Business Laws and Ethics · Indian Contracts Act, 1872

Offer, Acceptance and Revocation of Proposals under the Indian Contract Act

Updated 10 October 2026 · Fact-checked

A proposal (offer) is a willingness to do or not do something, communicated to get the other person's assent. When the person accepts it, it becomes a promise. Communication is complete at fixed moments, and a proposal or acceptance can be revoked only before that moment, as Section 5 says.

Understand Offer, Acceptance and Revocation of Proposals

Every contract starts with an agreement, and every agreement starts with a proposal. Under Section 2(a), a person makes a proposal when they signify to another their willingness to do or abstain from doing something, with a view to obtaining that other's assent. The person making it is the proposer (offeror). The person receiving it is the offeree.

When the offeree signifies assent, the proposal is accepted and becomes a promise (Section 2(b)). The proposer becomes the promisor and the acceptor becomes the promisee. So: proposal + acceptance = promise. Promises that form a reciprocal set become an agreement.

The offer must be communicated. Nobody can accept an offer they do not know about. The offer must also be definite, with clear terms, and must be made to create legal relations. An invitation to offer is only an invitation to others to make offers. Price tags in shop windows, auction calls, catalogues and prospectuses are the usual examples. The difference is intention: an offer is made so that a bare "yes" concludes the deal, but an invitation only starts negotiation.

Acceptance must be absolute and unqualified, given in the prescribed or usual mode, and made by the offeree, who must know of the offer. It must be communicated to the proposer. Silence cannot be imposed as acceptance by the proposer. A conditional reply or a counter-proposal is not acceptance. By general law, it rejects the original offer and is itself a new offer.

Section 5 lets a proposal be revoked at any time before the communication of its acceptance is complete as against the proposer. An acceptance can be revoked at any time before its communication is complete as against the acceptor. Once those moments pass, revocation is too late. Section 6 adds that a proposal is revoked by communication of notice of revocation by the proposer, by lapse of time, by failure of the acceptor to fulfil a condition precedent to acceptance, or by death or insanity of the proposer (if the acceptor knows of it before accepting). Section 6 is closely linked, so study it together.

Key rules to remember

Proposal: Section 2(a): willingness to do or abstain + signified to another + with a view to obtaining assent; All three parts must be present. Mere statement of intention or an invitation is not a proposal.
Promise: Proposal + Acceptance = Promise (Section 2(b)); Acceptance must be absolute and unqualified.
Communication of proposal: Complete when it comes to the knowledge of the person to whom it is made (Section 4); The offeree cannot accept before knowing of the offer.
Communication of acceptance: Against the proposer: complete when put in a course of transmission to him, out of the acceptor's power to recall. Against the acceptor: complete when it comes to the proposer's knowledge (Section 4); This is the postal rule. It decides when revocation is too late.
Communication of revocation: Against the person making it: complete when put in course of transmission out of his power to recall. Against the person to whom it is made: complete when it comes to his knowledge (Section 4); A revocation sent but not received does not yet bind the offeree.
Revocation of proposal: Section 5: before acceptance is complete as against the proposer; After this point the proposal cannot be withdrawn.
Revocation of acceptance: Section 5: before acceptance is complete as against the acceptor; The acceptor's revocation must reach the proposer before or at the same moment as the acceptance, as the Section 5 illustration shows, for example by a faster message.
Section 7 rules of acceptance: Absolute and unqualified + in the prescribed manner, or in a usual and reasonable manner if none is prescribed; If the proposer prescribes a mode and the acceptor uses another, the proposer may insist on the prescribed mode. If he does not insist, within a reasonable time after the acceptance is communicated to him, that the proposal be accepted in the prescribed manner, he is deemed to have consented to the acceptance.

How to solve Offer, Acceptance and Revocation of Proposals questions

Use this order for any problem on offer, acceptance or revocation. Write the legal point first, then apply it to the facts.

1Identify the parties. Mark who is the proposer and who is the offeree.
2Decide whether the first statement is an offer or only an invitation to offer. Look at the intention and whether a bare "yes" would conclude the deal.
3Check that the offer was communicated and that the offeree knew of it before acting.
4Test the reply. Is it absolute, unqualified and in the prescribed or usual mode? A conditional reply or counter-offer is not acceptance.
5Build a timeline of each message, noting when it was sent and when it was received.
6Apply Section 4 to fix the moment of completion for the proposal, acceptance and revocation.
7Apply Section 5. Revocation is valid only if it is complete before the relevant moment.
8Write a conclusion in one line: a valid contract exists or not, and from when.

Quickest way: Timeline check for revocation questions

When to use it: Use it when the question gives dates or times for an offer, acceptance by post or telegram, and a withdrawal.

