Communication of offer and acceptance when complete
Q. 4 Discuss the rules regarding communication of offer and acceptance in the English and Indian law with special reference to Bhagwan Das Kedia v. Girdhari lal & Co.
Or
Write a short note on mode of
communication.
Or
Write a short note on Communication when
complete.
Ans.
Communication of proposal when complete
According to Sec. 4 "the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made . If an offer has not yet been communicated, even if somebody act according to the terms of the offer, he cannot be deemed to be accepter of that offer. Acting in ignorance of an offer does not amount to the acceptance of the same. How can there be consent or assent to that d which the party has never heard?
Lalman Shukla v Gauri Dutt (1913 11 All L.J. 489) In this case, the defendant's nephew absconded from home. The plaintiff, who was defendant's servant, was sent to search the missing boy. After the plaintiff had left in search of the boy, the defendant issued handbills announcing a reward of Rs. 501 to anyone who might find out the boy. The plaintiff came to know of this offer only when he had already traced, and informed defendant about the boy. The plaintiff brought an action to claim this reward, Held that since the plaintiff was ignorant of the offer of reward, his act of bringing the lost boy did not amount to the acceptance of the offer, and, therefore, he was not entitled to claim the reward.
The Court observed: A suit like the present one can only be founded on a contract. In order to constitute a contract, there must be an acceptance of an offer and there can be no acceptance unless there is knowledge of the offer..
The contention of the plaintiff was that a privity of contract was unnecessary and neither motive nor knowledge was essential for acceptance of an offer. The court observed that the motive is not essential, but knowledge and intention are. In Williams v Carwardine (1833) 2 LJKB 101, where information was given about the murderers of her husband by a woman, not so much for reward, but to assuage her feelings, she was allowed to recover. Where an offer has been accepted with knowledge of the reward, the fact that the informer was influenced by motives other than the reward will be immaterial.
The court further observed that in the case of public advertisements offering a reward, the performance of the act' raises an inference of acceptance (Sec. 8). But, in the present case, the plaintiff was already under an obligation to do what he did (acting under the servant's duty) and, therefore the performance of act cannot be regarded as a consideration for the defendant's promise.]
In an Australian case, R. v Clarke (1927) 40 CLR 227, it was held that even if the acceptor had once known of the offer but had completely forgotten about it at the time of acceptance, he would be in no better position than a person who had not heard of the offer at all. In that case, the government offered a reward for giving information about some murderers. The offer further added that if the information was given by an accomplice, not being himself the murderer, he would also be entitled to a free pardon. The plaintiff, being an accomplice, saw the offer and having been so much excited by the hope of pardon, that he gave the information to save himself, completely forgetting the reward. Held that he could not recover the reward.
Where
an offer is made to the whole world, acceptance of the offer and performance of
the condition will be sufficient for making it an enforceable contract. A well
known illustrative English case on the point is Carlill v. Carbolic Smoke Ball Co., (1893) 1 QB 256.
In this case, the defendants were proprietors and vendors of 'Carbolic Smoke Ball'. They advertised a reward of £100 to any person who contracted influenza after using the Smoke Ball for a certain period according to the printed directions. In order to show their sincerity, they also deposited £ 1000 in a Bank for the same purpose. The plaintiff, a lady, used the Smoke Ball according to the printed directions yet she contracted influenza. She brought an action to claim the reward. It was held that she was entitled to claim the reward. The court pointed out that in advertisement cases, an offer may be made to the whole world but it becomes a promise only when it is accepted by an ascertained person.
Communication of Acceptance when complete,
Acceptance by post, etc..
Sec. 4 of the Act lays down that the communication of acceptance is complete as against the proposer, when it is put in the 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.
Illustration: B accepts A's proposal by a letter sent by post. The communication of the acceptance is complete as against A, when the letter is posted, and as against B, when the letter is received by A.
