ASSIGNMENT

Law of Contract

SUBMITTED BY:
Prosfutita Singha

SEMESTER
SF0121045

FACULTY-IN-CHARGE
Ms. Monmi Gohain

TOPIC
Communication as an important element of Contract: A judicial study
 Contents

1. What is Contract Law? 3

2. Introduction to Communication of Offer in the Indian Contract Act, 1872 3-6

3. Extracting the concept of Communication and its importance from the above mentioned

sections of the Indian Contract Act, 1872 and analyzing it with a few case laws both of

India and abroad 6-11

4. Conclusion 11
 Communication as an important element of Contract:
A Judicial Study

What is Contract Law?

Contracts form the backbone of society by establishing trust and minimizing risks between
parties.i A contract is the exchange of an act or promise between two or more individuals where
one individual offers the other some form of value in exchange for something in return.i A
contract is a binding agreement that creates legal obligation(s) recognized by law, meaning that a
party can bring a civil claim (or even criminal if fraud is involved) against another party to the
contract for breach of contract.i The use of digital contracts and electronic signatures has become
the norm in this era of the worldwide pandemic.ii The Indian Contract Act, 1872 states that the
term “Contract” under its definition clause of Section 2(h) as an agreement that can be enforced
by law, or an agreement which intends to create a legal relationship.ii When we break down this
definition, it has two significant parts to it:
1. agreement
2. enforceable by lawii
Communication of offer is part of one of the most essential elements of a contract- “offer”.ii Only
if offer is communicated, there can be acceptance, such that we can move onto other stages of
formation of a contract, like capacity to contract and consideration.ii

Introduction to Communication of Offer in the Indian Contract Act, 1872

Communication is very important in a contract and as such it becomes essential for a democracy
to form laws so as to make contract binding on parties whosoever, enters into it. In India, we

i
DocPro Legal ,6 Essential Elements of a Valid Contract with Examples, DOCPRO PROFESSIONAL DOCUMENTS , 17th Dec,
2021, 14:32 pm, https://docpro.com/blog14/6-essential-elements-of-a-valid-contract-with-examples
ii
LEXLIFE INDIA, Law of Contract: Communication of Offer, LEXLIFE INDIA, 17th Dec, 2021, 14:36 pm,
https://lexlife.in/2020/06/06/law-of-contract-communication-of-offer/
follow the Contract Act, 1872 which has been amended time to time to make it suit the
requirements of the contemporary world. Unlike torts, it is highly codified making sections
easily accessible.
Section 4 of the Indian Contract Act 1872 deals with the completion of a proposal, acceptance
and revocation enumerates that the communication of the offer is completed when it has come to
the knowledge of the person that it was supposed to have been made to.i When the offeree
(specific offer) or any member of the public (general offer) becomes aware/knows of the offer,
the communication of the offer is said to be complete.i When 2 people are talking, face-to-face or
via telephone, etc., the communication will be complete as soon as the offer is made.i
Example: A writes a letter to B offering to install plug points around A’s new home for Rs.
2,000. He mails it via the post office on 8th July, 2020. The letter reaches B on 10th July, 2020.
Thus, communication of offer is said to be done on 12th July, 2020.

The Indian Contract Act, 1872 defines acceptance in Section 2(b) as: When the person to whom
the proposal is made signifies his assent thereto, the offer is said to be accepted. Thus, the
proposal when accepted becomes a promise.ii Acceptance of an offer can be transmitted back to
the offeror in either written or implied (through conduct) way of communication. Section 5 & 6
of the Indian Contract Act, 1872 clearly states the Communication of Revocation. Also, the
Specific Relief Act, 1963 and the Sales of Goods Act, 1860 is often talks about communication
in a contract.i Section 3- 9 of the Indian Contract Act, 1872 also talks about communication of
offers and acceptance, revocation of proposals and acceptance. i

