LAW OF CONTRACT - 1

NARMADA N
Faculty of Law
REVOCATION OF CONTRACT

The term revocation means calling back a thing granted or destroying or making void of some
deed that had existed until the act of revocation made it void. Where any deed or thing is
revoked, it is as if it never had been. Revocation means revocation of an order which is
otherwise valid and operative. Revocation includes cancellation of all orders invalid as well as
valid. Revocation means annulling, rescinding, or withdrawing.

Section 5 of the Act, “A proposal may be revoked at any time before the communication of its
acceptance is complete as against the proposer, but not afterward.”

• Therefore revocation means to retract, cancel, or withdraw.

• In some cases situations, even though the offer has already been made an offer to the
offeree,
• If the offer is validly revoked, there will be no contract created.
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When can the offer be revoked?

• Section 5(1) provides that “A proposal may be revoked at any time before the
communication of its acceptance is complete as against the proposer, but not afterward.
• Therefore once an acceptance has been made. The offeror is no longer entitled to revoke his
offer.

Payne v. Cave, (1789) 3 TR 148

The claimant put his goods up for sale at a public auction. The defendant made the highest bid
but then changed his mind. He purported to withdraw the bid before the auctioneer’s hammer
fell. The claimant argued that there was a completed contract and the defendant had to pay for
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the goods. The Court held in favor of the defendant. The defendant’s bid was an offer, which
had been withdrawn before it was accepted. As such, there was no contract.

Routledge v Grant [1828]

Grant wrote to Routledge offering to purchase the lease of his house. The offer was to remain
open for six weeks. Grant then changed his mind about purchasing the lease and, within six
weeks, withdrew his offer. After Routledge had received Grant's letter withdrawing the offer he
wrote to Grant, within six weeks, accepting Routledge's offer. The court held that the Offer
could be withdrawn within the six-week period without incurring any liability. "... If a party
makes an offer and fix a period within which it is to be accepted or rejected by the person to
whom it is made, though the latter may at any time within the stipulated period accept the offer,
still the former may also at any time before it is accepted retract it; for to be valid, the contract
must be mutual: both or neither of the parties must be bound by it...“
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Kamisetti Subbiah v. Katha Venkatswami, (1903) 27 Mad 355,

The gap of time between the posting and delivery of acceptance to the proposer can be utilized
by the acceptor if he wants to revoke his earlier acceptance by a speedier means of
communication which reaches faster or earlier than the letter of acceptance.

How can the offer be revoked?

It can revoked under the prescribed forms of section 6 (a), (b), (c), (d)

Section 6(a) -
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• According to this provision, if the offeror decides to revoke his offer by giving a notice, the
revocation of an offer would only be effective after the notice of revocation had occurred to
the actual knowledge of the offeree.
• The notice here is not restricted to a written notice. The offeror may also give a verbal
notice of the revocation.
REVOCATION OF CONTRACT
When is the communication of revocation is complete?

The communication of revocation stands complete when it is made according to the provisions
mentioned under section 4. i.e., if the offeror makes the revocation of the offer, he needs to put
the letter into transmission, so as to be out of his control once it is dispatched. Here the
revocation of the offer is complete for the offeror. The revocation of the offer is complete to the
acceptor when it comes to the knowledge of the acceptor.

Illustration:
A revokes his proposal by telegram. The revocation is complete against A when the telegram is
dispatched. It is complete against B when B receives it.
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If A had sent a letter of offer to B. B received the offer. A may revoke his proposal at any time
before or at the moment when ' posts his letter of acceptance but not afterward.

Byrne & Co v Leon Van Tien Hoven & Co [1880] 5 CPD 344

Facts
The defendants wrote a letter, on October 1, to the plaintiffs offering the sale of 1000 boxes of
tin plates. The defendant was based in Cardiff and the plaintiff was based in New York, and
letters took around 10-11 days to be delivered. The plaintiffs received this letter on October 11
and accepted it on the same day by telegram, as well as by letter on October 15. However, on
October 8, the defendant sent a letter to the plaintiffs which withdrew their offer and this
arrived with the plaintiff on October 20. The plaintiffs claimed for damages for the non-delivery
of the tin plates.
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The court held that the withdrawal of the offer was ineffective as a contract had been
constructed between the parties on October 11 when the plaintiffs accepted the offer in the letter
dated October 1. On this basis, it was held that an offer for the sale of goods cannot be
withdrawn by simply posting a secondary letter which does not arrive until after the first letter
had been responded to and accepted. The court gave judgment for the plaintiff and awarded that
the defendant paid their costs.

