Description
Revocation is the act of recall or annulment. It is the reversal of an act, the recalling of a grant, or the making void of some deed previously existing.
Chapter 4: Acceptance, Rejection and Revocation of Offer Legal Aspects of Business, 3rd Edition
1
Acceptance, Rejection and Revocation of Offer
2
Case: Shares for Sale
Thomas says to Rajat, “I offer to sell 50 shares of Rubicon Ltd. to you for Rs. 700 a share.” Rajat replies, “I accept the offer but I will confirm this evening.” Later in the evening, Rajat calls up Thomas and says, “I am sorry I am not going to buy the shares.”
3
… Cond
Rajat had taken time till the evening to mobilise resources to buy the shares. Later in the day, he consulted a friend who was very knowledgeable about buying and selling shares. His friend told him that it was not a good time to buy shares. He expected the prices of the shares to come down further. Convinced by his friend, Rajat had called up Thomas declining from buying the shares.
4
… Cond
Thomas says to Rajat, “I offer to sell 50 shares of Rubicon Ltd. to you for Rs. 700 a share.” Rajat replies, “I accept the offer but I will confirm this evening.” Later in the evening, Rajat calls up Thomas and says, “I am sorry I am not going to buy the shares.” Thomas insists that an agreement has got formed between the parties.
5
Summary
An acceptance with qualifications, riders or conditions is not an acceptance. An acceptance must be clear and definite. The Indian Contract Act states this principle in Section 7(1) as: 7. Acceptance must be absolute.- In order to convert a proposal into a promise, the acceptance must-
(i) be absolute and unqualified;
6
Case: Research Project
Maya got to know Shiraj through a friend Niraj. She submitted a proposal for a study to Shiraj. A week later, when Maya called Niraj, he congratulated her. He said that Shiraj had accepted the proposal. Maya had another assignment waiting. She declined it as she liked this one better. A few days later, Shiraj got back to her only to tell her that he had commissioned someone else for the study. Maya learnt from Niraj that other members working with the team advised Shiraj to opt for a person based in Chennai. Maya insists that her proposal was accepted by Shiraj and, thus, an agreement was formed between them. 7
Summary
Acceptance should be communicated to the person making the offer.
8
Case: Results on the Webpage
Aqua-jet, a company manufacturing irrigation equipment, sought tender from several parties for supplying components. The tender notice mentioned that the names of persons whose tenders were accepted would be put up on its webpage on September 5. Raman was happy he saw his name on the webpage in the list of successful candidates. He saved the page on his computer. Two days later, he received a later from Aqua-jet informing him that he was not successful in securing tender with them. He visited the webpage and noted that the entire list was removed. Raman contends that an agreement has been formed between the parties. Aqua-jet claims that they have turned down the tender-offer by their 9 letter of rejection.
Summary
The contracting parties can specify modality of communication. In the absence of this, acceptance should be communicated to the person making the offer.
10
Case: Acceptance through Email
Rakesh, a manufacturer, sent an email to a potential buyer, Anil: “Further to our discussion, I offer to sell 100 pieces of ergonomically designed computer work station chairs at Rs. 2000 a piece. Send acceptance by email or fax by 5.00 PM.”
Anil phoned Rakesh and said, “I accept the email offer sent by you this morning.”
11
… Cond
Rakesh replied, “Kindly acceptance by email or fax.” communicate your
Anil explained, “I do not have a fax machine and my internet is down to send an email.” Rakesh replied, “It is our practice to insist on acceptance by fax or email. Kindly arrange to communicate your acceptance through email or fax.” Rakesh did not receive a fax or email from Anil till 5.00 PM. Is a contract formed between them? 12
… cond
Let us take a variation of the case. Rakesh concedes Anil’s request of receiving acceptance on the phone. Soon thereafter, Anil receives an email terminating the contract for which he needed the chairs. Anil does not need the chairs any more.
Anil claims that the modality for accepting Rakesh’s offer was by fax or email. As he has not sent any fax or e-mail, Anil argues, no agreement has been formed between them.
Decide.
13
Summary
Acceptance must be by the communication indicated in the offer. means of
With mutual consent, the parties can waive the prescribed mode of communication.
