Table of Abbreviations

& And

AIR All India Reporter

AC Appeal Cases

SC Supreme Court

SCR Supreme Court Reporter

SCC Supreme Court Caes

SCC (Supp) Supreme Court Cases (Supp)

UOI Union of India

Vs/ V/ V. Versus

WLR Weekly Law Reports

1
 Table of Cases

• Badri Prasad v. State of M.P. (1971) 3 SCC 23………………………………………….

……..12
• Gibson v Manchester City Council [1979] 1 WLR 294…………………………………..……
12
• Harvey v Facey LR 1893 AC 552 (PC)
………………………………………………………….13
• Sanwarmal Goenka v. Soumyendra Chandra Gooptu 1980 SCC OnLine Cal 20….………
13
• Rosenbaum v. Belson, (1900) 2 Ch
267…………………………………………………………..14
• Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas & Co
(1966) 1 SCR 656……………………………………………………………………………….…15
• LIC v. Raja Vasireddy Komalavalli Kamba (1984) 2 SCC 719………………………….…15
• Kanhaiyalal vs Dineshchandra AIR 1959 MP 234………………………………….……….17
• J.K. Enterprises vs State Of Madhya Pradesh AIR 1997 MP 68………………….……….18
• Somasundaram Pillai vs The Provincial Government Of Madras AIR 1947 Mad. 366..19
• Viswesardas Gokuldas v. B.K. Narayan Singh, (1969) 1 SCC 547……………………….19
• Balram Gupta v. Union of India 1987 Supp SCC 228……………………………………..20

Table of Statute

• Section 2- Indian Contract Act, 1872

• Section 3- Indian Contract Act, 1872
• Section 4- Indian Contract Act, 1872
• Section 5- Indian Contract Act, 1872
• Section 6- Indian Contract Act, 1872
• Section 73-Indian Contract Act, 1872
• Section 13(2)(a)(ii)- Information Technology Act, 2000

2
 TABLE OF CONTENTS
Table of Abbreviations..............................................................................................................1
Table of Cases............................................................................................................................2
Table of Statute..........................................................................................................................2
Introduction................................................................................................................................3
Definitions........................................................................................................................5
Research Framework.................................................................................................................6
Review of Literature.........................................................................................................7
Statement of Problem.......................................................................................................7
Hypothesis........................................................................................................................7
Methodology.....................................................................................................................7
Objectives of Study...........................................................................................................7
Research Questions..........................................................................................................8
Offer...........................................................................................................................................9
Communication........................................................................................................................12
Revocation...............................................................................................................................15
Effects of Terminating an Offer...............................................................................................18
Conclusion & Suggestions.......................................................................................................20
Bibliography............................................................................................................................21

3
 Introduction
The Indian Contract Act, 1872 defines contract as— “An agreement is a contract if there is
free consent of competent parties, for a lawful consideration and with a lawful object, and are
not hereby expressly declared to be void.”
Here, an agreement is a set of actionable promises between at least two parties, a promisor
and promisee. It consists of two essentials- (1) Offer and (2) Acceptance. An offer is an out-
ward expression of willingness to enter into a contract which upon acceptance becomes
legally binding on the offeror and the party the offer is made to. This offer is understood to be
made with an intention to oblige with its conditions once acceptance has been communicated.
However, when the offeror no longer wishes to contract, they can terminate the offer (before
its acceptance) and thereby avoid any liability. It is however important to note that in prac-
tice, it is not this simple. There are many ways offers and acceptances are made. Apart from
traditional ways of communication like prepared documents, e-mails and telephone often big
corporations enter into contracts through exchange of correspondences also. Thus, it is at
times difficult to break down an agreement into offer and acceptance. However, the law has
been interpreted and adjusted to suit the changing societies and needs of people that enter into
a contract by courts over these years. As a result it is now increasingly possible to ascertain
whether the contract has been concluded even if there is no offer and acceptance clearly evi-
dent in the first glance often through intervention of a court. At the same time there still exists
an ambiguity surrounding offer, acceptance etc especially when they interact with different
modes of communication, places of contract, circumstances in which consent was obtained
and other such variables. Therefore, even when the law is clear and definitive it is on the
court to provide an interpretation such that the said ambiguities arising out of different situa-
tions are resolved to increase the scope of what may be considered a binding contract to ac-
commodate technological developments and provide relief to parties. Given these facts, it is
perhaps pertinent to establish a set of indicators that can make parties understand when a con-
tract is concluded and thus, a breach upon termination of the said offer. Also, the conse-
quences of this to both the terminating and the aggrieved party.