Section 3: Communication of offer, acceptance and revocation of proposals - The types of

communication etc., are said to be done by any act or omission, by which he intends to

i
LEXLIFE INDIA, Law of Contract: Communication of Offer, LEXLIFE INDIA, 17th Dec, 2021, 14:36 pm,
https://lexlife.in/2020/06/06/law-of-contract-communication-of-offer/
ii
Shruti Saman, Communication in Law of Contracts: Importance and Legal Consequences, legalserviceindia, 17th
Dec, 15:00 pm, https://www.legalserviceindia.com/legal/article-5094-communication-in-law-of-contracts-
importance-and-legal-consequences.html
communicated such proposal, acceptance or revocation, or which has the effect/impact of
communicating the offer.i

Section 4: Communication when complete- The acceptance’s communication is done against

the proposer, when it is put in a course of transmission to him outside the acceptor’s control; as
against the acceptor, when it comes to the knowledge of the proposer.i The communication of a
proposal is fulfilled only when the person to whom it is made has the knowledge of it.i

Section 5: Revocation of proposals and acceptance - An acceptance may be abrogated at any

time before acceptance is communicated as against the acceptor, but not after it is
communicated.i Proposals can be repealed at any time before the acceptance is delivered against
the proposer, but not afterwards.i

Section 6: How the revocation is made - An offer can be taken back through communication via
notice of revocation by the proposer to the other party for many reasons:
i) due to the death or insanity of the proposer
ii) if the fact of the death or insanity comes to the knowledge of the acceptor before
acceptance by the lapse of the time prescribed in such proposal for its acceptance
iii) by the negligence of the acceptor to fulfill a condition before acceptance
iv) if devoid of communication of acceptance in case there is no time limit prescribed, a
reasonable standard will be appliedi

Section 7: Acceptance must be absolute - The transformation from a proposal to a promise

should be accompanied by a absolute and unqualified assent.i The acceptance should be shown in
a rationale and prudent manner, unless the proposal specified in the contract decided the mode in
which it is to be accepted.i If the proposal explicitly states the method, but is not adhered to, the
proposer may insist that his proposal shall be accepted in the prescribed manner, within a
reasonable time after the acceptance is communicated to him and not otherwise. If he defaults on
doing, he accepts the acceptance.i

i
LEXLIFE INDIA, Law of Contract: Communication of Offer, LEXLIFE INDIA, 17th Dec, 2021, 14:36 pm,
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Section 8: Acceptance through performing the terms of the contract or getting payment -
Performing the conditions of proposal/acceptance of any consideration for a bilateral promise
along with the offer, is an acceptance of the proposal.i

Section 9: Express and implied promises - If the proposal or acceptance of any promise is
expressed on paper on words, it is said to be expressly/explicitly given.i If it is not in
words/documented, it is said to be an implied promise.i

Thus, the above sections give us a brief idea about how communication to an offer is taken into
account by the Law of the land.

Extracting the concept of Communication and its importance from the above mentioned sections
of the Indian Contract Act, 1872 and analyzing it with a few case laws both of India and abroad

One must know that the word Communication comes from the Latin word communication which
means to share.ii So anything that is shared through spoken, written or implied signs and symbols
can be termed as Communication.ii Every communication involves atleast one sender and one
recipient.ii These communications may include our emotions, the cultural situation, the medium
used to communicate and even our location.ii If we clearly analyze the sections that have been
mentioned above, communication finds its existence as:
1. Communication of Offers
2. Communication of Acceptance
3. Communication of Revocationii

i
LEXLIFE INDIA, Law of Contract: Communication of Offer, LEXLIFE INDIA, 17th Dec, 2021, 14:36 pm,
https://lexlife.in/2020/06/06/law-of-contract-communication-of-offer/

ii
Shruti Saman, Communication in Law of Contracts: Importance and Legal Consequences, legalserviceindia, 17th
Dec, 15:00 pm, https://www.legalserviceindia.com/legal/article-5094-communication-in-law-of-contracts-
importance-and-legal-consequences.html
1. Communication of Offers

Section 2(A) of the Indian Contract Act, 1872 states that “When any one person signifies to
another his willingness to do or to obtain 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”.i This definition has
two important terms which should be noted well.i ‘Signifies’ in the above definition means to
indicate or declare (example: public offer) that, is, proposal communicated to the promisor
through a general declaration thereby not making a binding contract.i ‘Assent of that other’
means that there should be atleast two parties in a contract.i It is also to be noted that the two
parties would require meeting of the minds on the same thing, in the same sense, which is,
Consensus Ad Idem, and when the proposal has been accepted by the party to whom it has been
made, the proposal becomes a valid contract (with exceptions).i

