases.
Acceptance must be made in a prescribed manner
When no manner prescribed usual and reasonable manner
Household Fire & Accident Insurance co v grant, 1879
Facts
The defendant, Mr Grant, applied for shares in the complainant’s company, the Household Fire Insurance. The
complainants allotted shares to Mr Grant and they completed this contract by posting him a letter with notice of the
allotment. However, this letter never reached Mr Grant and it was lost in the post. Mr Grant never paid for the shares
as a consequence. When the Household Fire Insurance company went bankrupt, the liquidator asked the defendant for
payment of the shares. Mr grant refused to pay, as he did not believe he was a shareholder nor was there a binding
contract in his mind.
Issues
The court held that the liquidator was entitled to recover this money, as there was a binding contract between Mr
Grant and the Household Fire Insurance company. This decision was appealed. The issue in the appeal concerned
whether there had been an acceptance of the share offer and if there was a legally binding contract.
Held; The appeal was dismissed and it was held that there was a valid contract between the parties for the shares. The
postal rule was affirmed, which states that acceptance is effective when it is mailed, as long as the parties consider the
post as an acceptable way of communicating. This rule is true even though the letter never arrived to Mr Grant. Lord
Justice Thesiger stated that posting acceptance creates a ‘meeting of minds’, which created a binding contract. Lord
Justice Bramwell dissented, arguing that the postal rule can hinder transactions and that acceptance should only be
effective once the letter arrives
.
Countess of Dunmore v Alexander (1830) 9 S. 190 Contract law – Formation of contract
The Countess of Dunmore (C) was looking to change servant and wrote to Lady Agnew (LA) requesting information on the character of one of her servants,
Alexander. LA responded and recommended Alexander, stating that she would accept the proposed wage. C accepted this and sent a letter to LA, acknowledging
the agreement. LA was away from her residence but had the letter forwarded to the appropriate address. She acknowledged the letter and sent this on to Alexander.
A day later, C wrote to LA stating that she no longer needed Alexander. LA forward the second letter by express post and both letters were delivered to Alexander at
the same time. After C refused to house or pay Alexander, Alexander brought an action against her on the basis that there had been a completed contract and C had
breached the terms.
Issue; C argued that as the two letters were received at the same time, Alexander had proper notice that she was not required. The issue for the court to consider was
whether a party, who accepts an offer is entitled at the same moment to retract its acceptance.
Held;The court held that there was no completed contract and therefore Alexander was not entitled to the wages for which she had claimed. The court found that as
the two letters were received at the same time by Alexander, there could be no contract but notably stated that if one had arrived in the morning and the other in the
afternoon, this would have been different (as per Lord Balgray). As a result of the circumstance, C was allowed to revoke her acceptance

When parties in direct communication

Entores Ltd v Miles Far East corporation, 1955
Contract – Acceptance – Postal Rule – Damages – Instantaneous communication
The Plaintiffs were an English company. The Defendants were an American corporation.
Facts; The complainants, Entores, were a company that was based in London. They had telexed an offer to purchase 100 tons of copper cathodes to the defendants,
Miles Far East Corp. Their company was based in Amsterdam and this offer was communicated by Telex, a form of instantaneous communication. The Dutch
company sent an acceptance of this offer by Telex to the complainants. The claimant later alleged that the defendant had breached the contract. They sought
permission from the English courts to serve their claim out of the jurisdiction. To get permission, they had to show that the contract was formed in London. The
defendant claimed that the postal rule applied to this case. If so, this meant that their acceptance was valid the moment it was sent in the Netherlands. Accordingly,
the contract was formed in the Netherlands. The controlling company, Entores, was based in the UK and under English law Entores could only bring the action in
the UK (serve notice of writ outside the jurisdiction) if it could prove that the contract was formed within the jurisdiction, i.e. in London rather than Amsterdam.
Issues; In order to decide whether the action for damages should arise in English or Dutch law, the court had to decide the moment of acceptance of the contract. If
it was when the contract acceptance was sent, damages would be dealt with under Dutch law. If acceptance was when it was received, then it would be under
English law.
Held; The court held that the contract and damages were to be decided by English law. It was stated that the postal rule did not apply for
instantaneous communications. Since Telex was a form of instant messaging, the normal postal rule of acceptance would not apply and
instead, acceptance would be when the message by Telex was received. Thus, the contract was created in London. This general principle on
acceptance was held to apply to all forms of instantaneous communication methods. Acceptance via these forms of communication had to be
clear before any contract is created.