4
Section 5 of the Indian Contract Act, 1872 states that “—A proposal may be revoked at any
time before the communication of its acceptance is complete as against the proposer, but not
afterwards.”
Accordingly, it becomes important to understand what these terms- offer, communication of
acceptance against the proposer and communication of the revocation itself mean. An un-
derstanding of the said variables can provide a clear picture on what constitutes a termination
of offer without breach. This understanding however comes only with a study of the statute
along with relevant case laws to ascertain the requirements of a termination without liability.
Furthermore, remedies in case of breach usually include compensation, injunctions or, contin-
uation. Courts depending on individual cases award an appropriate solution to a party. It is
crucial to question whether the said remedies are available only in case of a concluded con-
tract of which there is a breach or in case of a lawful termination of offer due to which the of-
feree (while not expecting such a termination) has incurred losses. In case of the latter— is
the offeree entitled to a remedy?
It is also important to acknowledge that in the times of Covid-19, due to emergencies arising
out of lockdowns, an offeror’s wish to recall an offer might have increased which may have
led to the other party suffering losses. Therefore, it is important for the parties to realise alter-
natives available for an offeror and remedies for the aggrieved party. The subsequent project
will focus on addressing the mentioned issues.

Definitions
The following sections of the ICA provide definitions to understand proposal, communication
and completion of proposal, acceptance and revocation.
Section 2 of the ICA, 1872 defines proposal as—“(a) When one person signifies to another
his willingness to do or to abstain from doing anything, with a view to obtaining the assent of
that other to such act or abstinence, he is said to make a proposal;”

Section 3 of the Indian Contact Act, 1872 —“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 pro-
posal, acceptance or revocation, or which has the effect of communicating it.”

5
Section 4 of the ICA, 1872 states—“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.”

Research Framework

Review of Literature

6
1. ‘The Indian Contract Act’ by Pollock and Mulla- Explanations of the sections of the ICA,
1872 was referred to from here. The book provides extensive descriptions along with il-
lustrations to better reason their explanations. A greater quantity of the cases discussed
were also found from here. The book structurally divides section 4, 5 and, 6 such that
when read together helps to relate and come to the conclusions of this project. The defini-
tions however, are quoted from the Indian Contract Act, 1872.

2. ‘Anson’s Law of Contract’- This book was referred to for basic understanding of the im-
portant concepts discussed in the project. As it also provides a perspective of the English
law it helps to understand the origin of the ICA, 1872 itself. Some foreign case laws men-
tioned were also found in this book.

Statement of Problem
Analysing the consequences of terminating an offer. Thereafter establishing what constitutes
a legally justified termination and what constitutes a breach and to study the conditions re-
quired for a termination without breach. Also, the ramifications of the same to both parties.

Hypothesis

There are exceptions to Section 5 of the ICA, 1872 and circumstances leading to a legally
justified termination of offer is subject to particular facts of each case.

Methodology
Descriptive, analytical research was used as the method of study for the purpose of this
project. Existing case laws and situations were considered to analyse and supplement the con-
clusions drawn.

Objectives of Study
1. Study in depth- Communication, Offer and acceptance to understand when and what
leads to their completion and concludes a contract.

7
2. To determine whether there are exceptions to Section 5 of the ICA, 1872 and if a party
can in fact terminate the offer due to extreme circumstances.
3. To understand the consequences of terminating an offer for both parties by considering
different case laws.
4. To explore remedies available to the aggrieved party in case of breach and otherwise if
there is loss suffered by that party.

Research Questions
1. When is a communication of proposal, acceptance and revocation complete?
2. Can a party despite acceptance of offer, terminate the offer/discontinue the contract with-
out being liable for breach?
3. Under what circumstances does termination of an offer hold no negative consequences
for the offeror?
4. What are the available remedies for an offeree in case of its termination?

8
 Offer
As defined above an offer is an intimation by action, or a verbal communication, of willing-
ness to enter into contract that is legally binding. It has been held that every agreement, to be
recognised as a contract, must in its essence have a proposal by the proposer that has an un-
qualified and absolute accepted.

