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Revocation of offer and acceptance – CA Foundation Business Law

Introduction

An offer and acceptance are an integral part of a promise or agreement. We know about the provisions regarding the offer, acceptance, and their communication. Now we will learn about how and when an offer or acceptance can be revoked? So let’s understand the revocation of offer and acceptance (CA Foundation Business Law).

Revocation 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”. Hence we will that an offer will be said to be communicated when it came to the knowledge of the offeree.

Further section 5 provides that a proposal can be revoked at any time before the communication of its acceptance is complete as against the proposer. This means an offer can be revoked on or before the acceptance is transmitted by the offeree.

For Example, Ram sent an offer to Shyam by a letter. The concerned dates are-

Date of acceptance -14 September 2020, Date of post – 15 September 2020. Date of receiving the letter – 18 September 2020, Date of reading the letter – 19 September 2020. Here the offeror can revoke on or before the date when the acceptance will be communicated against him. Here the date of transmission of the acceptance which is 15 September 2020. This means the offeror can revoke his proposal on or before 15 September 2020.

Further, there are various other modes to revoke an offer. Know more about them.

https://successroar.com/modes-of-revocation-of-offer-ca-foundation-business-law/

Revocation of offer

We know that communication of acceptance will be considered to be completed when the acceptance comes to knowledge of the offeror. In the above example, the acceptance is completed on 19 September 2020 i.e. date of reading the acceptance by the acceptor.

In terms of Section 5 of the Act, an acceptance may be revoked at any time before the communication of acceptance is complete as against the acceptor.

It means if we check in the above example, communication of acceptance is completed against the acceptor. It is the date on which the offeror came to know about the acceptance which is 19 September 2020. This means the acceptor can revoke its acceptance on or before this date. We can understand this with the help of this diagram-

Communication of Revocation

Section 4 of the Act describes the provision for communication of offer and acceptance both. This means when a revocation for offer or acceptance will be considered to be completed. The General rule is-

1. 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.

2. As against the person to whom it is made

When it comes to his knowledge.

For example, Ram wants to revoke his proposal. The revocation will be said to be completed as soon as he put the revocation into the transmission. It will be considered completed on part of Shyam when he comes to knowledge of the revocation. It is to be remembered that this revocation is only possible until Shyam has not transmitted his acceptance. The same rule will apply to the revocation of acceptance.

Conclusion

So we have seen, revocation of offer and acceptance has the same rules for communication provided by section 4 of the Act. Further section 5 provides the provision regarding the time limit up to which an offer or acceptance can be revoked.

Revocation of offer and acceptance – CA Foundation Business Law

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

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