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    Sunday, 26 March 2017

    When and how a proposal may be revoked

    1. Proposal
    When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. Section 2(a)

    a. Proposal or Offer
    A proposal is merely an offer to be bound by a promise. It is declaration by the proposer of his intention to- be bound by an obligation if the offeree fulfils or undertakes to fulfill certain conditions. It is only on the acceptance of the offer or proposal that the offer becomes a promise. Therefore, when an instrument is so worded as to be binding on the proposer, it is in point of law only an offer and until both parties are bound, neither party is bound. Such instrument was no more than a proposal because unless the person to whom the offer was made signifies his willingness to accept it, the proposer would not in law, ripens into an agreement.

    (b) Offer must be clear
    An offer which does not contain any particulars as to the thing offered does not constitute a proposal properly so called. Therefore where one person by a letter asks the consent of another to a certain transaction without stating the consideration, it is, not an offer.

    c. Term of proposal
    A "term of the proposal" signifies a condition without the fulfillment of which the proposer is not willing to undertake the obligation. Whether a particular condition proposed amounts to a term of the proposal depends upon the intention of the proposer.

    d. Undertaking to make an offer
    A mere undertaking to make an offer in the future in case of a certain contingency is not an offer. Thus a term in a partition deed that in the event of any of the brothers wishing to sell his share of the house, he should sell it to the other brothers at the market value is not an offer itself but merely an undertaking to make an offer of sale upon the arising of a certain contingency.

    e. Invitation to offer
    In cases of invitations for orders, a contract would come into being only when the invitee places an order and the inviter accepts the same.  A catalogue of the good of a company for sale is not a series of offers but only invitation for offers.

    f. Pre-conditions for making a proposal
    Where there is a precondition for making an offer such as pre-qualification for making a bid for a contract. An offer made by petitioner who had not applied for pre-qualification in response to respondent's notice, having missed the bus had to lag behind on account of their own lethargic conduct. The petitioner would thus be disqualified from making an offer and their offers may not be considered while granting the contract.

    2. Revocation of proposals and acceptances
    A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposal, but not afterwards. An acceptance may be revoked at time before the communication of the acceptance is complete as against the acceptor, but not afterwards. Section 5

    (a) Revocation of  proposal
    Under section 5 of the Contract Act a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer. An offer to sell and to keep the offer open till a certain time is Nudum Pactum and, can, at any time before acceptance, be recalled.

    b. Conditional Acceptance
    A proposal which is accepted conditionally may be revoked before the acceptance becomes unconditional. A bidder at an auction sale only makes an offer which he can withdraw before its acceptance by the fall of the hammer. Where an auction sale is held under the express condition that the acceptance of the highest bid would be subject to confirmation by a particular authority, the bidder could withdraw his offer before such confirmation in spite of the bid having been provisionally accepted.

    (c) Completed contract
    After a transaction has ripened into a contract it requires the consent of parties to revoke or modify it. Thus once an offer to be bound by the, special oath of the other party has been made by a party and accepted by the. other, it cannot be revoked. He cannot, therefore, be allowed to resile from his offer before the special oath has actually been taken.

    d. Counter-proposal
    An original proposal becomes superseded by the counter-proposal made by the other party and would not be revived even if the maker of the proposal rejects the counter offer. Quite a different result would however follow if the person making the counter-proposal withdraws it before the other either accepts the counter proposal or rejects it.

    3. How revocation is made

    A proposal is revoked
    i. by the communication of notice of revocation by the proposer to the other part,.
    ii. by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is So prescribed, by the lapse of a reasonable time, without communication of the acceptance:
    iii. by the failure of the acceptor to fulfill a condition precedent to acceptance; or
    iv. by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.

    Lapse of time after proposal

    Where a proposal is not accepted within a reasonable time and no time has been fixed for the acceptance of the proposal, the proposer may revoke the proposal. Thus where application for shares-of a company was made in March and July, 1933 and December, 1934, but there was, no allotment of shares till August, 1935, no notice of allotment being given to the proposer till then: and there was nothing in the conduct of the applicant amounting to waiver of revocation; it was held that S.6(2) applied and the proposals must be defend to have been revoked.
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