An offer is of two types:

General Offer- when an offer is made to the world at large.
Specific Offer- when it is made to individual. In this case the person to whom it is made must
accept the offer.

However, this general rule is hard to apply in cases where there is no explicit offer and accep-
tance or where there are persons entering into contract through same brokers such that it is
difficult to say who has made the offer and who has accepted the same. Furthermore, the
Supreme Court in Badri Prasad v. State of M.P.1, held that an invitation to offer cannot be
treated as an offer and, an offer must have an unconditional acceptance even if it is treated as
an offer. A mere statement of intention especially where there is an indication of further ne-
gotiation is not an . It is an ‘invitation to treat’. Thus, statements that negate such intention is
not an offer. An offer or promise held out over loudspeakers, hoardings announcing sale of a
certain good cannot be binding. Quotation of prices or letter asking for a quotation are invita-
tion to offer and not offers. However, communication of willingness to sell at a price in re-
sponse to a letter asking for a quotation or inquiring about readiness for sale has been held to
be an offer. These principles have been upheld by numerous courts throughout these years for
example- In Gibson v Manchester City Council2

“The defendant city council adopted a policy of selling council houses to its tenants.
The claimant, on a printed form supplied by the council, applied for details of the
price of the council house he was renting and mortgage terms. The defendant replied,
‘The corporation may be prepared to sell the house to you at the purchase price of . . .

1 (1971) 3 SCC 23
2 [1979] 1 WLR 294.

9
 £2,180.’ The claimant thereupon completed and sent off the application form to pur-
chase the house.

The House of Lords held that there was no contract because the defendant’s letter was
not an offer to sell (that is, although this terminology was not used, it was merely an
invitation to treat). The words italicized were fatal to regarding the letter as an offer.”

Another instance of the courts recognising the difference between invitation to offer and offer
can be seen in the case of Harvey v Facey3 cited in an Indian judgement to say that a re-
sponse quoting a price is not an offer and the the claimant in this case was to supposed to of-
fer in response to this quotation while the defendant should have accepted. Therefore, there is
no binding contract. In this case cited in the judgement of Sanwarmal Goenka v. Soumyen-
dra Chandra Gooptu4 supposed offeree received two telegrams inquiring about Facey’s
readiness to sell a Bumper Hall Pen property to Harvey and the second posing a question re-
lated to the lowest possible price. The first telegram read “will you sell us Bumper Hall Pen?
— Telegraph lowest cash price”. The respondent here, replied with regards to the second tele-
gram only— “Lowest price for Bumper Hall Pen £900”. The third telegram by the petitioner
here indicated acceptance of the allegedly made offer— “we agree to buy Bumper Hall Pen
for £900 asked by you”. It was held by their Lordships that the appellants could not treat the
response from Facey as binding him in any respect, except with regards to the terms i.e. the
lowest price. In fact the offeror here was Harvey and the acceptance must have been made by
Facey. Thus, the contract could have only been concluded and any liability imposed if this of-
fer was accepted.

Courts have also recognised the validity of a contract in case of representatives making deals
when appropriate authority is given by the party. However, its has distinguished between au-
thority to invite an offer and making an offer itself. In the case of Sanwarmal Goenka v.
Soumyendra Chandra Gooptu5 a mention of this can be found cited from a previous case.

“Dealing with similar question Mookerjee J. (later Sir Asutosh) in the Division Bench
Judgment observed at p. 470:—

3 LR 1893 AC 552 (PC)

4 1980 SCC OnLine Cal 20
5 Supra note 4

10
 “The essential question is, whether the agent employed is authorised to make a bind-
ing contract for sale. Such an authority may be expressly conferred, as in Rosen-
baum v. Belson, (1900) 2 Ch 267. As Buckley, J., points out, there is a substantial dif-
ference between an authority to sell and an authority to find a purchaser. Authorising
a man to sell means an authority to conclude a sale; authorising him to find a pur-
chaser means less than that; it means, to find a man willing to become a purchaser, not
to find him and also make him a purchaser”.”

