In contract law, acceptance plays a crucial role in forming a valid agreement between parties. However, there are situations where an acceptance may be withdrawn before it becomes binding. This concept is known as revocation of acceptance. Along with this, understanding how acceptance and its revocation are communicated is essential to determine when a contract becomes legally enforceable.
What is Revocation of Acceptance
Revocation of acceptance refers to the withdrawal of acceptance before it becomes legally binding. According to Section 5 of the Contract Act, an acceptance may be revoked at any time before its communication is complete as against the acceptor, but not afterward.
In simple terms, an acceptor can take back their acceptance only before it reaches the proposer. Once the acceptance has been communicated and becomes effective, it cannot be revoked.
For example, if A offers to sell his watch to B for $500 and B sends a letter of acceptance, B can revoke the acceptance by sending a faster communication such as a telegram or phone call before the letter reaches A. After the letter reaches A, revocation is no longer possible.
Communication of Revocation of Acceptance
The rules regarding the communication of revocation of acceptance are provided under Section 4 of the Contract Act. These rules explain when the revocation becomes effective for both parties.
1. As Against the Acceptor
The communication of revocation is complete as against the acceptor when it is put into a course of transmission to the proposer, so that it is out of the control of the acceptor.
This means that once the acceptor sends the message of revocation, such as posting a letter or sending a telegram, the revocation is complete on their part.
2. As Against the Proposer
The communication of revocation is complete as against the proposer when it comes to their knowledge. In other words, the revocation becomes effective when the proposer receives and reads the message.
Example: If B revokes his acceptance by sending a telegram, the revocation is complete as against B when the telegram is dispatched. It becomes complete as against A when A receives and reads the telegram.
Communication of Acceptance
The communication of acceptance is also governed by Section 4 of the Contract Act. It determines when acceptance becomes binding on both parties.
1. As Against the Proposer
The communication of acceptance is complete as against the proposer when the acceptor sends the acceptance into a course of transmission, making it out of their control.
At this point, the proposer cannot withdraw the offer.
2. As Against the Acceptor
The communication of acceptance is complete as against the acceptor when the acceptance comes to the knowledge of the proposer.
At this stage, the acceptor can no longer withdraw the acceptance.
Examples: When B accepts A’s offer by sending a letter, the communication of acceptance is complete as against A when the letter is posted. It becomes complete as against B when A receives and reads the letter.
Similarly, if acceptance is sent through a telegram, it is complete as against the proposer when the telegram is sent and as against the acceptor when it is received and understood by the proposer.
Conclusion
Revocation of acceptance and communication of acceptance are fundamental concepts in contract law that determine when an agreement becomes binding. The timing of communication plays a critical role in deciding whether acceptance can still be withdrawn. By understanding these rules, parties can avoid disputes and ensure that contracts are formed and executed properly.
See Also: What is Revocation of Proposal