Acceptance of promises can be of two types:

• Express - Express promises include contracts formed either through written and oral
mediums.i
• Implied - Implied promises means promises that become binding through conduct.i

Example of an implied contract: Upton-on-Severn Rural District Council v. Powell, where the
court held that putting out the fire was implied as that, the defendant wanted the services from
Upton and in response to that request, putting off the fire came under the banner of 'implied
contract' and made the defendant liable to pay Upton for the services.ii

The most important fundamental element of communication is that it becomes complete when it
comes to the knowledge of the person to whom it is made. Honorable Allahabad High Court
reiterated in the landmark case of 'Lalman Shukla vs. Gauri Datt' ii how lack of knowledge about
the offer meant no valid contract. Also in a popular case of Fitch vs. Snedkar, ii New York Court
of Appeals rightly pointed, "How can there be consent from the other party, which has never

i
Shruti Saman, Communication in Law of Contracts: Importance and Legal Consequences, legalserviceindia, 17th
Dec, 15:00 pm, https://www.legalserviceindia.com/legal/article-5094-communication-in-law-of-contracts-
importance-and-legal-consequences.html
ii
Indian Contract Act, 1872: Bare Act and Illustrations- Law Literature Publications
heard of any such offer? In case of the Communication in General Offers, the British Court of
1605AD, came to the conclusion that offers made to the public at large does not bind many
people with the promise, instead binds that one party who accepts and follows the terms and
conditions of the contract as in the old case of Weeks vs Tybald (1605)ii, the King's bench had
observed that proposal from the promisor must be made to a definite person only, which was
subsequently brainstormed by the court with a better conclusion.i

2. Communication of Acceptance

Section 2(b) of the Indian Contract Act, 1872 defines acceptance of a proposal. i The definition
clearly requires that the acceptance of the proposal should be signified and communicated to the
proposer.i A mere mental acceptance of the proposal and not communicating it to the proposer
will not amount to the formation of a contract, as stated in the landmark case of Brodgen v.
Metropolitan Railway Co.ii There is another case law upon it which is an Indian case named
Hindustan Co. Insurance Society v. Shyam Sunderii in which Calcutta High Court reiterated the
same that acceptance is complete only when communicated to the offeror. One must note in a
few countries, the acceptance to a proposal should be made in the same mode as prescribed by
the offeror as in the American case named Eliason v. Henshaw,ii where the plaintiff was asked to
supply the defendant with flour but the mode of communication should be the wagon itself from
which the offer came.i However, in contrary to it, Section 7 of Indian Contract Act, 1872 states
that in cases where the mode of communication is different from the preferred one, the offeror
may ask the acceptor to accept the proposal through the prescribed mode and if the offeror
doesn't do that, he becomes bind by the acceptance of the contract.i

Apart from communication of acceptance , communication to the offeror is also of prime

importance as stated in the landmark case, Felthouse v. Bindley,ii where the court inferred that

i
Shruti Saman, Communication in Law of Contracts: Importance and Legal Consequences, legalserviceindia, 17th
Dec, 15:00 pm, https://www.legalserviceindia.com/legal/article-5094-communication-in-law-of-contracts-
importance-and-legal-consequences.html
ii
Indian Contract Act, 1872: Bare Act and Illustrations- Law Literature Publications
acceptance of a contract should be communicated to the offeror himself or to the one whom the
offeror has authorized to receive acceptances else, no contract comes into being.i