Therefore, the above principles can be conclude as follows:

“Where a person intends, actually or objectively, to be bound without further negotia-
tions by a simple acceptance of his terms, his expression will be an offer or proposal.
To have made a proposal, a person must have:
(i) signified to another his willingness to do or to abstain from doing anything; and
(ii) has done so with a view to obtaining the assent of that other to such act or absti-
nence.”6

Communication

Section 4 of the Indian Contract Act, 1872 extensively states when and how communication
of an offer is complete against the offeror and the offeree. For the purpose of this project I

6 Pollock F and Mulla DF, The Indian Contract Act (16th edn Lexis Nexis 2019) 1139

11
will focus on completion of communication against the proposer. Communication of accep-
tance 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;”

For a binding contract to take place, the intention of the acceptor must be made clear through
an external action such that this intention is notified. This was held in the case of Bhagwan-
das Goverdhandas Kedia v. Girdharilal Parshottamdas & Co.,7

“There should therefore be an offer by one party, express or implied, and acceptance
of that offer by the other in the same sense in which it was made by the other. But an
agreement does not result from a mere state of mind: intent to accept an offer or even
a mental resolve to accept an offer does not give rise to a contract. There must be in-
tent to accept and some external manifestation of that intent by speech, writing or
other act, and acceptance must be communicated to the offeror, unless he has waived
such intimation, of the course of negotiations implies an agreement to the contrary.”

The general rule also states the the acceptance must be communicated to the proposer and
come to the knowledge of the proposer. The rationale behind this being that it is unfair to
hold the proposer liable for an acceptance he has no knowledge of. In the case of LIC v. Raja
Vasireddy Komalavalli Kamba8, it was held that mere silence does not denote the acceptor’s
consent to the contract.

“Mere delay in giving an answer cannot be construed as an acceptance, as, prima fa-
cie, acceptance must be communicated to the offerer. The general rule is that the con-
tract of insurance will be concluded only when the party to whom an offer has been
made accepts it unconditionally and communicates his acceptance to the person mak-
ing the offer.”

7 (1966) 1 SCR 656

8 (1984) 2 SCC 719

12
However, there are certain exceptions to this general rule. Firstly, when the proposer has
waived this requirement specifically and requires acceptance through other forms like accep-
tance by conduct.

“There is a material distinction between acceptance of a proposal that asks for a prom-
ise and a proposal that asks for an act on the condition of the proposal becoming a
promise. In the former case where the acceptance is to consist of a promise, there
must be communication to the proposer.105 But in the latter class of cases, as for ex-
ample, dispatching goods ordered by post, the rule is that no further communication
of acceptance is necessary than performance of proposed act. Mere performance of
the act prescribed by the proposal is sufficient acceptance of such proposal and con-
verts it to a promise even without further communication of acceptance.”9

Furthermore, in case of electronic communication the transmission occurs when such elec-
tronic record enters a computer resource. For example, if an offer specifically states that the
acceptance must be communicated to a particular address then it is complete when the said
acceptance reaches the designated computer resource. This is stated in the Information Tech-
nology Act, 2000 section 13(2)(a)(ii)—

“(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;”10
“If the addressee has not designated a computer resource along with specified timings,

the record is received when it enters the computer resource of the addressee. The
sender of the electronic record is entitled to stipulate that the record sent shall be bind-
ing only on receipt of acknowledgment.” 11

Thus, in case of contracts negotiated in each other’s presence the communication is complete
at the same point of time for both the proposer and acceptance. When it is done through spo-
ken words, the verbal communication must be clear and audible to the other party such that it
has come to the knowledge of the proposer. However, when parties are at a distant communi-
9 Pollock F and Mulla DF, The Indian Contract Act (16th edn Lexis Nexis 2019) 1139
10 Information Technology Act, 2000
11 Pollock F and Mulla DF, The Indian Contract Act (16th edn Lexis Nexis 2019) 1139

13
cation depends on instantaneous (telephone, e-mail etc.) or non-instantaneous modes such as
post or courier.
Now in case of instantaneous communication like telephone, the same principle as present in
orally communicated contracts applies. The acceptance must be audible, heard and under-
stood by the offeror. It is accepted in India that acceptance is communicated when it is actu-
ally received by the proposer when being done through telephone. This was further made
clear in the case of Firm Kanhaiyalal vs Dineshchandra12

“But communication is instantaneous and oral. The rule that acceptance is incomplete
until received, heard and understood by the offeror would, therefore, govern contracts
negotiated over the telephone no less than those settled in oral negotiations in the
physical presence of the parties. If then a contract settled by telephone is complete
only when the acceptance is received by the offerer, the place where the contract is
made would clearly be the place where the acceptance is received.”

