Skip to content

CA Foundation · Business Laws · The Indian Contract Act, 1872

Anil writes to Bharat on Monday offering to sell his old printing machine for Rs 2,00,000. On Tuesday, before receiving any reply, Anil sends a letter revoking the offer, and Bharat gets that letter on Thursday. On Wednesday Bharat had already posted a letter of acceptance. Which statement is correct?

A binding contract exists. Revocation of an offer takes effect against the offeree only when it reaches his knowledge. Bharat posted his acceptance on Wednesday, before receiving the revocation on Thursday, so the offer was still open and his acceptance completed the contract.

  1. AThe offer was validly revoked, because Anil posted his revocation before Bharat's acceptance reached him
  2. BA binding contract exists, because revocation is effective against Bharat only when it reaches him, and his acceptance was posted before thatCorrect
  3. CNo contract exists, because acceptance is complete only when Anil receives it
  4. DNo contract exists, because an offer cannot be revoked by post once made

Explanation

Revocation of a proposal is complete against the person to whom it is made only when it comes to his knowledge. Bharat posted his acceptance on Wednesday, before he learnt of the revocation on Thursday, so the offer was still open and a contract was formed. The option saying revocation took effect on posting is wrong because posting is not enough against the offeree.

Did you get it right without looking?

One question tells you little. A timed set on The Indian Contract Act, 1872 shows your real accuracy, how long you take and where you lose marks.

Practise The Indian Contract Act, 1872Free diagnostic mock

More The Indian Contract Act, 1872 questions