Lord Denning said: ‘The contract is only complete when the acceptance is received by the offeror’.
An agreement made in one country and amended in another should not be regarded as having been made in the second country.
Denning LJ said: ‘In a matter of this kind however it is very important the countries of the world should have the same rule. I find that most
of the European countries have substantially the same rules as that I have stated’.
Contract – Acceptance – Postal Rule – Damages – Instantaneous communication
Bhagavandas Goverdhandas Kedia v Giridharilal Parshottamdas &co, 1966
On July 22nd 1959, Kedia Ginning Factory and Oil Mills (appellant) of Khamgaon entered into a contract over telephone to supply cotton
seed cakes to M/s. Girdharilal Parshottamdas and Co. (respondents) of Ahmedabad.  The respondents commenced an action against the
appellant in the City Civil Court of Ahmedabad for failing to supply cotton seed cakes as per the aforementioned agreement. The respondents
contended that the cause of action for the suit arose at Ahmedabad as the appellant’s offer to sell was accepted at Ahmedabad and the
appellant was to be paid for the goods through a bank in Ahmedabad. The appellant contended that the respondents’ offer to purchase was
accepted at Khamgaon; the delivery and payment of the goods were also agreed to be made in Khamgaon and the City Civil Court of
Ahmedabad did not have jurisdiction to try the suit. The City Civil Court of Ahmedabad held that it had jurisdiction as the acceptance of the
offer was intimated to the offerree at Ahmedabad and that is where the contract was made. The appellants filed a revision application in the
High Court of Gujarat which was rejected. Then, the appellants preferred an appeal to the Supreme Court with special leave.
Contentions of appellant: In the case of a contract by telephone, only the court within whose territorial jurisdiction the acceptance of offer is
spoken into telephone has jurisdiction to try any suit regarding the contract
 Contentions of defendant: The contract is formed where the acceptance of offer is intimated to the offerree. Hence, the court in whose
territorial jurisdiction such acceptance of offer was intimated can try such suit.
 Judgement: The court held that the contract act does not expressly deal with the place where a contract has been made. As against cases of
correspondence by post or telegram, in the present case of correspondence by a telephone, a contract was formed when acceptance was duly
communicated to the offeror and hence at Ahmedabad
Revocation section 5
Communication of revocation section 6
The term “revocation” refers to the recall, cancellation, or annulment of something that has been granted, such as a privilege, an offer, or a
contract .
Revocation of offer
Revocation acceptance

Revocation of offer
in contract law the term revocation may refer to the termination or withdrawal of an offer. The party making an offer may legally revoke it
before it has been accepted by the other party.

MODES OF REVOCATION OF OFFER: • Withdrawl before expiry of fixed period

1) Revocation by communication of notice Alfred Schonlank v Muthunyna Chetti, 1892
Henthorn Fraser, 1892 • Acceptance of proposal under voluntary retirement
2)Revocation by lapse of time scheme
Ramsgate Victoria Hotel Co v Montefiore, 1866 Bank of India v O.P.Swarnakar, 2003
• Agreement to keep offer open for specified period
3)revocation by non-fulfilment of conditions or failure to accept
• Communication of revocation must be from offeror
condition precedent
State of West Bengal v Mahendra Chandra das, 1990 himself
Dickinson v Dodds, 1876
4)By death or insanity of offeror • Revocation of general offer
5)Revocation by counter offer Shuey v United States, 1875
6)Revocation by failure to accept the offer in the prescribed mode • Superseding proposals by fresh proposals
• Cancellation of allotment of land
• Revocation of bid
Union of India v Bhim Sen Walaiti Ram, 1969
• BY NOTICE OF REVOCATION (S. 6 CLAUSE 1) - A proposal by the proposer by communication of notice of revocation proposal to the
propose only before the proposee send the communication of acceptance.
• BY LAPSE OF TIME (S. 6. CLAUSE 2) – A proposal is revoked by the time prescribed in such proposal of acceptance, or, if no time is
prescribed, by the reasonable lapse of time, without communication of acceptance. o A of Agra by letter to B in Bhatinda offers his car for 2 lakhs
through letter on 15 August 2017 and asks B to confirm the acceptance within 7 days of accepted letter. B receives the offer letter on 17 August
2017 and fails to communicate the acceptance by 24 August 2017. As time lapses A can revoke the offer. If time is specified in the offer a
reasonable time should be considered for the period of acceptance.