Adams v. Lindsellii is the landmark English case that brought into discussions, when does a
contract become binding on the part of the offeror?i If we look at the facts of the case, the
defendant sent a letter offering to sell good quality of wool on 2nd September 1817 to the
plaintiff and the plaintiff received the letter on 5th September.i He posted his letter of acceptance
on the same day which was received by the defendant on 9th September.i However, he had sold
his wool on 8th September.i The court in this case, mentioned that such an act led to the breach
of contract as the defendant should have waited for the letter of acceptance or denial.i Court also
pointed out that in such situations, contracts would never ever be completed by post.i As a result
of this case, it was inferred that complete contract arises on the very date the letter of acceptance
is posted by the acceptor as posting the letter brings the letter into transmission and brings the
acceptor out of the purview of revoking it.i This rule was further upheld by The Court of Appeal
in Household Fire and Accident Insurance Co. v. Grantii and is also defined by the Indian
Contract Act, 1872 under Section 4 as mentioned above and so this principle is followed in India
for instance, it was followed by the Allahabad High Court in Ramdas Chakrabarti v. Cotton
Ginni Co. Ltd.ii

In English laws, both the parties become bound the very moment letter of acceptance is posted
by the acceptor.i However, Section 4 of the Indian Contract Act, 1872 clearly states that the
offeror becomes bound by the contract the very moment the letter of acceptance is posted by the
acceptor.i However, unlike the English laws the acceptor does not become bound by the contract
unless it comes to the knowledge of the offeror.i Under section 4, for the time gap between
posting of the letter of acceptance and the delivery of the letter to the offeror, can be used by the
acceptor to revoke his acceptance, provided the revocation letter reaches the offeror earlier than
the letter of acceptance.i

i
Shruti Saman, Communication in Law of Contracts: Importance and Legal Consequences, legalserviceindia, 17th
Dec, 15:00 pm, https://www.legalserviceindia.com/legal/article-5094-communication-in-law-of-contracts-
importance-and-legal-consequences.html
ii
Indian Contract Act, 1872: Bare Act and Illustrations- Law Literature Publications
 3. Communication of Revocation

In Henthorn v. Fraserii, the court observed that a revocation is effective only when the
revocation of the offer is made to the knowledge of the person to whom it is made which can be
also found as a principle of Section 5 of Indian Contract Act, 1872.i It is to be noted that the
revocation of offer should be posted by the offeror himself or through his agent.i Also in
Dickinson v. Doddsii, the Court held that an offer is revoked even if the plaintiff has got to know
about revocation from an authorized agent or third parties.i It is however suggested in Pollock
and Mulla that the rule will not be applicable in India as under Section 6(1) requires the very fact
that revocation of offer can only be made by the offeror to the offeree.i

In case of general offers, A general offer that is published for the public at large should be
revoked using the same mode through which it was brought to the knowledge of the public, and
the revocation will remain effective even if a particular person went on with the terms of the
offer unaware of the revocation and in case of the death of the offeror, the offer lapses provided
the death of the offeror should be communicated to the offeree well in time, before he posts his
letter of acceptance for the offer.i In the landmark Dickinson v. Doddsii case, an English court
inferred that the offer ceases to exist after the death of the offeror however, if the letter of
acceptance is posted first and the offeree comes to know about the death later, the heirs of the
offeror will be bound by the contract unless the contract could have been fulfilled by the offeror
only.i

Conclusion

Communication in contract was and will always remain the most important criterion for courts to
decide the validity of offers and contracts. Lack of communication or miscommunication can be
a source of disputes which can only be kept robust by the frequent check and analysis of the act

i
Shruti Saman, Communication in Law of Contracts: Importance and Legal Consequences, legalserviceindia, 17th
Dec, 15:00 pm, https://www.legalserviceindia.com/legal/article-5094-communication-in-law-of-contracts-
importance-and-legal-consequences.html
and its subsidiaries by the judiciary.i Also, Section 4 of the Contract Act, 1872 lacks to keep
pace with the modern world.i

The Supreme Court in Bhagwandas case has held that Section 4 of the Contract Act is only
applicable to forms of communication that are not instantaneous.i Also, taking the example of the
2019 amendment of the Consumer Protection Act, we need to incorporate our digital lifestyle
into legislations.ii Where social distancing has become the norm, we need to ratify international
conventions governing e-contracts.i Countries like Cayman Islands, Bahrain, USA, and Thailand
are paving the way for communication of offer, and are setting an example for India to keep up
with this fast-changing digital world.i

………………………………………………………………………………………………………

i
LEXLIFE INDIA, Law of Contract: Communication of Offer, LEXLIFE INDIA, 17th Dec, 2021, 14:36 pm,
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