Time of revocation of offer and acceptance: Sec.5

(i)     Revocation of offer - at any time before the communication of acceptance is complete as against the offeror, but not afterwards.

(ii)   Revocation of acceptance - at any time before communication of acceptance is complete as against the acceptor, but not afterwards. 

Example : A sends his letter of offer by post on 1^st July – received by B on 3^rd July – B posts his acceptance on 6^th July – acceptance letter received by A on 8^th July.

Ø  A can revoke his offer at any time before B posts his acceptance on 6^th July, but not afterwards.

Ø  B can revoke his acceptance at any time before his letter of acceptance reaches A, i.e. before 8^th July, but not afterwards.

#   In India the acceptor does not become bound merely by posting his acceptance.  He becomes bound only when his acceptance comes to the knowledge of the proposer.  The gap of time between the posting and the delivery of acceptance can be utilised by the acceptor for revoking his acceptance by a speedier communication which will overtake the acceptance. 

The peculiarity is that after an acceptance is posted and before it comes to the knowledge of the offeror, only one party, i.e. the offeror, is bound.   The acceptor has still the right to repudiate the contract by revoking his acceptance. 

Loss of letter of acceptance in postal transit :  acceptance is complete as against the offeror when letter posted by acceptor – even is the letter gets lost, it is valid acceptance so long as it is correctly addressed, sufficiently stamped and posted.

Contracts over telephone, telex or oral communication : - telephone and telex have same effect as oral communication – but proper receipt of communication is must – otherwise invalid.  Contract deemed to be made at the place where communication of acceptance is received. 

Example: A shouts his offer to B across a river or courtyard -  B shouts back his acceptance – A cannot hear B’s reply as aircraft flying overhead – No communication of acceptance – no contract. 

Entores vs. Miles Far East Corpn. – Offer made from London by telex to party in Holland – acceptance sent by telex – telex is a method of instantaneous communication – different from the rule about the post - Held, contract made at the place where the acceptance is received. 

Bhagwandas Goverdhandas Kedia Vs. Girdharilal Parshottamdas & Co. – offer made from Ahmedabad to party at Khamgaon – acceptance given – Held, conversation resulted in a contract when acceptance of offer is intimated to the offeror – hence contract entered at Ahmedabad.

Revocation of offer: must be at any time before its acceptance is complete as against the offeror; revocation must be communicated to the offeree.

1.      By communication of notice of revocation - at any time before the acceptance of offer is complete as against the offeror.

2.      By lapse of time :  revokes if not accepted within prescribed time period – if no time prescribed, lapses after reasonable time.

Ramsgate Victoria Hotel Co. Vs. Montefiore  - Offer made by M on June 8 - to take shares in R – Acceptance received on Nov 23 – beyond reasonable time – no valid acceptance.

Head Vs. Diggon  - offer to sale of wool made on Thursday – three days’ time limit for acceptance- offeree sent acceptance on Monday – Held, offer had lapsed.

3.      Non-fulfilment of condition precedent:  Example: An offered to sell goods to B – condition that agreed price to be paid before a certain date – B fails to pay by specified date – Held, the offer stands revoked.

4.      Death or insanity of offeror – offeree must have knowledge of it before giving acceptance – if acceptance given in ignorance of offeror’s death/insanity, acceptance is valid.

5.      Counter offer - offer accepted with modification of terms of offer, or some new condition – qualified acceptance.

Hyde Vs. Wrench - W offered to sell farm at £1000 – H rejected it – instead offered to buy it for £950 – turned down by W – subsequently H agreed to pay £1000 – Held, H gave counter offer, rejecting the previous offer – earlier offer cannot be revived by giving acceptance to it - no contract. Tinn Vs. Hoffman – offeree agreed to buy half the quantity of goods offered on the same terms and conditions as applicable to the full contract – Held, there was a counter offer – no contract. 

6.      If not accepted according to prescribed or usual mode – provided offeror gives notice to offeree about the lacunae – if offeror keeps quiet – deemed to have accepted the acceptance.

Eliason Vs. Henshaw – A offered to buy flour from B – specified that acceptance should be sent by the wagon which brought the offer – B sent acceptance by post thinking it would reach offeror more speedily – letter reached later than the wagon- acceptance not as per prescribed mode – no contract.

In the above case, if the mail had reached earlier than the wagon – offeror would have been bound unless had an exclusive preference for reply by wagon – minor departure from the prescribed mode of communication not to affect the fact of acceptance provided communication is made in equally expeditious way. 

7.      Law is changed – if contemplated contract becomes illegal or incapable of performance.

8.      Rejection of offer – once rejected cannot subsequently be accepted.

May be express or implied.

Ø  Express – by words, written or oral.

Ø  Implied -  where counter offer made – or conditional acceptance given.

Hyde Vs. Wrench  - W offered to sell farm at £1000 – H rejected it – instead offered to buy it for £950 – turned down by W – subsequently H agreed to pay £1000 – Held, H gave counter offer, rejecting the previous offer – earlier offer cannot be revived by giving acceptance  to it -  no contract.

Tinn Vs. Hoffman – offeree agreed to buy half the quantity of goods offered on the same terms and conditions as applicable to the full contract – Held, there was a counter offer – no contract.