• By nonfulfillment of the condition precedent to acceptance(S.6 clause 3): Sometimes the offeror may ask the offeree to fulfil certain
conditions before acceptance. If the conditions are on fulfilled by the offeree the offeror may revoke the offer and the offer lapses.
• By death or insanity of the proposer (S.6 clause 4): A proposal can be revoked by death or insanity of the proposer if the fact of his death or
insanity comes to his knowledge of acceptor before acceptance. Death of offeror revokes the proposer and if the acceptance is made it is of no
effect.
• Other methods of revocation of offer: The counter offer amounts to rejection of the original offer by a counter offer-  Rejection of
original offer takes place when the original offer lapses. A counter offers result is a new offer A offered to sell his old car for 1 lakh. B replied to
pay 90000. On A’s refusal to sell at this price. B agreed to pay 1 lakh. Now A is not bound to sell his car to B at 1 lakh. Initial offer to sell the car
was made by A and B rejected the offer by giving a counter offer. Now again B is giving new offer to buy the car at 1 lakh. Thus as offering, he has
the right to accept and reject the new offer given by B. A counter offer amounts to new offer and gives the offeror the power to revoke the offer. By
acceptance not being accepted in the mode prescribed : If the offeror has prescribed a condition in the offer of acceptance it should be strictly
followed by the offeree. If the offer is not accepted in the mode prescribed, the offeror can reject the acceptance by giving notice to offeree within
reasonable time that offer should be accepted in the prescribed mode. A company selects Mr M for the post of general manager and sends him offer
letter and asks him to confirm the acceptance within 7 days by e-mail only. B receives the offer letter and communicates the acceptance to
company by speed post. The condition of the offer is not satisfied hence the offer is not revoked.
by rejection of offeror by offeree an offer comes to an end when offeree does not accept it and once rejected cannot be revived again by him.
A of Agra by a letter to B offers his car for 2 lakhs. B rejects the offer now B cannot revive it.
 By subsequent illegality of subject matter of the offer- An offer lapses if it becomes illegal before its acceptance by the offeree o A offers Pan
Masala of Rs 2000 to be delivered on 1 July 2012 and asks for the acceptance by 15 July 2012. On 10 July 2012 the sale of Pan Masala is
illegal. The consideration has become illegal hence the offer has lapsed.
• By subsequent destruction of subject matter of offer- An all trader offers 4 tons of oil to be on 1 July 2012 and asks him for acceptance by 15
July. On 10 July due to fire all oil is destroyed. As the subject matter of the offer is destroyed the offer is lapsed due to destruction of subject
matter. 
CASES: 1) IN HENTHORN VS. FRASER : Facts
The complainant and the defendant had been negotiating the purchase price of houses. An original offer to buy the houses for £600 had been rejected. The defendant, Mr Fraser, handed the
complainant, Mr Henthorn, a note that detailed an option to sell the property for £750, which would be valid for 14 days. While this offer was being considered, another buyer was interested
and the defendant concluded a contract with them instead. The next day, the defendant then withdrew the offer to the complainant by post. This note did not reach Mr Henthorn until 5pm. In
this time, Mr Henthorn had already responded to the offer by post with an unconditional acceptance to buy the houses for £750. But, this was not delivered to Mr Fraser until the office was
closed and he did not read this acceptance until the morning.
Issues;The issue in this case concerned the revocation of the offer. This was completed before the postal acceptance of the offer was received. It was for the court to decide whether the
acceptance of the offer was valid or if the contract had been revoked successfully before the acceptance.
Held; The court held that the offer was valid and an order for specific performance made for £750 to purchase the property. The postal rule in Adams v Lindsell would apply, which stated that
it would be reasonable for acceptance of an offer to take place by post. However, this rule would not apply to the revocation of an offer. Post was a way of communicating offer acceptance, but
the acceptance itself is completed as soon as it is posted. This was reasonable to expect since both parties lived in different towns
2) NUTAKKI SHESHARATANAM VS. SUBCOLLECTOR The land owner offering land for acquisition if lumpsum price is paid. He withdrew his offer before
acquisition offer was accepted. The court held that the withdrawal was good. Thus the communication of the revocation should reach the offeree before the
acceptance is out of power.