The offeror becomes bound immediately on the posting of the letter to him and it makes no difference that the letter is delayed in transit or it is even lost in the post and offeror never receives it. In Adams v lindsel (1818) 106 ER 250, on Sept. 2, the defendants sent a letter offering to sell goods to the plaintiff. The letter added "receiving your answer in course of post". The letter reached the plaintiffs on 5th Sept. On the same day, the plaintiffs posted their letter of acceptance which reached defendants on 9th Sept. The defendant had sold the goods on Sept. 8th. Held that a complete contract arises on the date when the letter of acceptance is posted in due course (i.e. on Sept. 5th). Thus, there is a binding contract between the parties.
Difference between English and Indian Laws
ln England, when a letter of acceptance is posted, both the offeror and the acceptor become irrevocably bound. In India, the offeror becomes bound but the acceptor does not become bound by merely posting his acceptance. He becomes bound only when his acceptance "comes to the knowledge of the proposer". The gap of time between the posting and the delivery of acceptance can be utilised by the acceptor for revoking his acceptance by a speedier communication which will overtake the acceptance. The Indian rule is peculiar as a contract means an agreement which binds both the parties to it. Under both English and indian laws, a contract is made at a place where the letter of acceptance is posted.
Acceptance by telephone/telex (direct communication)
Sec. 4 of the Contract Act supposes to deal with communication by post only. Where, however, the parties are in each other's presence or, though separated in space, they are in direct communication, as, for example by telephone, the contract is complete only when the acceptance is received by the offeror, and the contract is made at a place where the acceptance is received or heard.
Bhagwandas G, kedia v Girdharilal & C 0. (AIR 1966 SC 543)
In this case, the plaintiffs made an offer (on phone) from Ahmedabad to the defendants at Khamgaon to purchase certain goods and the defendants accepted the offer. The question was whether the conversation resulted in a contract at Khamgaon or at Ahmedabad. The question was relevant to decide the jurisdiction of the Ahmedabad Court. it was held that the contract was made at Ahmedabad where the acceptance was communicated. The contract, in case of acceptance by phone, is deemed to be complete when the offeror hears the acceptance at his end rather than when the acceptor speaks the words of acceptance. This is unlike acceptance by letter where the contract is concluded when the letter of acceptance is posted.
The Supreme Court endorsed the principle of Entores case. In Entores Ltd, v Miles Far East Corpn. (1955) 2 All ER 493, an offer was made from London by Telex to a party in Holland and it was duly accepted through the Telex, the only question being as to whether the contract was made in Holland or in England. Held that Telex is a method of instantaneous communication and the rule about such communications is different from the rule about the post. The court observed: "Where the parties are in the presence of each other, say, two persons across a river.... one shouts an offer, but do not hear another's reply because of aircraft noise. There is no contract at that moment.... to be a contract, acceptance has to be shouted again and heard by the other. Similarly, in case of a telephonic conversation, if the line goes 'dead' so that one do not hear other's words of acceptance, there is no contract at that moment."
The Supreme Court observed that the rule about 'communication by post' makes the position of the offeror miserable. Thus where a premium due on a Life Insurance Policy was sent by money order, it was held that the policy had revived from the date of the money order and not from the date of its receipt by the company. The assured having died in the meantime, his widow recovered the proceeds (Hairoon Bibi v United India Life Insurance C 0. , AIR 1947 Mad 122). The current feeling, therefore, is that even in reference to postal communications the principle of consensus or "meeting of minds" should be adhered to and there should be no contract till the acceptance is received.
The issue then is whether the ordinary rule, which regards a contract as complete only when the acceptance is intimated to the proposer, should apply or whether the exception engrafted upon the rule in case of offers and acceptance by post and telegrams, is to be accepted.
References
Avtar Singh – Law of Contract and Specific relief .
Mulla --- Law of Contract and Specific relief.
Dr. H.K. Saharay- Law of Contract.
Dr R.K. Bangia—Law of Contract.
https://www.slideshare.net/shrinivas1648/law-of-contract-business-law
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