Model Answer
0 min readIntroduction
The principle of contract law dictates that a proposal, once made, remains open for acceptance until it is duly revoked or lapses due to time or counter-offer. The statement "Revocation of proposal is death of the proposal" encapsulates this fundamental concept. It signifies that upon valid revocation, the proposal ceases to be operative, and no acceptance thereafter can create a binding contract. This principle is enshrined in the Indian Contract Act, 1872, which provides a framework for the formation and enforcement of contracts, ensuring clarity and predictability in commercial transactions. Understanding the nuances of revocation is vital for both offerors and offerees to protect their respective interests.
Understanding Revocation of Proposal
Revocation, as defined under Section 5 of the Indian Contract Act, 1872, means the cancellation or withdrawal of a proposal by the proposer. A proposal can be revoked before the communication of its acceptance is complete as against the proposer. This means the proposer is free to withdraw the offer at any time before the offeree posts the letter of acceptance or sends an electronic communication of acceptance. Once acceptance is communicated, the proposal cannot be revoked.
Manners of Revocation
The revocation of a proposal can occur in several ways, each with specific legal implications:
1. By Notice of Revocation
This is the most common and direct method. The proposer must communicate the revocation to the offeree. The communication must be explicit and unambiguous. The revocation is effective only when it reaches the knowledge of the offeree. For example, if A offers to sell his car to B for ₹5 lakhs, A can revoke the offer by sending a letter to B stating that he no longer wishes to sell the car. This revocation is effective only when B receives the letter.
2. By Lapse of Time
A proposal may specify a time limit within which it must be accepted. If the offeree fails to accept the proposal within the stipulated time, the proposal automatically lapses and is deemed revoked. Section 6 of the Act addresses this. If no time limit is specified, the proposal lapses after a reasonable time, determined by the nature of the subject matter and surrounding circumstances. For instance, an offer to buy perishable goods will have a shorter reasonable time than an offer to purchase land.
3. By Counter-Offer
A counter-offer is a response to an offer that varies the terms of the original proposal. Section 7 of the Act states that a counter-offer amounts to a rejection of the original offer. Therefore, making a counter-offer effectively revokes the original proposal. If A offers to sell goods for ₹100 per unit, and B offers to buy them for ₹90 per unit, B’s offer is a counter-offer, and A’s original offer is revoked.
4. By Rejection of the Offer
An explicit rejection of the offer by the offeree constitutes revocation. Once rejected, the offer cannot be revived by the offeree unless the offeror agrees to a fresh offer. The rejection must be communicated to the offeror.
5. By Death or Incapacity of the Proposer
Section 76 of the Act states that the death or insanity of the proposer, if the fact is communicated to the offeree before acceptance, revokes the proposal. This is because a deceased or incapacitated person cannot enter into a contract. However, if the offeree is unaware of the proposer’s death or incapacity, and accepts the proposal in ignorance, the contract may be enforceable against the proposer’s estate.
6. By Illegality of the Subject Matter
If the subject matter of the proposal becomes illegal after the proposal is made but before acceptance, the proposal is automatically revoked. For example, if A offers to sell goods that are subsequently prohibited by a government order, the offer is revoked.
Communication of Revocation – A Critical Aspect
It is crucial to note that revocation is not effective until it is communicated to the offeree. The proposer cannot unilaterally revoke the offer without informing the offeree. The communication can be express (e.g., a letter, email, or phone call) or implied (e.g., through conduct that clearly indicates the proposer’s intention to revoke the offer). The burden of proving that revocation was communicated lies with the proposer.
Revocation vs. Withdrawal
While often used interchangeably, there's a subtle difference. Withdrawal is the act of the proposer deciding to take back the offer. Revocation is the process of communicating that withdrawal to the offeree, making it legally effective.
Conclusion
In conclusion, the revocation of a proposal is indeed the ‘death’ of that proposal, rendering it incapable of being accepted and forming a binding contract. The Indian Contract Act, 1872, meticulously outlines the various manners in which revocation can occur, emphasizing the importance of clear communication and adherence to legal principles. Understanding these provisions is paramount for ensuring the validity and enforceability of contracts, fostering trust and stability in commercial relationships. The evolving landscape of digital communication necessitates a continued focus on the effective communication of revocation in the modern context.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.