Business Laws · The Indian Contract Act, 1872

Offer, Acceptance and Communication (Indian Contract Act, 1872)

Updated 4 October 2026

An offer (proposal) is a willingness to do or not do something, made to get another person's assent. Acceptance of it creates a promise. To solve questions, identify the offer, check it is not a mere invitation, test the acceptance, then use Sections 4, 5 and 6 to fix the timing of communication and revocation.

Understand Offer, Acceptance and Communication

Every contract starts with an offer (called a proposal in the Act). Under Section 2(a), it is a person's willingness to do or abstain from doing something, shown to another person, with a view to getting that person's assent. The person making it is the proposer (offeror). The person to whom it is made is the offeree.

An offer is different from an invitation to offer (invitation to treat). In an invitation, the person only invites others to make offers. Examples: goods displayed in a shop window, price lists, catalogues, and auction announcements. The customer makes the offer, and the seller is free to accept or refuse. In the old case of Harvey v Facey, a reply giving only a lowest price was held to be a statement of price and not an offer to sell.

Offers can be express (words, spoken or written) or implied (conduct). They can be specific (made to a particular person) or general (made to the world at large). A general offer can be accepted by anyone who performs the stated conditions. In Carlill v Carbolic Smoke Ball Co, the company promised a reward to anyone who used its smoke ball as directed and still caught influenza. Mrs Carlill did so and was held entitled to the reward. Performing the conditions was acceptance.

Acceptance is the offeree's assent to the offer. When a proposal is accepted, it becomes a promise (Section 2(b)). Under Section 7, acceptance must be absolute and unqualified, and it must be expressed in some usual and reasonable manner unless the proposal prescribes the manner. It must also be communicated to the proposer, and made while the offer is still alive. A conditional reply such as "I will buy at ₹90 instead of ₹100" is not absolute and unqualified, so it is a counter-offer. It ends the original offer.

For a specific offer, the acceptance must be communicated to the proposer. For a general offer, performing the stated conditions is itself treated as acceptance and as communication of it. No separate notice to the offeror is needed. But the person must know of the offer when performing.

Communication has timing rules. Section 4 says when communication is complete, and Section 5 says until when you can revoke. Section 6 lists the ways a proposal comes to an end. Most exam problems are a timeline of letters or telegrams, and you decide who could do what, and when.

Key rules to remember

Proposal (Section 2(a)): Willingness to do or abstain + shown to another + to obtain assent; All three parts are needed. A mere statement of price or an invitation to deal is not a proposal.
Communication of a proposal (Section 4): Complete when it comes to the knowledge of the person to whom it is made; The offeree must know of the offer. In Lalman Shukla v Gauri Dutt, a person who did not know of the offer when acting could not claim the reward.
Communication of acceptance (Section 4): Against the proposer: when put in course of transmission, out of the acceptor's power. Against the acceptor: when it comes to the proposer's knowledge; Posting a letter binds the proposer at once. The acceptor is bound only when the letter reaches the proposer.
Communication of revocation (Section 4): Against the person revoking: when despatched, out of his power. Against the other party: when it comes to his knowledge; Same two-point idea as acceptance. Revocation of a proposal is complete against the offeree only on receipt.
Revocation of proposal (Section 5): Allowed at any time before communication of acceptance is complete as against the proposer, but not afterwards; So the proposer can revoke up to the moment the acceptance is posted.
Revocation of acceptance (Section 5): Allowed at any time before communication of the acceptance is complete as against the acceptor, but not afterwards; So the acceptor can revoke up to the moment the acceptance reaches the proposer. The revocation must get there first or at the same time.
Ways a proposal is revoked (Section 6): (1) notice of revocation; (2) lapse of time; (3) failure to fulfil a condition precedent; (4) death or insanity of proposer, if known to acceptor before acceptance; Lapse means the time stated in the proposal, or a reasonable time if none is stated. Death or insanity works only if the acceptor learns of it before accepting.
Acceptance rules (Section 7): Absolute and unqualified + expressed in the prescribed manner, or if none is prescribed, in a usual and reasonable manner; Added from general law, separate from Section 7: acceptance must be given by the offeree, while the offer is open. Silence cannot be imposed as acceptance.

How to solve Offer, Acceptance and Communication questions

Use this order for any problem or theory question on offer and acceptance. It keeps your answer in the provision, facts, conclusion format.

1Find the offer. Ask if the person is willing to be bound or is only inviting offers. Shop displays, catalogues and price quotes are usually invitations.
2Classify it as specific or general, and express or implied. For a general offer, recall Carlill and say that performing the conditions is acceptance.
3Check the offeree knew of the offer. Without knowledge, there is no valid acceptance.
4Test the reply under Section 7. Is it absolute and unqualified, in the prescribed or usual manner? Any change in terms is a counter-offer, which ends the original offer.
5Draw a timeline of dates with each event: posted, despatched, received. Mark when each step is complete under Section 4.
6Apply Section 5 to the timeline. Ask if the revocation came before the acceptance was complete against the proposer (for a proposal) or the acceptor (for an acceptance).
7Check Section 6 for other ways the offer may have ended: lapse of time, unmet condition, death or insanity known to the acceptor.
8Write the conclusion in one line: whether a contract is formed, and from which date.

Quickest way: Timeline and three-question check

When to use it: Use this when the question is a short fact pattern with dates, letters or telegrams, and you have about 5 to 6 minutes for it.

