REVOCATION OF CONTRACTS UNDER

INDIAN CONTRACT LAWS

Submitted By

NISHANT CHAUDHARY

DIVISION D, PRN - 21010223137, CLASS OF 2021-26

Symbiosis Law School, NOIDA

Symbiosis International (Deemed University), PUNE

In

October, 2021

Under guidance of

Ms. Pallavi Mishra

(Course-in-Charge, Law of Contracts)

Symbiosis Law School, NOIDA

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 CERTIFICATE

The project entitled “Revocation of Contracts under Indian Contract Laws” submitted to the
Symbiosis Law School, NOIDA for Law of Contracts as part of Internal Continuous
Evaluation is based on my original work carried out under the guidance of Ms. Pallavi
Mishra. The material borrowed from other sources and incorporated in the research has been
duly acknowledged.

I understand that I myself could be held responsible and accountable for plagiarism, if any,
detected later.

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 ACKNOWLEDGEMENT

First and foremost, I'd like to thank Ms. Pallavi Mishra for her assistance and guidance
throughout this project. She provided me with excellent expertise, allowing me to grasp all of
the project's fundamentals and alleviate any concerns I had.

I'd also like to express my gratitude to the library department and academic support at
Symbiosis Law School, NOIDA for providing me with variety of research materials to aid in
the creation of an original project.

I'd also like to express my gratitude to Symbiosis Law School, NOIDA, for presenting me
with this assignment so that I could grasp the fundamentals of contract law swiftly,
satisfactorily, and thoroughly.

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S.No. Topic Pg. No.
1 Certificate 2
2 Acknowledgement 3
3 Introduction 5
4 Body of the Article 6-8
5 Conclusion 9

INDEX

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 INTRODUCTION

When there is an offer and acceptance of that offer, as well as other basic elements such as
free consent, lawful consideration, competency, and meeting of minds a contract is
considered to be complete. However, there are some key intermediate components in between
that are necessary and can cause the path of events to change. Before the promisor and
promise reach finality, the contract can be terminated if specific requirements are met, this is
referred to as revocation of contract. Revocation can happen in a variety of ways, the most
common of which is when one of the parties revoke the contract. The act of recalling,
cancelling, or annulling a contract is referred to as revocation. Sections 5 and 6 of the Indian
Contract Act, 1872 govern how a proposal and acceptance are rescinded. Revocation can take
place before the offer is accepted because there is no legally binding contract at the time of
the revocation and hence the offeror has the option to withdraw the offer before it is accepted.
Similarly, the offeree (person accepting the offer) has the right to withdraw his acceptance
prior to consideration or contract signing. The timing of offer and acceptance communication
is critical.

The rules for rescinding an offer are outlined in Section 5 of the Indian Contract Act. It
specifies that the offer may be withdrawn at any time before acceptance is communicated to
the proposer/offeror. Revocation of the offer is no longer possible once acceptance is
communicated to the proposer; however, this section also states that acceptance can be
revoked until acceptance is communicated to the acceptor. There can be no revocation of
acceptance after that date, and Section 6 of the Act outlines the various methods for
revocation of proposal and acceptance.

RESEARCH QUESTIONS / OBJECTIVES

1. What is revocation of contract, which sections of the Act apply to it and what are the
various ways in which revocation can take place?
2. To get a better understanding of the topic, some relevant cases are also reviewed.

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BODY OF THE ARTICLE

Section 51 stipulates that acceptance can be withdrawn until the acceptance has been
communicated to the acceptor. After that date, no withdrawal of acceptance is possible.
Section 62 discusses the following modes for the revocation of offer.

 REVOCATION OF OFFER BY NOTICE

According to the Contract of Law, an offer can only be revoked before the communication of
its acceptance is complete, that is, before the acceptance has been put into the course of
transmission by the acceptor according to the rules of acceptance communication.
To put it another way, anyone who makes an offer must signal its renunciation to the acceptor
before the latter can accept it and take action on it. This rule primarily applies to and concerns
with communication via letter or post, which is one of the oldest and most formal modes of
communication.

If the offeror gives the option of accepting within a certain time frame, he has the right to
withdraw the offer before the time limit expires. One could argue that the revocation is valid
as long as it is made prior to acceptance. This is supported by the Madras High Court's
decision in Alfred Scholank v Muthunyna Chetti,3 which held that the promise is nothing
more than a bare promise in the absence of any consideration for the promise to keep the
offer available for a certain period of time.
In this case, the defendant made an offer to sell a quantity of indigo to the plaintiff and
provided him with a time of eight days to accept it but on the fourth day the defendant
rescinded the offer, the plaintiff accepted the offer on the fifth day. The plaintiff then went on
to sue for specific performance of the contract. The issue here was whether the offer which
had an option to accept it in the fixed time frame be revoked before ending of that period. So
even though there was a time frame given here, an offer can be withdrawn before the expiry
of the fixed period if the offeree has not accepted the offer.

