QUAID-E-AZAM LAW COLLEGE, LAHORE

The Contract Act, 1872

“PROPOSAL AND ACCEPTANCE”

1. PRELIMINARY NOTE:

AIR 1951 All 93

A proposal is merely an offer to be bound by a promise. It is a

declaration by the proposer of his intention to be bound by an obligation
if the offeree fulfills or undertakes to fulfill certain conditions.

2. RELEVANT PROVISION:

Section.2 through 9 of the Contract Act, 1872

3. CROSS REFERENCES:

Indian Contract Act, 1872

4. INTERPRETATION OF TERMS:

i. Proposal:

Black’s Law Dictionary, 9th Edition

Something offered for consideration or acceptance.

ii. Acceptance:

Black’s Law Dictionary, 9th Edition

An offeree’s assent, either by express act or by implication from

conduct, to the terms of offer in a manner authorized or
requested by the offeror.

iii. Communication:

Black’s law dictionary Baryan A.Garner

The expression or exchange of information by speech, writing

gestures or conduct.

iv. Revocation:

Black’s law dictionary Baryan A.Garner

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The Contract Act, 1872
An annulment, cancellation or reversal of an act or power.

5. INGREDIENTS OF DEFINITION OF PROPOSAL:

U/Sec.2 (a)

i. One person signifies to another

ii. His willingness

 To do, or

 To abstain from doing

iii. With view of obtain the assent.

6. KEY POINTS OF DEFINITION OF AACEPTANCE:

U/Sec.2 (b)

i. The person to whom the proposal is made

ii. Signifies his assent thereto.

7. ESSENTIALS OF A VALID OFFER:

According to Cavendish Law Cards on Contract Law

A valid offer:

i. May be communicated:

 In writing,

 Orally or

 By conduct

ii. May be made to particular person, to a group of person or to the

whole world

iii. Must be definite in substance

iv. Must be distinguished from an offer to treat.

8. ESSENTIALS OF A VALID ACCEPTANCE:

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The Contract Act, 1872
An acceptance is valid if:

i. Be made while the offer is still in force.

ii. Be made by the offeree.

iii. Exactly matches the terms of the offer

iv. Be written, oral or implied.

9. COMMUNICATION OF OFFER OR PROPOSAL IS NECESSARY:

An offer unless it is communicated to the other party is not capable of

acceptance.

2008 MLD 577

Communication of proposals and acceptance of proposals are to be

deemed by an act or omission of party proposing accepting by which he
intends to communicate such proposal or acceptance.

10. COMMUNICATION OF PROPOSAL WHEN COMPLETES:

The communication of proposal completes when it comes to the

knowledge of the person to whom it is made.

11. TWO PHASES FOR ACCEPTANCE:

i. The fact of acceptance:

An acceptance is a final and unqualified assent to all the terms of

the offer.

ii. Communication of acceptance:

Acceptance must be communicated.

12.COMMUNICATION OF ACCEPTANCE :

A. GENERAL RULE:

An acceptance has no effect unless and until it is communicated to

the offeror.

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The Contract Act, 1872
CASE-LAW REFERENCE:

Powell Vs., Lee (1908)

Acceptance must be communicated by offeree or his agent.

 Silence as communication:

An offeror may not stipulate the silence of the offeree is to

amount to acceptance.

13.MODES 0F ACCEPTANCE:

U/SEC. 7, 8

a. By fulfilling the condition

b. By receiving consideration

c. By fulfilling the manner prescribed

14. COMMUNICATION OF ACCEPTANCE WHEN COMPLETES:

i. As against the propose:

When it put into the course of transmission as to the out of the

power of acceptor.

ii. As against the acceptor:

When it comes to the knowledge of the proposer.

15.EXCEPTION AS TO THE RULE THAT ACCEPTANCE MUST BE

COMMUNICATED:

 Postal Rule:

Acceptance takes place when a letter is posted, not when it is

received.

 Limitation To The Postal Rule:

 It only applies to acceptances and not to any

other type of communication.

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The Contract Act, 1872
 Only applies to letters and telegrams.

 Letter of acceptance must be addressed and

stamped properly.

16.REVOCATION OF PROPOSAL:

MODES OF REVOCATION OF PROPOSAL

Termination Lapse occurrence of condition Rejection Death & incapacity

17. REVOCATION OF PROPOSAL THROUGH TERMINATION BY OFFEROR:

An offeror may withdraw an offer at any time before it has been

accepted and must be communicated to offeree before acceptance.

18.REVOCATION OF PROPOSAL BY LAPSE:

An offer may lapse and thus be incapable of being accepted because of:

 Passage of time

 Death

 Failure of a condition

19.REVOCATION OF PROPOSAL THROUGH REJECTION BY OFEREE:

Rejection by offeree may be expressed or implied while counter offer is

not the implied rejection.

20.REVOCATION OF PROPOSAL THROUGH OCCURRENCE OF CONDITION:

An offer may be so expressed as to come to an end on the occurrence of

a condition.

21.REVOCATION OF PROPOSAL AT DEATH OR INCAPACITY:

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The Contract Act, 1872
An offer cannot be accepted after the death of either of party, in fact the
death or incapacity makes it impossible for them to reach at the stage of
agreement.

22.MODES OF Revocation: u/sec.6

o By failure to fulfill the condition

o By death of proposer

o By failure to fulfill the manner prescribed

o By lapse of time

23.COMMUNICATION OF REVOCATION WHEN COMPLETES:

U/sec.4

i. As against the person who makes it:

When it put into the course of transmission.

ii. As against the person to whom it is made:

When it comes to the knowledge of the person to whom it is made.

24.TIME LIMITATION FOR REVOCATION: u/sec.5

Proposal may be revoked at any time before the communication of its

acceptance.

25.CONCLUSION:

Lord Wilberforce Stated:

No universal rule could cover all such cases; they must be resolved by
reference to the attention of parties, by sound business practice and in
some cases by a judgment of where the risk should lie.

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