Write the dates in a line: offer, acceptance posted, acceptance received, revocation sent, revocation received.
Ask Q1: was it an offer or an invitation? Stop early if it is an invitation.
Ask Q2: is the acceptance absolute, unqualified and in time? If not, there is no contract.
Ask Q3: did the revocation get sent before the acceptance was posted (proposal) or reach before the acceptance reached (acceptance)?
State the rule in one sentence with the section number, apply it with the dates, and give the conclusion. Do not copy long section text.

Common mistakes in Offer, Acceptance and Communication

Treating a price tag, catalogue or shop display as an offer.
It looks like the seller is offering goods at a price.
Fix: Remember the seller only invites the customer to make an offer. The contract forms when the seller accepts at the counter.
Saying the proposer can revoke until the acceptance reaches him.
Students mix up the proposer's and acceptor's positions.
Fix: Against the proposer, acceptance is complete when posted. So the proposer's revocation must be effective before that. The acceptor's own revocation is the one that can race the letter to the proposer.
Confusing a counter-offer or an enquiry with acceptance.
A reply that engages with the offer feels like agreement.
Fix: Check the words. A change of terms is a counter-offer and ends the original offer. A mere request for information does not.
Saying a general offer cannot be accepted without telling the offeror.
Students apply the rule for specific offers, where acceptance must be communicated to the proposer.
Fix: In a general offer, performing the stated conditions is treated as acceptance and communication, as in Carlill. No separate notice is needed. Still, the person must know of the offer when performing.
Giving revocation by death of the proposer as automatic.
Students remember only the word death in Section 6.
Fix: State the full condition: the fact of death or insanity must come to the acceptor's knowledge before acceptance.
Writing only the rule with no facts or conclusion.
Students rely on memorised notes.
Fix: Always follow the format: provision, apply it to the dates and parties, then conclude whether a contract exists.

Worked examples

Example 1

On 1 March, A offers by letter to sell his flat to B for ₹40,00,000. B posts a letter of acceptance on 5 March. It reaches A on 8 March. On 6 March A sends a telegram revoking his offer. It reaches B on 7 March. Is there a contract?

Show the solution

Provision: Section 5 says a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
Section 4 says the communication of acceptance is complete as against the proposer when it is put in course of transmission to him, so as to be out of the power of the acceptor.
Facts: B's acceptance was complete against A on 5 March, when the letter was posted.
A sent his revocation on 6 March. By then the acceptance was already complete against A, so under Section 5 A could not revoke on 6 March.
The telegram reaching B on 7 March does not matter. The revocation was barred whenever it arrived, and the offer had already been accepted.

Answer: A's revocation is ineffective. A valid contract was formed on 5 March, when B posted the acceptance, and A is bound to sell the flat to B.

Example 2

A shop displays a camera in its window with a price tag of ₹18,000. Separately, a company advertises in a newspaper that it will pay ₹50,000 to anyone who finds a particular fault in its software within 30 days, and it deposits the amount in a bank to show sincerity. (a) Is the window display an offer? (b) Rohan finds the fault in 20 days after reading the advertisement. Can he claim?

Show the solution

(a) Provision: an offer shows willingness to be bound, whereas an invitation to offer only invites others to make offers. A display with a price tag is generally an invitation to offer.
Facts: the shop has not yet agreed to sell to any particular customer. The customer makes the offer by asking to buy, and the shopkeeper may accept or refuse.
(b) Provision: a general offer made to the public can be accepted by anyone who performs its conditions. Carlill v Carbolic Smoke Ball Co is the leading case.
Facts: the advertisement states a clear promise, a time limit and the work required. Rohan read it and found the fault within 30 days, so he performed the conditions with knowledge of the offer.
Performing the conditions amounts to acceptance, so a contract is formed with Rohan.

Answer: (a) The window display is only an invitation to offer, not an offer. (b) The advertisement is a general offer. Rohan accepted it by performing the conditions within the time stated, so he can claim ₹50,000.

Exam tips

Draw the date timeline before writing. Most Section 4 and 5 marks are lost by mixing up who is bound when.
Quote the section number and the rule in one line, then spend the rest of the answer on the facts.
Learn two cases cold: Carlill for general offers and Harvey v Facey for an invitation to offer. Name them only where they fit.
For difference questions, such as offer vs invitation to offer, write 4 to 5 clear points in two columns of wording, with an example for each.
Always end with a one-line conclusion saying whether a contract exists and from when.

Practice questions from The Indian Contract Act, 1872

Offer, Acceptance and Communication: frequently asked questions

What is the difference between an offer and an invitation to offer?

An offer shows willingness to be bound once the other person accepts. An invitation to offer only invites others to make offers, and the inviter can still refuse. Shop displays, catalogues and price lists are common invitations.

When is communication of acceptance complete under Section 4?

As against the proposer, it is complete when the acceptance is put in course of transmission, such as posting the letter, so that it is out of the acceptor's power. As against the acceptor, it is complete when it comes to the proposer's knowledge.

Until when can an offer be revoked?

Under Section 5, the proposer can revoke at any time before the communication of acceptance is complete as against the proposer, which is when the acceptance is posted. After that, the offer cannot be revoked. Section 6 lists the other ways an offer can end.

Can a general offer be accepted without informing the offeror?

Yes, no separate notice is needed. In a general offer, performing the conditions stated in it is treated as acceptance and communication of it. Carlill v Carbolic Smoke Ball Co is the standard case. The person must know of the offer when performing, as Lalman Shukla v Gauri Dutt shows.

Does a counter-offer keep the original offer alive?

No. A counter-offer is a rejection of the original offer and a new proposal. The original offeror is no longer bound by the first offer.