The ICA, 1872 has no mention of situation arising out of acceptance lost in transit. However,
it can be presumed that actual communication was necessary for a contract. Moreover, gener-
ally if the proposer has specified an address for the acceptance sent at or a mode of communi-
cation to be used for the said acceptance then, the proposer must take any risk of delay or
miscarriage relating to the acceptor’s action. Although it might seem unfair that the offeror
may be held liable even when they have no such knowledge of the acceptance, the law
favours offeree because the proposer has the flexibility to stipulate how such acceptance must
come to their knowledge in the offer so that they can escape liability in the event of delay, or
miscarriage. This was given in the case of J.K. Enterprises vs State Of Madhya Pradesh13 in
which the the petitioner claimed that since acceptance was not received by them, the defen-
dants cannot forfeit the earnest money an is clearly illegal and arbitrary as the offer was with-
drawn. While the defendants claimed that the petitioner cannot take advantage of its own
wrong by not giving the complete address. In case the address given to the respondents was
incomplete, the petitioner has to suffer for the same. The court held the following:

“In ray considered opinion Kalluram Kesharvani (AIR 1986 Madh Pra204) (supra) in-
stead of supporting the case of the petitioner goes against him. Here in the present

12 AIR 1959 MP 234

13 AIR 1997 MP 68

14
 case the communication was put in transit on an address given by the petitioner him-
self, and in that view of the matter offer of the petitioner shall be deemed to have been
accepted. This finding supports from the aforesaid paragraph of the Judgment.”

The following points can be concluded from the above discussions:

1. Acceptance must be made clear through external action such that it is audible, heard and
understood by the proposer.
2. It must have come knowledge of the proposer.
3. Acceptance must be done through the specified mode of communication as notified by
the offeror.
4. Though the ICA, 1872 does not specifically mention about miscarriage or message lost in
transit, the general rule is that the contract concludes even when the acceptance is lost in
transit as it is the responsibility of the offeror to provide appropriate address/mode for the
same.

Revocation
Section 5 of the ICA, 1872 states that an offer can be revoked before the acceptance is com-
plete as against the proposer. Now that rules of completion of communication of acceptance
against the proposer has been established, this section will focus on conditions of revocation.

“Where the acceptance is being sent by post or telegram, the revocation of the offer
must reach the offeree before the offeree posts the letter or hands over the telegram
for delivery. Where the proposal requires the doing of an act as a condition of pro-
posal, the proposal may be revoked before the act is done.”14

The acceptance here, must be unconditional. This was held in the case of Somasundaram Pil-
lai vs The Provincial Government Of Madras15. In this case the plaintiff was the highest bid-
der for a public auction of some of the arrack shops held by the Sub-Collector. The shops
were later sold to at lower bids as a result of the plaintiff’s withdrawal of the same. The Gov-
ernment proceeded against him for having incurred a loss. The court however, held that there
14Pollock F and Mulla DF, The Indian Contract Act (16th edn Lexis Nexis 2019) 1139
15 AIR 1947 Mad. 366

15
was provisional acceptance in response to an offer which was later changed to unconditional.
However, before the offer was accepted unconditionally the offeror withdrew the bid. There
was no consideration to support his implied acceptance before the acceptance became uncon-
ditional. Thus, the offeror cannot be held liable as there was no absolute acceptance of the
same hence, no contract or breach.

Furthermore, when the proposer has specified a date before which it is to be accepted, the of-
fer cannot be revoked prematurely without the consent of the other party. However, promise
to keep an offer open must have consideration for without consideration it is not enforceable.
This consideration can be in the form of a benefit for the offeror or a penalty for the offeree.
The same was held in the case of Viswesardas Gokuldas v. B.K. Narayan Singh,16

“This document though worded as an agreement was in point of law an offer only. As
a matter of fact, on September 2, 1957, the plaintiffs had not agreed to purchase the
mining lease. Until both parties were bound there could be no concluded contract. The
promise to keep the offer open for three months was not supported by any considera-
tion. The defendant was at liberty to revoke the offer at any time before its acceptance
by the plaintiffs.” 