Henthorn v Fraser [1892] 2 Ch 27

The complainant and the defendant had been negotiating the purchase price of houses. An
original offer to buy the houses for £600 had been rejected. The defendant, Mr Fraser, handed
the complainant, Mr Henthorn, a note that detailed an option to sell the property for £750,
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which would
be valid for 14 days. While this offer was being considered, another buyer was interested and
the defendant concluded a contract with them instead. The next day, the defendant then
withdrew the offer to the complainant by post. This note did not reach Mr Henthorn until 5 p.m.
At this time, Mr Henthorn had already responded to the offer by post with an unconditional
acceptance to buy the houses for £750. But, this was not delivered to Mr Fraser until the office
was closed and he did not read this acceptance until the morning. The court held that the offer
was valid and an order for specific performance made for £750 to purchase the property. The
postal rule in Adams v Lindsell would apply, which stated that it would be reasonable for
acceptance of an offer to take place by post. However, this rule would not apply to the
revocation of an offer. Post was a way of communicating offer acceptance, but the acceptance
itself is completed as soon as it is posted. This was reasonable to expect since both parties lived
in different towns.

Adams v Lindsell
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The
defendants wrote to the plaintiffs on 2 September, offering to sell them some wool and
requested that the plaintiffs reply ‘in course of post’. The letter which contained the offer was
wrongly addressed and therefore the plaintiffs did not receive it until 5 September. As a result of
this delay, the letter of acceptance was not received until 9 September by the defendants, and
this was two days later than the defendants would have expected to receive it. Because of this,
on 8 September the defendants had sold the wool to a third person. The question for the court in
Adams v Lindsell was therefore whether a contract of sale had been entered into before 8
September when the wool was sold to the third party. If the acceptance was effective when it
arrived at the address or when the defendant saw it, then no contract would have been made and
the sale to the third party would amount to revocation of the offer. However, the court held that
the offer had been accepted as soon as the letter had been posted. Thus, in Adams v Lindsell
there was indeed a contract in existence before the sale of the wool to the third party, even
though the letter had not actually been received by the defendant. The defendant was therefore
liable in breach of contract.
REVOCATION OF CONTRACT

Who can revoke the offer?

Revocation of the offer may only be done by the offeror or his representative acting on his
behalf. Communication by a 3rd party not acting on behalf of the offeror is not sufficient.

Section 6(b) – revocation of the offer by lapse of time –

This section provides that an offer may expire by lapse of time in 2 situations:

• When the acceptance has not been made within the time prescribed by the offeror.
• If no time is prescribed, the acceptance has not been made within a reasonable time.
• What is reasonable depends on the facts and circumstances of each cases
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Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109

The defendant, Mr. Montefiore, wanted to purchase shares in the complainant’s hotel. He put in
his offer to the complainant and paid a deposit to his bank account to buy them in June. This
was for a certain price. He did not hear anything until six months later when the offer was
accepted and he received a letter of acceptance from the complainant. By this time, the value of
shares had dropped and the defendant was no longer interested. Mr. Montefiore had not
withdrawn his offer, but he did not go through with the sale.
The court held that the Ramsgate Victoria Hotel’s action for specific performance was
unsuccessful. The offer that the defendant had made back in June was no longer valid to form a
contract. A reasonable period of time had passed and the offer had lapsed. The court stated that
what would be classed as a reasonable time for an offer to lapse would depend on the subject
matter. In this case, it was decided that six months was the reasonable time before the automatic
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expiration of
the offer for shares. Yet, for other properties, this would be decided by the court in the
individual cases.

Revocation by failure of the offeree to fulfill the condition precedent to the acceptance –
Section 6(c).

• If the offeror puts a condition to be fulfilled by the offeree before making acceptance, the
offeree must fulfill it. If not, the offeror is automatically revoked.

Pym v Campbell (1856) 6 E & B 370

Pym and Campbell signed a written agreement wherein Campbell agreed to purchase
threeeighths of the profits to accrue from Pym’s new invention. The invention did not receive
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the requisite
approval from one of Campbell’s engineers and, accordingly, Campbell refused to pay Pym the
purchase price. Pym sued for breach of contract. However, Campbell claimed that the
agreement was conditional upon the approval of the invention, presenting oral evidence of party
negotiations to that effect. The Court held that, as a general rule of law, the terms contained
within a signed written contract are conclusive and cannot be varied by parol evidence.