3) TENAX STEAMSHIP C. LTD. VS. BRIMNESS- A notice of withdrawal of ship from charter services was sent by Telex and was received during normal
business hours but the plaintiff read the message next day. Court held that he was bound by the notice when he received it. Thus, the notice of revocation shall be
deemed to be served when it reaches the offeree’s address.
4) Payne v Cave (1789) - The defendant made the highest bid for the plaintiff's goods at an auction sale, but he withdrew his bid before the fall of the auctioneer's
hammer. It was held that the defendant was not bound to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the
auctioneer signified acceptance by knocking down the hammer. Note: The common law rule laid down in this case has now been codified in s57(2) sales of goods
act.
5) Fisher v Bell- A shopkeeper displayed a flick knife with a price tag in the window. The Restriction of Offensive Weapons Act 1959 made it an offence to 'offer
for sale' a 'flick knife'. The shopkeeper was prosecuted in the magistrates' court but the Justices declined to convict on the basis that the knife had not, in law, been
'offered for sale'. This decision was upheld by the Queen's Bench Divisional Court. Lord Parker CJ stated: "It is perfectly clear that according to the ordinary law of
contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which
constitutes a contract."
Bank Of India & Ors vs O.P. Swarnakar Etc on 17 December, 2002
SBI introduced a scheme for voluntary retirement and gave a circular to its employees
2. I accept the terms and conditions stipulated in PNB Employees Voluntary Retirement Scheme 2000 unconditionally and irrevocably.
3. I furnished the required particulars in the APPENDIX enclosed for consideration of my offer to seek voluntary retirement from the service of the Bank under the
above scheme.
Yours faithfully, Signature of the Employee Place: Name _______________ Date : Designation___________ BO/Division __________"
A large number of employees (1,01,000 employees approx.) submitted their applications out of whom a small number of employees (200 employees approx.)
withdrew their offer. Despite withdrawal of their offer the same was accepted. In some cases offers despite withdrawal thereof were accepted within the period
during which the scheme was operative and in some beyond the same
It is in the aforementioned backdrop, the questions are required to be answered. It is now well-known that the use of the term 'offer' or 'proposal' is not decisive. It, as
noticed, would depend upon the fact involved in the matter.
In Anson's Law of Contract, 26th Edn. at p.25 it is stated:
"Offers and Invitations to Treat: It is sometimes difficult to distinguish statements of intention which cannot, and are not intended to result in any binding obligation
from offers which admit of acceptance, and so become binding promises. A person advertises goods for sale in a newspaper, or announces that he will sell them by
tender or by auction; a shopkeeper displays goods in a shop window at a certain p rice; or a bus company advertises that it will carry passengers from A to Z and will
reach Z and other intermediate stops at certain times. In such cases it may be asked whether the statement made is an offer capable of acceptance or merely an
invitation to make offers, and do business. An invitation of this nature, if it is not intended to be binding, is known as an 'invitation to treat.
Chitty on Contract states the law thus:
"Tenders A statement that goods are to be sold by tender is not normally an offer to sell to the person making the highest tender; it merely indicates a readiness to
receive offers. Similarly, an invitation for tenders for the supply of goods or for the execution of works is, generally, not an offer, even though the preparation of the
tender may involve very considerable expense. The offer comes from the person who submits the tender and there is no contract until the person asking for the
tenders accepts one of them. These rules, may, however, be excluded by evidence of contrary intention: e.g. where the person who invites the tenders states in the
invitation that he binds himself to accept the highest offer to buy (or as the case may be, the lowest offer to sell or to provide the specified services). In such cases,
the invitation for tenders may be regarded either as itself an offer or as an invitation to submit offers coupled with an undertaking to accept the highest (or, as
the case may be, the lowest) offer; and the contract is concluded as soon as the highest offer to buy (or lowest offer to sell, etc.) is communicated.“
Alfred Schonlank v Muthunyna Chetti, 1892
Facts: The defendant left an offer to sell a quantity of indigo at the plaintiff's office allowing him eight days time to give his acceptance. The defendant then revoked
his offer on the fourth day and plaintiff accepted it on the fifth day.  The plaintiff files the suit for the specific performance of the contract.