Another exception to this rule is that a proposal cannot be withdrawn where a statutory rule
applicable to it prevents it from withdrawing the offer before there is an acceptance or refusal
of the same.17 Additionally, a resignation is also treated as an offer to terminate a contract and
this offer can be withdrawn after acceptance, before it becomes effective. The same principle
applies in case of other such offer such as voluntary retirement held in the case of Balram
Gupta v. Union of India18. Employer’s acceptance of resignation with immediate effect was
not valid.

“There the court reiterated that till the resignation was accepted by the appropriate au-
thority in consonance with the rules governing the acceptance, the public servant con-
cerned has locus poenitentiae but not thereafter. Undue delay in intimating to the pub-
lic servant concerned the action taken on the letter of resignation may justify an infer-

16 (1969) 1 SCC 547

17Pollock F and Mulla DF, The Indian Contract Act (16th edn Lexis Nexis 2019) 1139
18 1987 Supp SCC 228

16
 ence that resignation had not been accepted. But in the facts of the instant case the
resignation from the government servant was to take effect at a subsequent date
prospectively and the withdrawal was long before that date.”

Offers can also be terminated under other circumstances as stated below according to section
6 of the ICA, 1872—

“Revocation how made.—A proposal is revoked—

(1) by the communication of notice of revocation by the proposer to the other party;
(2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so
prescribed, by the lapse of a reasonable time, without communication of the acceptance;
(3) by the failure of the acceptor to fulfil a condition precedent to acceptance; or
(4) by the death or insanity of the proposer, if the fact of his death or insanity comes to the
knowledge of the acceptor before acceptance.”

Firstly, any revocation is invalid without appropriate communication of the same. The same
is not required to be from the offeror themselves, any reliable source communicating such re-
vocation is valid to notify the termination. This was held in the case of Dickinson v Dodds
that an offeree cannot be accepted after they know it has been revoked even if the communi-
cation has not come from the offeror.19 Secondly, by lapse of time. If before the specified
time, acceptance has not reached the proposer, the offer is said to have been terminated. If the
offer does not specify a date or time before which it is supposed to be accepted, it lapses after
reasonable time, however, the offeror can waive the revocation at his discretion. Lastly, upon
death and insanity the offer stands revoked.

“The section suggests that if a condition is to be complied with by the acceptor before
acceptance, its non-fulfilment will prevent the formation of a contract. A conditional
proposal lapses when the offeree does not accept the condition.”20

19J. Beatson, Anson’s Law of Contract (29th edn Oxford 2010)

20Pollock F and Mulla DF, The Indian Contract Act (16th edn Lexis Nexis 2019) 1139

17
 Effects of Terminating an Offer

Remedies are believed to be available only when there is a concluded contract. An absence of
such contract arises questions as to who will be liable and pay for damages. However, over
these years there have been certain exceptions such as the case of J.K. Enterprises v. State of
Madhya Pradesh,21 in which the court recognised loss suffered by the respondent despite ab-
sence (offeror revoked the proposal) of a concluded contract and maintained lower court’s or-
der of forfeiture of the earnest money.

“11. Another limb of Shri Dhande's submission is that respondents were not put to
any loss and as such they cannot be permitted to forfeit the earnest money. In the re-
turn the respondents have clearly stated that the lot in question was put to reauction
and the same was sold at the rate of Rs. 5.50 per standard bag whereas the offer of the
petitioner was Rs. 30/- per standard bag. Thus there is nothing on the record brought
by the petitioner to controvert, the aforesaid statement made by the respondent in their
return. In that view of the matter, I have no option then to hold that the respondents
suffered a loss. Consequently, their action cannot be faulted on the ground of ‘no loss’
urged on behalf of the petitioner. Thus, I do not find any merit in the submission of
the learned counsel for the petitioner.”

Apart from this, remedies in case of breach usually include compensation, injunctions or,
continuation. Courts depending on individual cases award an appropriate solution to a party.

