Success Roar Classes

Communication of offer and acceptance – CA Foundation Business Law

Introduction

Suppose a person writes a letter to give an offer to someone and forgets to send or the offeree forgets to tell about his acceptance on the offer. Both these conditions will lead us to a situation where our contract cannot be created. This clears us that both communication of offer and acceptance (- CA Foundation Business Law) are the unforgettable part of making a contract. So how we will communicate our offer or acceptance? When any offer or acceptance is said to be communicated. Let’s know the answer to all these questions.

Communication of offer

In terms of Section 4 of the Act, “the communication of off­er is complete when it
comes to the knowledge of the person to whom it is made”.

This is the general rule of communication of offer. Now we will see how communication will be completed in different cases.

1. Instant or face to face offer

In this situation, the communication of the offer completes instantly. For example, Ram asked Shyam, will you purchase my bike? Here the offer is communicated as instant as Ram said.

2. Offer through email, post, etc.

This is the situation where sending of offers or receiving offer may have some time difference. In this situation, the offer is complete when it received and came to the knowledge by the offeree (the person to whom the offer was given).

For Example, Ram sent an offer to Shyam by a letter. The concerned dates are- Date of post – 15 September 2020, Date of receiving the letter – 18 September 2020, Date of reading the letter – 19 September 2020

Here the date of communication of offer is 19 September 2020 i.e. the date when the offer came into the knowledge of the offeree. Therefore it is also clear that mere receiving the offer is not sufficient but the offeree must read or have knowledge of the offer.

Communication of Acceptance

While reading the communication of offer we need to know about two things-What are the modes of communication of acceptance?

  1. When an acceptance will be called communicated?
  2. When an acceptance will be called communicated?

1. Modes of communication of acceptance

Acceptance can be communicated in the following three modes

1. Acceptance by act

This mode includes communication through words. This can be in oral form for example acceptance on the telephone or in written form, for example, email, letter, fax, etc. This also includes positive signs to use as acceptance.

2. Acceptance by omission to do something

This includes not doing something or forbearance as acceptance. For example, Ram gives an offer to Shyam that he will give him Rs. 50000 if he does not open his shop for 7 days. The next day, Shyam did not open his Shop. This will be considered as acceptance by the omission of doing something.

3. Acceptance by Conduct

This method includes acceptance by action or conduct. For example withdrawing the amount from an ATM machine, standing in queue for a ticket, etc.

2. Completion of communication of acceptance

An acceptance is completed on two levels-

1. Completion against proposer

An acceptance must be considered communicated when it is transmitted by the acceptor and the acceptor has no control to withdraw his acceptance.

For Example, Shyam sent his acceptance to Ram by a letter. The concerned dates are Date of post – 15 September 2020. Date of receiving the letter – 18 September 2020. Date of reading the letter – 19 September 2020. Now here the acceptance will be completed against the proposer on the date the letter was posted i.e. 15 September 2020 as now the acceptor has no control to withdraw his acceptance. Now the offeror is bound by his promise he cannot revoke his offer.

Further, if the letter is lost or delayed, will not impact the situation. The proposer will still bound by the acceptance.

2. Completion against Acceptor

Acceptance will only be considered communicated against acceptor when it comes to knowledge of the proposer or offeror. For example, in the above example, Shyam will bound by his acceptance only on the date 19 September 2020 i.e. date of reading the acceptance by the acceptor.

Further, in the case of a letter lost in transit, the acceptor will not be bound by his acceptance unless he has taken care of all measures on his behalf like address, postal duty payment, etc.

Analysis of the above

We have seen that in case any acceptance is transmitted but not reached to proposer due to lost in transit or due to technical issues in the mail, etc. will bound the proposer but not the acceptor. This will rise to an awkward situation where the one-party (proposer) is bound by the promise but not the other party i.e. acceptor.

Conclusion

So we have seen only giving an offer or accepting it is not enough to make a promise. It must be communicated to the other part properly.

Communication of offer and acceptance- CA Foundation Business Law

CA Foundation Paper-2 Business Law- The Indian Contract Act 1872-Unit-1 Nature of Contract

Share and Enjoy !

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
error: Content is protected !!