Issues: Whether an offer with an option to accept within a fixed period could be withdrawn before the expiry of that period?
Holding: An offeror can withdraw an offer with an option to accept within a fixed period before the expiry of that period if the offeree has not accepted the offer
before it is withdrawn.
Rationale: The court observed that the acceptance is useless as both on principle and on authority it is clear that there is no consideration for the promise to keep the
Shuey v United States, 1875
Facts: Following President Lincoln's assassination, the Secretary of War issued and published a $25,000 reward "for the apprehension of John H. Surratt, one of
Booth's accomplices." Plaintiff aided in capture of Surratt. The reward had been withdrawn (several months prior to Surratt's capture) in the newspaper. The
U.S. paid $10,000 for Plaintiff's assistance in capturing and identifying Surratt.
Issue: Is Defendant liable to pay the remaining $15,000 from the reward?
Holding: No, The U.S. adequately compensated Plaintiff for his assistance--he did not actually apprehend Surratt, as required by the reward offer.

Dickinson v Dodds (1875) 2 Ch D 463

Contract – Offer – Acceptance – Promise – Third Party
Facts
The defendant, Mr Dodds, wrote to the complainant, Mr Dickinson, with an offer to sell his house to
him for £800. He promised that he would keep this offer open to him until Friday. However, on the
Thursday Mr Dodds accepted an offer from a third party and sold his house to them. It was claimed
that Mr Dickinson was going to accept this offer, but had not said anything to Mr Dodds because he
understood that he had time to give acceptance until Friday. Mr Dodds communicated that the offer
had been withdrawn through a friend to the complainant. After hearing this, Mr Dickinson went to
find the defendant, explaining his acceptance of the offer. The complainant brought an action for
specific performance and breach of contract against the defendant.
Issues
The issue in this case was whether the defendant’s promise to keep the offer open until Friday
Dunlop v Higgins [(1848) 1 H.L.C. 381
morning was a binding contract between the parties and if he was allowed to revoke this offer and sell Dunlop & Company offered by post to sell 2,000 tons of pig-Iron at
to a third party. some price. The offer was sent on 28 January 1845. It reached
Held Higgins on 30 January 1845. Higgins posted the letter of acceptance
The court held that the statement made by Mr Dodds was nothing more than a promise; there was no the same day but the defendant received it on 1 February 1845 with
binding contract formed. He had communicated an offer for buying his house to the complainant and some delay. The defendant refused to supply the goods, because the
this offer can be revoked any time before there is acceptance. There was no deposit to change this prices had increased. It was held that the acceptor was not
responsible for any delay in the course of the transit. Hence there was
situation. Thus, as there was no obligation to keep the offer open, there could be no ‘meeting of the a binding contract. The posting of a letter accepting an offer
minds’ between the parties. In addition, the court stated that a communication by a friend or other constitutes a binding contract even if the letter never arrives due to
party that an offer had been withdrawn was valid and would be treated as if it came from the person the fault of the post office.
themselves
Postal rule and electronic communications
Another problem faced by the courts was the introduction of computers. Contracts created over the internet, for example a CD
bought from an online shop, are seen as quite similar to a transaction in a shop. The item on the webpage is seen to be an
invitation to treat , the customer then puts the items in there virtual basket and proceeds to checkout where they give there
credit card details to the seller, this constitutes an invitation to buy; this makes the transaction ‘analogous to the situation in
Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd’  ’  , the website only then displays a confirmation of order,
the acceptance is often only communicated by dispatch of the goods themselves. The contracts between consumers and
businesses selling through websites is expressly governed in this way by The Electronic Commerce (EC Directive) Regulations
2002  which implies that the ‘receipt’ rule is effective in internet contracting by stating the order/acknowledgment of the order
‘will be deemed to be received when the parties to whom they are addressed are able to access them’  . The postal rule
therefore does not apply as internet contracting is held to be a method of instantaneous communication, the regulations are a
form of primary legislation which means parliament preferred the ‘receipt’ rule over the ‘dispatch rule’ in this situation.