Thus, parol evidence cannot introduce an addition to or variation from the terms of a written
contract between the Parties. However, in this case, the Court held that the general parol
evidence rule is not applicable as the question did not concern the construction of the terms of a
contract but rather whether there was any agreement at all. Thus, parol evidence that sought to
show that the agreement was never entered into was admissible. On the facts, the Court held
that there was overwhelming evidence from the oral negotiations between the Parties that, prior
to signing the written document, the Parties came to a mutual understanding the prospective
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purchase was
not intended to be an agreement until the invention was approved by the engineers. As there
was no approval, there was no agreement and Campbell was not obliged to pay Pym.

Revocation by the death or mental disorder of the offeror – section 6(d)

Death od mental disorder of the offeror may terminate the offer. However, the offer is only
revoked if the offeree is aware of the fact before he makes any acceptance. If the offeree has no
knowledge about the death or mental disorder of the offeror, his acceptance is valid and
binding.
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Bradbury v
Morgan [1862] 158 ER 877

Leigh requested that Bradbury provide credit to his brother to the value of £100. Leigh
guaranteed the account owned by his brother to this effect. Accordingly, Bradbury credited
Leigh’s brother’s account and continued selling goods to Leigh in their usual manner.
Unfortunately, Leigh died and Bradbury continued to supply his brother with goods on the
credit which had been previously agreed.

Bradbury had no knowledge or notice of the death of Leigh. Morgan, who was an executor on
behalf of Leigh, did not pay Bradbury for the goods and refused to do so on the basis that the
debts were contracted after Leigh’s death and as a result, Leigh was not liable for the payment.
Bradbury brought an action for the payment that was due for the goods. The court found in
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favor of
Bradbury. The court held that if the situation was dealing with an implied contract that had
arisen out of a request, then it would be stopped by the death of a party. However, in this
circumstance, there was no notice provided of the death of Leigh, and therefore there was no
attempt to end the contract.

REVOCATION OF ACCEPTANCE

According to English Law - Acceptance once made cannot be withdrawn. “Acceptance is to an

offer what a lighted match is to a train of gunpowder”. it produces something that cannot be
recalled or undone. Acceptance once made is irrevocable. Once the letter is posted for
acceptance, it cannot be revoked. Thus Anson compares an offer with a train of gunpowder and
acceptance with a lighted match. Both do something that cannot be undone. The material in
gunpowder by itself is not enough to cause exploitation. Gun-powder will cause explosion only
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when it is
ignited by a lighted match stick. Until then it was harmless. But as soon as a lighted match is
shown to a match to a train of gunpowder, if explodes. It produces something which cannot be
recalled. Or undone.

Similarly, an offer when accepted becomes a contract and will give rise to legal obligation. In
other words, offer and acceptance together can explode leading to the formation of a valid
contract. But so long as a light match is shown, the gunpowder remains inert or powerless and
can be removed or may even become damp. Similarly, an offer unless it is accepted does not
create any legal relationship between the parties. It can be revoked before it is accepted it can
even lapse for want of acceptance after the expiry of a reasonable time. But once acceptance is
given, it ripens into a contract just as when a lighted match is applied to a train of gun-powder,
it explodes. Hence, Anson emphasizes two things, namely:
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• There
cannot be an acceptance after revocation of the offer, and

• When once cannot there is an acceptance, there can be no revocation.

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REVOCATION OF ACCEPTANCE UNDER INDIAN LAW

The rule as to when the offeree can revoke his acceptance is provided under section 5(2):

• “An acceptance may be revoked at any time before the communication of the acceptance is
complete against the acceptor, but not afterward.”
• The offeree could revoke his acceptance at any time before or at the moment the letter of
acceptance reaches the offeror.
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Countess of Dunmore v Alexander (1830) 9 S. 190

The Countess of Dunmore (C) was looking to change servant and wrote to Lady Agnew (LA)
requesting information on the character of one of her servants, Alexander. LA responded and
recommended Alexander, stating that she would accept the proposed wage. C accepted this and
sent a letter to LA, acknowledging the agreement. LA was away from her residence but had the
letter forwarded to the appropriate address. She acknowledged the letter and sent this on to
Alexander. A day later, C wrote to LA stating that she no longer needed Alexander. LA
forwarded the second letter by express post and both letters were delivered to Alexander at the
same time. After C refused to house or pay Alexander, Alexander brought an action against her
on the basis that there had been a completed contract and C had breached the terms. The court
held that there was no completed contract and therefore Alexander was not entitled to the
wages for which she had claimed. The court found that as the two letters were received at the
same time by Alexander, there could be no contract but notably stated that if one had arrived in
the morning and the other in the afternoon, this
would have been different (as per Lord Balgray).
As a result of the circumstance, C was allowed to revoke
her offer.
THANK YOU
Narmada N
Faculty of Law
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