WHEN IS COMMUNICATION OF ACCEPTANCE COMPLETE?
In case the parties to the contract are present at the same place, one making the offer and theother communicating the acceptance, both the parties become bound immediately.
The problem arises when the parties are at different places and the communication of after andacceptance is made by post, or telephone, etc.
ACCEPTANCE BY POST, ETC.
Sec. 4 of the Act mentions the following rules when the communication of acceptance is madeby post, etc.:
1. The communication of acceptance is complete as against the proposer, when it is put in the course of transmission to him so as to be out of the power of the acceptor.
2. The communication of acceptance is complete as against the acceptor, when it comes to theknowledge of the proposer.
ILLUSTRATION (B) TO SEC. 4.
B accepts A's proposal by a letter sent by post. The communication of the acceptance is complete,— as against A, when the letter is posted; as against B, when the letter is received byA.
OFFEROR BOUND WHEN LETTER OF ACCEPTANCE (OR TELEGRAM) IS POSTED TO HIM
The communication of acceptance is complete as against the proposer when the letter of acceptance is posted to him. Once the letter of acceptance is posted, the offeror becomes bound. He becomes bound immediately on the posting of the letter to him and it makes no differencethat the letter is delayed in transit, or it is even lost in the post and the offeror never receives it. Communication of acceptance at the address given by the offeror amounts to acceptance, eventhough the acceptance letter does not reach the offeror.
J.K. ENTERPRISES V. STATE OF M.P.,[A.I.R. 1997 M.P. 68.]
The petitioner submitted a tender to purchase Tendu leaves on 11-1-93. The respondents sentcommunication of acceptance by registered cover dated 12-2-93 on the address given by the petitioner. The said letter of acceptance was, however, returned to the respondents.
It was held that dispatch of letter of acceptance had amounted to acceptance and completion ofthe contract.
ACCEPTANCE OF A TENDER BY A TELEGRAM
O.N.G.C v. Modern Construction Co., A.I.R. 1998 Guj. 46.
If there is acceptance of a tender by a telegram, the contract becomes concluded where the telegram is despatched, and therefore, the place of the contract is where the acceptancetelegram starts its journey.
HOUSEHOLD FIRE AND CARRIAGE ACCIDENT INSURANCE CO. V. GRANT, [(1879) 4 EX. D. 216.]
Grant offered to buy 100 shares in the Household Fire and Carriage Accident Insurance Co. Theletter of allotment of shares was sent to Grant by post but he never received the same.
The shares were partly paid. The company brought an action against Grant to recover the balance of the amount due on the shares, on the ground that the contract for the sale of shares had become complete when the letter of allotment of shares was posted to Grant.
It was held by the Court of Appeal that Grant had become bound by the contract when the letter of acceptance of his offer was posted to him and, therefore, he was bound to pay for those shares.
DUNLOP V. HIGGINS [(1848) 1 H.L.C. 381.]
Dunlop & Co. offered to sell 200 tons of iron pigs at 65 sh. per ton to Higgons & Co. through their letters dated 22nd and 28th January, 1945. Higgins & Co. received the letters on 30th January and replied the same day, indicating their acceptance to purchase the iron pigs in accordance with the offer.
Due to frosty weather there was disruption in the train services and the letter of acceptance instead of reaching on 31st January reached Dunlop & Co. on 1st February. Dunlop & Co. refused to supply iron pigs on the ground that the receipt of the letter of acceptance by them had been delayed.
It was held that Dunlop & Co. had become bound by the contract as soon as the letter of acceptance was posted to them.
PROGRESSIVE CONSTRUCTIONS LTD. V. BHARAT HYDRO POWER CORP. LTD.,
[A JR. 1996 DELHI 92.]
In it has been held that when the parties enter into contract by correspondence by post, the contract would be deemed to be complete where the offer was received, and the acceptance was posted.
The place of delivery of letter is irrelevant and, therefore, the cause of action does not arise where the letter is delivered.
ACCEPTOR BOUND WHEN HIS LETTER REACHES THE OFFEROR
Though the offeror becomes bound when the letter of acceptance is posted to him, the acceptor himself does not become bound thereby. In India an acceptor becomes bound by his acceptance when his letter of acceptance comes to the knowledge of the offeror. [See Sec. 4.]
Thus, after posting the letter of acceptance if the acceptor wants to revoke the same, he may send his communication of revocation by a quicker mode. If communication of revocation reaches earlier than communication of acceptance, the acceptance stands revoked.
