Revocation of Proposal

QUESTION 5

Revocation of Proposal – Detailed Analysis (LLB Exam Perspective)

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INTRODUCTION

Under the Indian Contract Act, 1872, the term revocation means withdrawal of an offer by the proposer.
Section 5 deals with revocation of proposals.
A proposal can be revoked any time before the acceptance becomes complete against the proposer.

In simple words, the offeror can withdraw the offer as long as the offeree has not completed acceptance.

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MEANING OF REVOCATION

Revocation means that the person who made the offer decides to take it back before it turns into a binding contract.

Example:
A offers to sell his mobile to B. Before B accepts the offer, A withdraws it.
This is a valid revocation.

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ESSENTIAL POINTS ABOUT REVOCATION (SECTION 5)

1. Revocation possible before acceptance becomes complete

Acceptance becomes complete against the proposer when the offeree sends it (for example, posts the letter or sends the message).
Therefore, the proposer must revoke the offer before that stage.

2. Revocation must be communicated

According to Section 4, communication of revocation is complete only when it reaches the offeree.

3. Revocation must follow a reasonable mode

Section 6 explains the valid methods of revocation.

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METHODS OF REVOCATION (SECTION 6)

(a) Revocation by notice

The proposer directly informs the offeree that the offer is withdrawn.
Communication must reach the offeree.

(b) Revocation by lapse of time

If no time is specified, the offer automatically ends after a reasonable period.
If a time limit is fixed, the offer ends once that time expires.

(c) Revocation by non-fulfilment of condition precedent

If the offer requires the offeree to perform a condition before acceptance (for example, submit documents or a deposit), and the offeree fails to do so, the offer is revoked.

(d) Revocation by death or insanity of the proposer

If the offeree comes to know that the proposer has died or has become insane, the offer ends immediately.

(e) Revocation by counter-offer

If the offeree makes a new offer on different terms, the original offer ends automatically.
A counter-offer destroys the original proposal.

Example:
A offers to sell a car for Rs. 2,00,000.
B replies, “I can pay Rs. 1,50,000.”
This is a counter-offer, and the original offer ends.

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IMPORTANT CASE LAWS FOR REVOCATION

1. Byrne & Co. v. Van Tienhoven (1880)

Principle:
Revocation is valid only when it is communicated to the offeree.
Posting a revocation letter is not enough unless the offeree receives it.

2. Henthorn v. Fraser (1892)

Principle:
Revocation must be made within a reasonable time.
If it reaches the offeree too late, it is not effective.

3. Ramsgate Victoria Hotel v. Montefiore (1866)

Principle:
Revocation by lapse of time.
An offer may automatically end after an unreasonable delay.

4. Hyde v. Wrench (1840)

Principle:
A counter-offer destroys the original offer.
Once a counter-offer is made, the original offer cannot be accepted later.

5. Dickinson v. Dodds (1876)

Principle:
Revocation can be communicated through a reliable third person.
Direct communication from the offeror is not mandatory.

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CONCLUSION

Revocation of proposal is an important principle in contract law.
Section 5 allows the proposer to revoke the offer any time before acceptance becomes complete against him.
Revocation must be properly communicated and can take place through notice, lapse of time, failure of condition, death, or counter-offer.
Once revocation is validly made, no contract can come into existence.

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