The scope of The Electronic Commerce (EC Directive) Regulations  does not extend to email, this has caused some problem in
defining whether an email is ‘instantaneous’ or ‘non-instantaneous’; and as mentioned above the former is beyond the scope of
the postal rule . There is an argument for this from a technical perspective, the average person may regard email as just as
instantaneous as a fax or teletex, however an email is not sent directly between the two devices, instead it is transferred through
a server. Eliza Mik states ‘email messages are exchanged independent of each other, without establishing a simultaneously
contiguous end-to-end traffic path between the contracting parties’ , she states it is technically incorrect to describe Email as
instantaneous, thus on this basis surely the postal rule should apply to electronic mail.
A second argument originates from one of the justifications of the postal rule above, as the law states that a person should ‘trust
the post’  then surely it would be hypocritical for this not to apply to electronic post. The person has no control over the
acceptance once he has pressed send just as if he had put it into a mail box.  .
.
On the other hand, there are also a number of reasons put forward by academics of why the postal rule shouldn’t be
extended to email. The main argument regarding the purpose and reasons behind the postal rule when it was created in the
18th Century, namely as it was the only form of communication apart from face-to-face. Several Capps points out that in
the 21st century there are various methods of instantaneous communication to check that any non-instantaneous
correspondence have arrived successfully. A technological advancement to support this comes in the form of message
receipts, Fee in supporting the postal rule being applied to email, points out that businesses should take advantage of this
service to ensure that messages are received.
In summation, it seems the postal rule is not completely outdated; it can still apply to modern non-instantaneous methods
of communication such as email. It was held in a court in Singapore that email is non-instantaneous as messages can arrive
in a ‘incomprehensive’ form depending on the ‘protocols’ it is sent through. The case also compares emails that are not yet
accessed to mail unopened and subsequently is persuasive that the postal rule should apply to email. The fact that
parliament have not legislated on the subject whereas they have given clarity to contracting through websites may suggest
that it is their intention for the traditional postal rule of apply . Email is a system that is remarkably similar to post but on a
speedier basis, it seems only logical that when email messages between parties are truly instantaneous and direct should
the ‘receipt’ rule be considered
Though e-mail communication has some of the trappings of instantaneous communication, nevertheless, it is a fragmented
process involving many stages. The e-mail message is split into various packets and sent via different routes. Further, unlike in
instantaneous forms of communication, the sender does not know if the transmission of the e-mail is successful, for even though
he gets a delivery receipt, it only signals delivery to the mailbox and does not indicate that the other party has the knowledge of
the receipt. Thus, e-mail messages would come under the category of non-instantaneous form of communication. The default
rules enunciated above would apply to e-mail contracts.

Section 4 signifies that “the communication of an acceptance is complete as against the proposer, when it is put in a course of
transmission to him, so as to be out of the power of the acceptor and as against the acceptor, when it comes to the knowledge of
the proposer”. Here it is said to put in a course of transmission but no specific transmission is mentioned; so it includes all kinds
of transmissions even e-mail and Facebook. Though e-mail or Facebook communication is within the purview of Section 4, no
specific rule is constituted whether postal rule or rule of instantaneous communication will be considered same as e-mail and
Facebook contract. If someone sends a message through Facebook or e-mail and opposite party replies instantly it seems to be
instantaneous communication. In contrast, if a person sends a message through e-mail or Facebook Chat Messenger but opposite
party does not reply instantly; then it seems to be non-instantaneous communication in nature. Analyzing the nature of e-mail and
Facebook communication, it deems to be instantaneous as well as non-instantaneous communication. Justice Hidayatullah had
said, “the law was framed at a time when telephones, wireless, Telstar and Early Bird were not contemplated”. The Information
Technology Act, 2000, follows no rule of instantaneous communication or postal rule. Pursuant to Section 13 of the Information
Technology Act, 2000, the dispatch of an electronic record occurs when it enters a computer resource outside the control of the
originator and the receipt would occur in the case of e-mail when the message enters the addressee’s electronic mailbox; so
contract is complete when the message enters into the addressee’s mailbox. In pursuance of Entores Ltd. v. Miles Far East
Corpn., if we categorise e-mail or Facebook communication as instantaneous communication i.e. telex, telephone, fax; the
contract is complete when it comes to the knowledge of the proposer. If the proposer does not hear the acceptance for chaos or
noise the contract is not completed. Alternatively, if we follow postal rule in e-mail or Facebook contract the contract is complete
as soon as the e-mail or message is sent.