The general principle while awarding compensatory damages is that the aggrieved party is at
the same position as if the contract was performed. For determining the amount in damages,
which the Defendant would be liable to pay to the aggrieved party, was first elaborated in the
judgment of Alderson B., in the English Court of Exchequer, in the case of Hadley v. Baxen-
dale. In this case, the plaintiff, were millers. A crankshaft of a steam engine at the mill had
broken and the plaintiff arranged to have a new one made by W. Joyce & Co. in Greenwich,
and for the said purpose W. Joyce & Co. required that the broken crankshaft be sent to them
in order to ensure that the new crankshaft would fit together properly with the other parts of
21 AIR 1997 MP 68

18
the steam engine. The plaintiffs contracted with the defendants, who were common carriers,
to deliver the crankshaft to engineers for repair by a certain date. The defendants failed to de-
liver on this date, causing the plaintiff to lose business. The plaintiff sued for the profits lost
due to the defendant's late delivery, and the jury awarded the plaintiff damages.22

Section 73 of the Act provides the common law of damages. It states that where a given con-
tract is broken, the aggrieved party is entitled to a compensation by the defendant. The first
paragraph of the section concerns the compensation for loss or damage caused by breach of
contract. It states that when there is a breach of contract the party that suffers a loss is entitled
to receive compensation from the party who has breached for the damage caused. The com-
pensation is determined by considering what one must have received in case the obligations
had been discharged fully.

“When a contract has been broken, the party who suffers by such breach is entitled to
receive, from the party who has broken the contract, compensation for any loss or
damage caused to him thereby, which naturally arose in the usual course of things
from such breach, or which the parties knew, when they made the contract, to be
likely to result from the breach of it. Such compensation is not to be given for any re-
mote and indirect loss of damage sustained by reason of the breach"It further states
that "When an obligation resembling those created by contract has been incurred and
has not been discharged, any person injured by the failure to discharge it is entitled to
receive the same compensation from the party in default, as if such person had con-
tracted to discharge it and had broken his contract." The explanation to Section 73
states that "In estimating the loss or damage arising from a breach of contract, the
means which existed of remedying the inconvenience caused by non-performance of
the contract must be taken into account.”

Conclusion & Suggestions

22 Hitesh Sablok, “Consequential Damages Under The Indian Contract Act, 1872”
(Mondaq 10 January 2014) <https://www.mondaq.com/india/contracts-and-commercial-law/285520/
consequential-damages-under-the-indian- contract-act-1872> accessed October 28, 2021

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As discussed above there are many factors to keep in mind while considering the legality of
terminating an offer. As far as I understand, it is correct to say— the law slightly favours the
offeree in considering the limitations it bounds the offeror with respect to termination of an
offer. Therefore, an offer must always clearly state the offeror’s conditions such that they are
not bound or liable for breach even if they wish to terminate the offer at a later point.

In terms of the given hypothesis- “There are exceptions to Section 5 of the ICA, 1872 and cir-
cumstances leading to a legally justified termination of offer is subject to particular facts of
each case.”, each element was adequately discussed to then make a list of conditions applica-
ble when looking to terminate an offer. As is possible in the above mentioned text supple-
mented with appropriate case laws, the courts have awarded damages even in when there was
no concluded contract as a result of an unjustified termination of offer. This being one of the
objectives of study— whether damages were available in absence of a concluded contract.
However, I could not find exceptions to the rule in section 5 itself. As it stands, one cannot
terminate an offer after acceptance. Nevertheless, the law is broad and accommodating such
that it is possible to protect oneself from liability with statements such as ‘You may accept
within the time specified, but the limitation is for my benefit. I make no binding promise not
to revoke my offer in the meantime’.

Lastly, I believe I have done justice to my research questions and fulfilled the objectives of
my study, efficiently and have answered them in thorough detail and supplemented my an-
swer with equally relevant citations and cases.

Bibliography

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• Anson, William Reynell and Beatson,J., Anson’s Law of Contract ( 29th ed, Oxford Univer-
sity Press 2010)

• Hitesh Sablok, Consequential Damages Under The Indian Contract Act, 1872
(Mondaq 10 January 2014) <https://www.mondaq.com/india/contracts-and-commercial-
law/285520/consequential-damages-under-the-indian-contract-act-1872> accessed Octo-
ber 28, 2021

• Pollock F and Mulla DF, Of the Performance of Contracts, The Indian Contracts Act (16th
edn Lexis Nexis 2019)

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