Modes of Revocation of Offer in Contracts

What is Revocation?

Revocation refers to the cancellation or withdrawal of a proposal or acceptance in a contract. Section 5 of the Indian Contract Act outlines the rules for the revocation of proposals and acceptances. 

According to this section, a proposal can be revoked by the proposer at any time before the communication of its acceptance is complete against the proposer. Similarly, an acceptance can be revoked by the acceptor at any time before the communication of the acceptance is complete against the acceptor.

For example, if Jay proposes to sell his house to Veeru through a letter sent by post, and Veeru accepts the proposal, Jay can revoke his proposal at any time before or when Veeru posts his letter of acceptance. Likewise, Veeru can revoke his acceptance at any time before or at the moment when Veeru posts his letter of acceptance.

Modes of Revocation of Offer

There are different modes of revocation in contract law, including:

Revocation by Communication from the Offeror to the Offeree Before Acceptance

Revocation by communication refers to the act of the offeror withdrawing their offer before the offeree has accepted it. In this scenario, the offeror explicitly communicates their decision to revoke the offer to the offeree. 

For the revocation to be effective, it must reach the offeree before they accept the offer. Once the offeree receives the revocation, the offer is no longer valid, and the offeree cannot accept it. This means the offeror can change their mind about the offer at any time before the offeree communicates their acceptance back to the offeror.

Example: John offers to sell his car to Sarah for $10,000. Before Sarah has a chance to accept the offer, John calls her and informs her that he changed his mind and is no longer willing to sell the car. The revocation of the offer is effective once Sarah receives the phone call, and she cannot accept the offer anymore.

Revocation by Lapse of Time

Revocation by lapse of time occurs when the offeree fails to accept the offer within a reasonable time specified by the offeror or within a reasonable time under the circumstances. If the offer specifies a time limit for acceptance, the offeree must accept within that period; otherwise, the offer is considered revoked. Even if the offer does not specify a time limit, the offeree should accept within a reasonable time. What is considered a “reasonable time” depends on the nature of the offer and the usual business practices.

Example: Emma offers to sell her bicycle to Mark but does not specify a deadline for acceptance. However, if Mark waits for several weeks without responding to the offer, the offer may be considered revoked due to the lapse of time.

Revocation by the Failure of a Condition Precedent

A condition precedent is a condition that must be fulfilled before the offer becomes valid. If the specified condition is not met, the offer is not legally effective and is considered revoked. The offeror may make the offer conditional on certain events or requirements being met, and if these conditions are not satisfied, the offer is automatically revoked.

Example: Michael offers to hire Laura as his assistant on the condition that she successfully completes a particular certification course. If Laura fails to complete the certification course as required, the offer is revoked because the condition precedent was not fulfilled.

Revocation by Death or Insanity of the Offeror

The death or insanity of the offeror automatically revokes the offer. If the offeror passes away or becomes mentally incapacitated before the offeree accepts the offer, the offer is no longer valid, and the offeree cannot accept it. 

This is because contractual obligations are considered personal and cannot be enforced against someone who is deceased or mentally incapable of understanding and performing the contract.

Example: Alice offers to sell her property to Bob, but before Bob accepts the offer, Alice becomes mentally incapacitated. The offer is automatically revoked due to Alice’s insanity, and Bob cannot accept it.