Draw a line and mark: offer made, offer received, acceptance posted, acceptance received, revocation posted, revocation received.
Acceptance binds the proposer at posting. It binds the acceptor on receipt.
A proposer's revocation works only if it reaches the offeree before the acceptance is posted.
An acceptor's revocation works only if it reaches the proposer before or at the same moment as the acceptance reaches him, as per the Section 5 illustration.
State the answer with the Section 4 and Section 5 reason.

Common mistakes in Offer, Acceptance and Revocation of Proposals

Treating a price tag, catalogue or auction call as an offer.
Students link the goods being displayed to a sale being offered.
Fix: Say it is an invitation to offer. The customer's request to buy is the offer and the seller's acceptance completes the contract.
Saying a counter-offer is acceptance.
Students see the reply as a form of agreement and ignore the changed terms.
Fix: A qualified reply rejects the original offer and is a new proposal. The original cannot be accepted later unless it is repeated.
Confusing when acceptance is complete against the proposer and against the acceptor.
Both rules sit in one section and look alike.
Fix: Remember: against the proposer, at posting. Against the acceptor, on receipt by the proposer.
Saying silence is acceptance because the proposer said so.
Students overlook that the proposer cannot impose a duty to reply.
Fix: Silence is not acceptance unless the offeree's conduct or the law shows assent. The offeror cannot make it so by declaring it.
Allowing revocation after acceptance has been posted.
Students think the offer lives until the letter is read.
Fix: Once acceptance is posted, the proposer is bound and can no longer revoke under Section 5.
Mixing up Section 5 with Section 6 of the Act.
Both deal with an offer coming to an end.
Fix: Section 5 is about revocation by the person who made it. Section 6 lists the modes of revocation: notice of revocation, lapse of time, failure of a condition precedent, and death or insanity of the proposer. Name the right section.

Worked examples

Example 1

On 1 March, Ramesh of Pune writes to Suresh of Nashik offering to sell his car for ₹4,00,000 and asks for a reply by post. Suresh posts a letter of acceptance on 5 March. On 6 March Ramesh sends a telegram revoking the offer, which reaches Suresh on 6 March. The letter of acceptance reaches Ramesh on 7 March. Is there a contract?

Show the solution

The letter of 1 March is a proposal. Ramesh is proposer and Suresh is offeree.
Acceptance was posted on 5 March in the mode prescribed by the proposer (post). Against the proposer, acceptance is complete when posted, as Suresh cannot recall it.
Ramesh's revocation was sent on 6 March, after acceptance was complete as against him.
Under Section 5, a proposal can be revoked only before acceptance is complete as against the proposer. That time ended on 5 March.
So the revocation is too late, and it has no effect.

Answer: A valid contract exists from 5 March. Ramesh is bound to sell the car to Suresh for ₹4,00,000.

Example 2

Meera Stores displays a mixer priced ₹3,500 in its window. Anil goes in and says he will pay ₹3,000. The owner refuses. Anil says the shop must sell at the displayed price. Is he right?

Show the solution

A display of goods with a price is an invitation to offer, not an offer.
The customer's statement of willingness to buy is the offer. Here Anil offers ₹3,000.
The shopkeeper may accept or refuse it. The refusal means no acceptance, so no contract.
Anil's argument would apply only if the display were an offer. It is not.

Answer: Anil is wrong. The display is an invitation to offer, and the shopkeeper is free to refuse his ₹3,000 offer.

Exam tips

For a theory question, give the definition with its section number first. Then add one example. This is an easy way to earn marks.
For difference questions, use intention, effect and example as your points: offer vs invitation to offer, offer vs counter-offer.
In MCQs, check whether the question asks about the proposer or the acceptor. The answer usually depends on that.
Write a timeline with dates in postal rule problems. It shows your steps and earns method marks.
Name a case only if you are certain of its name and holding. A correct rule without a case still earns marks.

Practice questions from Indian Contracts Act, 1872

Offer, Acceptance and Revocation of Proposals in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Offer, Acceptance and Revocation of Proposals: frequently asked questions

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

An offer is made with the intention that a simple acceptance will form a binding contract. An invitation to offer only invites others to make offers. Shop displays, catalogues, auction calls and prospectuses are examples of invitations.

When does revocation of a proposal become complete?

Against the person making it, it is complete when put in a course of transmission, out of his power to recall. Against the person to whom it is made, it is complete when it comes to his knowledge. It works only if complete before acceptance is complete as against the proposer.

What are the rules of a valid acceptance?

Acceptance must be absolute and unqualified, given by the offeree who knows of the offer, and communicated in the prescribed or usual manner. A conditional reply or counter-offer is not acceptance. Silence by itself does not amount to acceptance.

Can an acceptance be revoked?

Yes. Under Section 5, an acceptance can be revoked at any time before its communication is complete as against the acceptor. In practice, the revocation must reach the proposer before or at the same moment as the acceptance. After that the acceptor is bound.