Keeping in mind the main elements which are essential for formation of a contract, some additions are required in Section 4
of the Contract Act, 1872. There should be information regarding the various modes of communication and which modes are
instantaneous or non-instantaneous. Not only this, proper rules should be provided for these modes of communication.
Considering the nature of Facebook and e-mail communication we should apply rule of instantaneous communication as well
as postal rule as it is mentioned earlier that nature of instantaneous communication and postal rule existed in these modern
modes of communications.
When the nature of initiation of negotiation is instant, the instantaneous communication should be applied whatever the
nature of completion of the negotiation and contract is complete when acceptance comes to the knowledge of the proposer.
But when the nature of negotiation is not instant, the postal rule should be applied and the contract is complete when the
acceptance is sent and gone beyond the control of the acceptor. If it is instant nature the offeror has option to revoke the
contract before the acceptance coming to his knowledge and in non-instant contract, the offeror has enough time to revoke
the proposal before the acceptance is sent. In the case of fax and e-mail, the sender is unable to know at once about the
success or failure of the communication. It is therefore submitted that the rules of postal communication must be applicable
to communication by fax or e-mail, or messages sent by similar electronic means except where the sender can verify the
proper communication of the message immediately.
The Information Technology Act (IT Act) has recognised e-mail contracts as legally valid and binding. It particularly mentions that a contract
cannot be deemed invalid solely on the basis of it being an online exchange of offer and acceptance. Section 10A of the Information
Technology Act hints at the validity of e-mail contracts. 
Section 10A of the IT Act: “Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of
proposals and acceptances, as the case may be, are expressed in electronic form or by means of an electronic record, such contract shall not
be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose
Section 13 in The Information Technology Act, 2000
13. Time and place of despatch and receipt of electronic record.-(1) Save as otherwise agreed to between the originator and
the addressee, the despatch of an electronic record occurs when it enters a computer resource outside the control of the
originator.
(2) Save as otherwise agreed between the originator and the addressee, the time of receipt of an electronic record shall be
determined as follows, namely:-(a) if the addressee has designated a computer resource for the purpose of receiving
electronic records,-(i) receipt occurs at the time when the electronic record enters the designated computer resource; or
(ii) if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource,
receipt occurs at the time when the electronic record is retrieved by the addressee;
(b) if the addressee has not designated a computer resource along with specified timings, if any, receipt occurs when the
electronic record enters the computer resource of the addressee.
(3) Save as otherwise agreed to between the originator and the addressee, an electronic record is deemed to be despatched
at the place where the originator has his place of business, and is deemed to be received at the place where the addressee
has his place of business.
(4) The provisions of sub-section (2) shall apply notwithstanding that the place where the computer resource is located may
be different from the place where the electronic record is deemed to have been received under sub-section (3).
(5) For the purposes of this section,-(a) if the originator or the addressee has more than one place of business, the principal
place of business, shall be the place of business;
(b) if the originator or the addressee does not have a place of business, his usual place of residence shall be deemed to be
the place of business;
(c) "usual place of residence", in relation to a body corporate, means the place where it is registered.
The Indian Evidence Act, 1872
E-mail records can be admissible as evidence in courts under the Indian Evidence Act. Hence issue of an offer or
acceptance via mails can give rise to binding contracts and these electronic records can be used an evidence in courts to
enforce the contracts. 
Section 85A of the Evidence Act: “The Court shall presume that every electronic record purporting to be an agreement
containing the [electronic signature] of the parties was so concluded by affixing the [electronic signature] of the
parties.”
Formation of contracts online via emails has been recognized and given validity to by the Indian courts time and again.
For instance, in the case of Trimex International FZE Limited, Dubai v. Vendata Aluminium Ltd.[1], the parties
thoroughly agreed to the terms of the contract via emails. The Supreme Court upheld the validity of this contract and
further observed that, “Once the contract is concluded orally or in writing, the mere fact that a formal contract has to be
prepared and initiated by the parties would not affect either the acceptance of the contract so entered into or
implementation thereof, even if the formal contract has never been initiated.” The Indian Contract Act has
acknowledged that conventional agreements which contain oral contracts entered into by competent parties with free
consent and a lawful object for a lawful consideration and are not illegal or void. Hence no provision in the Indian
Contract Act forbids e-mail contracts as long as all the essentials of a valid contract are present.