Revocation is the withdrawal of an offer or acceptance before it becomes legally irrevocable. S.5 fixes the time within which revocation must occur; S.6 lists the circumstances in which an offer lapses or is revoked altogether.
Legal Framework
| Section | Act | Scope |
|---|---|---|
| S.5 | Indian Contract Act, 1872 | Time limits for revocation of proposal and acceptance |
| S.6 | Indian Contract Act, 1872 | Modes of revocation of proposal |
Revocation of Proposal Under S.5
A proposal may be revoked at any time before communication of its acceptance is complete as against the proposer, that is, before the acceptor posts or transmits acceptance, but not afterwards.
Why: Once acceptance is out of the acceptor's control, the proposer's window to change their mind must close, otherwise contracts would never achieve finality.
Revocation of Acceptance Under S.5
An acceptance may be revoked at any time before communication of the acceptance is complete as against the acceptor, that is, before it comes to the knowledge of the proposer, but not afterwards.
Why: This grants the acceptor a narrow window, discussed in the communication rules, to change course before the proposer has actually learned of the acceptance.
Modes of Revocation of Proposal Under S.6
1. By Notice of Revocation. The proposer communicates withdrawal to the offeree before acceptance.
2. By Lapse of Time. If a time is prescribed for acceptance and it is not accepted within that time, or if no time is prescribed, if not accepted within a reasonable time.
Why: An offer cannot remain open indefinitely; commercial certainty requires a natural expiry.
3. By Failure to Fulfil a Condition Precedent. If the offeree fails to fulfil a condition precedent to acceptance, the offer lapses.
4. By Death or Insanity of the Proposer. If the offeree has knowledge of the proposer's death or insanity before acceptance, the offer lapses. If the offeree accepts without such knowledge, the position is debated, but the general Indian position, following English authority, is that acceptance without knowledge of death may still bind the estate in limited circumstances, though most examiners expect the lapse position to be stated as the default rule.
5. By Rejection. An express rejection or a counter offer terminates the original offer.
6. By Subsequent Illegality. If the subject matter of the offer becomes illegal after the offer is made but before acceptance, the offer lapses.
Illustrations
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Revocation before acceptance is posted: A offers to sell his shop to B by letter dated 1 July. On 3 July, before B has posted any acceptance, A sends a telegram revoking the offer, which reaches B on 4 July. B posts an acceptance letter on 5 July, unaware of the revocation. Since A's revocation reached B before B's acceptance was communicated, the revocation is effective and no contract forms.
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Lapse by reasonable time: A offers to sell perishable goods to B "as soon as possible." B replies three weeks later, purporting to accept. Given the perishable nature of the goods, three weeks exceeds a reasonable time, and the offer had already lapsed.
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Revocation communicated through a reliable third party (Dickinson v Dodds principle): A offers to sell property to B, giving B until Friday to decide. On Thursday, A sells the property to C. B learns of this sale from a reliable source before Friday and still attempts to accept on Friday. B's acceptance fails since the offer was effectively revoked once B had reliable knowledge that A no longer intended to be bound.
Recall Check
- What is the outer time limit under S.5 for revoking a proposal?
- List the six modes of revocation of a proposal under S.6.
- Why does knowledge of the proposer's death before acceptance cause the offer to lapse?
Key Cases
Dickinson v. Dodds (1876) Dickinson-v-Dodds-1876 Issue: Whether an offer could be validly revoked through information received from a third party, rather than direct communication by the offeror. Rule: Revocation need not come directly from the offeror; reliable knowledge from any source that the offeror no longer intends to be bound is sufficient. Held: The offer had been effectively revoked once the offeree had reliable knowledge of the offeror's changed position, even without formal notice.
Distinctions
| Basis | Revocation of Proposal | Revocation of Acceptance |
|---|---|---|
| Deadline | Before acceptance is communicated to proposer (before posting) | Before acceptance is communicated to proposer (before knowledge) |
| Who benefits from timing gap | Proposer loses right to revoke earliest | Acceptor retains a window even after posting |
| Governing provision | S.5, first limb | S.5, second limb |
Flashcards
Q: Until when can a proposal be revoked under S.5? A: Any time before communication of its acceptance is complete as against the proposer.
Q: Until when can an acceptance be revoked under S.5? A: Any time before communication of the acceptance is complete as against the acceptor, that is, before the proposer's knowledge.
Q: Name the six modes of revocation of a proposal under S.6. A: Notice, lapse of time, failure of condition precedent, death or insanity with knowledge, rejection, subsequent illegality.
Q: What did Dickinson v Dodds establish about revocation? A: Revocation can be effective through reliable third-party knowledge, without formal direct communication from the offeror.
Q: What happens to an offer if the offeree accepts after prescribed time has lapsed? A: The offer has already lapsed under S.6; there is nothing left to accept.
Exam Scenario
A offers to sell his printing press to B, stating the offer remains open till 10 am on Monday. On Sunday evening, A sells the press to C. D, a mutual friend, informs B of the sale on Sunday night. B nonetheless sends an acceptance to A at 9 am Monday, before the original deadline. Advise B on the validity of this acceptance.
Approach: Apply the Dickinson v Dodds principle that revocation via reliable third-party knowledge is effective revocation, independent of the prescribed deadline for acceptance. Assess whether D's information to B on Sunday night constituted reliable knowledge that A no longer intended to be bound, which would revoke the offer before B's Monday morning acceptance, notwithstanding that the stated deadline had not yet passed.
See Also
- Communication of Offer and Acceptance : the timing framework under S.4 that S.5 revocation deadlines are pegged against.