1
Indian Contract Act, §5, No. 09, Acts of Parliament, 1872 (India)
2
Indian Contract Act, §6, No. 09, Acts of Parliament, 1872 (India)
3
Alfred Scholank v Muthunyna Chetti (1892) 2 MLJ 57 (India)

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  REVOCATION OF OFFER DUE TO LAPSE OF TIME
Once the time period for accepting an offer ends, the offer may lapse. If an agreement
stipulates that acceptance should be provided within a certain amount of time, the acceptor's
inability to do so before the time frame expires will result in the offer being revoked.
If no deadline has been set for the acceptance to be solicited, the offer is considered revoked
when a reasonable period of time elapses. The length of reasonable time is not set in stone
and is determined by the facts and circumstances of each case.

 REVOCATION OF OFFER WHEN ONE FAILS TO MEET CONDITION

PRECEDENT
If the offer is made subject to the fulfilment of a condition prior, any acceptance made
without fulfilling the criteria of that condition will result in the offer being automatically
rescinded.
In the case of State of West Bengal v. Mahendra Chandra Das,4 The petitioner was informed
by the Assistant Secretary of West Bengal, Salt Lake Branch, that the government has
expressed its inability to revive the offer of an allotment of a plot of Salt Lake City made in
favour of the assistant, which has been cancelled due to the failure to pay salami within the
stipulated period. Initially, the petitioner responded to an advertisement in the newspaper by
applying for the allotment of the said land. The Deputy Secretary to the State of West Bengal
then informed the plaintiff by letter that the plot may be given to him on lease for a period of
999 years subject to certain terms and conditions, which included the payment of a sum of
money to the Government. The petitioner here failed to pay the sum hence the court ruled for
the cancellation for the allotment of land.

 REVOCATION OF OFFER DUE TO DEATH OR INSANITY OF THE

OFFEROR
In the unfortunate event of the offeror's death or insanity, an offer may lapse if the fact of
such death or insanity is notified before the acceptance is made. As per English law, an offer
concludes at the moment of the offeror's death, regardless of how it was brought to the
acceptor's attention; however, the rule was later amended, and the offer was deemed open till
the acceptor was notified of the offeror's death.

It should go without stating that the either the offeror or his lawfully authorised agent must
4
The State of West Bengal & ors. v. Mahendra Chandra Das, A.I.R. 1965 Cal 212 (India)

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notify the contract's withdrawal. This rule is in conflict with both Indian and English law. The
court in England allows for revocation by a third party if the offeree has been reliably
informed of the revocation. This is not relevant under Indian law, as section 6(1) of the Indian
Contract Act requires it to be made directly by the offeror or proposer.

 SOME MORE CASE LAWS

1. Nutakki Shesharatnam v. Sub collector5
In the following case, the landowner offered to sell the property if a lump sum payment was
made. Plaintiff cancelled the offer before the Acquisition officer could prepare the acceptance
award. The court ruled that the revoked offer is still valid. As a result, the offeree should
receive notification of revocation before receiving notification of acceptance.

2. J.K. Enterprises v. the State of M.P.6

In this case, the revocation letter was issued through fax message in this situation.
Unfortunately, it was delivered to the incorrect address. It was deemed ineffective by the
court. The court ruled that notification of the proposal's cancellation must be explicit and sent
to the correct address.

3. Sadhoo Lal Motilal v. The State of M.P.7

In this case, the party's tender, which was presented to the appropriate government, was
eventually accepted. However, a telegraph was issued to that government later revoking the
acceptance. The court found strong evidence of the contract's conclusion and concluded that
there was no grounds to annul the contract. The reason for this is because the tender contract
was completed as soon as the letter of acceptance was posted. As a result, revocation was not
possible.

5
Nutakki Shesharatnam v. Sub collector, AIR 1992 SC 131 (India)
6
J.K. Enterprises v. the State of M.P., AIR 1997 MP 68 (India)
7
Sadhoo Lal Motilal v. The State of M.P., AIR 1972 All 137 (India)

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 CONCLUSION

The Indian Contract Act of 1872 not only contains procedures for entering into a contract, but
also for terminating one that has been entered into by the parties. Section 5 of this Act
specifies the revocation requirements and rules, whereas section 6 specifies the ways of
revocation. Overall, revocation refers to the act of terminating an offer. It's worth noting that
either the offer or the acceptance must be revoked before the contract can be formed.
However, there is a distinction between the point at which the offeror and the acceptance
commence their contractual obligations. The moment the acceptor posts the acceptance, i.e.
the acceptance leaves the acceptor's hands, the offeror is regarded to be bound by the
contract. As a result, the proposer must rescind the contract before the acceptance is posted
against him, rather than later. When the acceptance is communicated, the contract comes in
place. The contract is complete when the acceptance is entered into the transmission process,
that is why, even after the proposer's rejection of the proposal is sent, the contract remains in
effect because acceptance was conveyed prior to the proposer's withdrawal of the proposal.