14
Case: DVD for the Card Holder
Dear Sumi, Congratulations! Your are a lucky winner of a lottery conducted by us for all our valued customers to have earned a DVD priced at Rs. 4500 for just Rs. 1500! …
15
… cond
Sumi was not interested and she threw away the letter. In the next month’s statement, she was charged Rs. 1500 for the DVD. The credit card company pointed out the following in the letter they had sent.
“If we do not hear from you within a month, we would understand that you have accepted the offer. We would go ahead to charge Rs. 1500 in the next month’s statement and deliver you the DVD. After all, who would miss on such a fabulous offer!”
16
Summary
Silence can only imply rejection, not acceptance.
17
Case: Computer for Sale
Shanat says to Vishal, “I offer to sell this computer to you for Rs. 30,000.” Vishal responds, “No. Thank you.” Vishal comes back half an hour later and says to Shanat, “I accept your offer.” In the meanwhile, Shanat has sold the computer to another person. Is an agreement formed between Shanat and Vishal?
18
Case: Sale of Computer
Shanat says Vishal, “I offer to sell this computer to you for Rs. 30,000.” Vishal shakes his head, puts his hand in his pocket, takes it out and gestures that he has no money. Vishal comes back half an hour later and says to Shanat, “I accept your offer.”
In the meanwhile, Shanat has sold the computer to another person. Is an agreement formed between Shanat and Vishal?
19
Summary
An offer gets extinguished by express or implied rejection.
20
Case: 6.00 PM Deadline
Shanat says to Vishal, “I offer to sell this computer to you for Rs. 30,000. Kindly let me know by 6.00 PM, coming Monday.” Vishal phones Shanat on Tuesday evening and says, “I accept your offer”. Shanat sold the computer on Tuesday morning to another person. Vishal claims that an agreement is formed between the parties.
21
Summary
A offer gets extinguished by the expiry of the stipulated time.
22
Case: Long Silence
Shanat offers to sell his computer to Vishal for Rs. 30, 000 on the phone. Vishal tells him that he will think it over and let him know. Vishal gets back after six months. In the meanwhile, Shanat has sold the computer to another person. Vishal is claiming that he has formed an agreement by accepting the offer.
23
Summary
A long silence implies rejection of an offer.
24
Case: House for Sale
Sunil offers to sell 10 shares of a company to Arman, as Sunil needs money for buying a house. Arman is still considering the offer. In this while, Sunil manages to get additional loan for buying the house. He need not sell the shares any more. He calls Arman and tells him that the shares are not for sale any more. Arman insists that Sunil has to sell the shares.
25
Pane v. Cave
Mr. Cave made a bid of £ 40 in an auction of a tub, seemingly made of an expensive alloy. Instead of striking the hammer, the auctioneer, Mr. Pane, dwelt on the bidding. Cave said, “Why do you dwell? You will not get more.” Pane replied that the tub weighed 1,300 cwt and was worth more than £40. Mr. Cave retorted by asking him whether he would have the tub weighed. Pane ignored the suggestion. Mr. Cave then declared that he would not take it and refused to pay for it. It was re-sold the next day for £30. Pane was insisting that Cave as the highest bidder was obliged to take the tub. Thus, Cave should pay the balance of £10.
26
Pane v. Cave
Every bidding is nothing more than an offer on one side which is not binding on either side till it is assented to. But according to what is now contended for, one party would be bound by the offer and the other not, which can never be allowed.
27
Revocation in Contract Act
Section 5. Revocation of proposals and acceptances.- A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
28
doc_773776095.ppt
Revocation is the act of recall or annulment. It is the reversal of an act, the recalling of a grant, or the making void of some deed previously existing.
Chapter 4: Acceptance, Rejection and Revocation of Offer Legal Aspects of Business, 3rd Edition
1
Acceptance, Rejection and Revocation of Offer
2
Case: Shares for Sale
Thomas says to Rajat, “I offer to sell 50 shares of Rubicon Ltd. to you for Rs. 700 a share.” Rajat replies, “I accept the offer but I will confirm this evening.” Later in the evening, Rajat calls up Thomas and says, “I am sorry I am not going to buy the shares.”
3
… Cond
Rajat had taken time till the evening to mobilise resources to buy the shares. Later in the day, he consulted a friend who was very knowledgeable about buying and selling shares. His friend told him that it was not a good time to buy shares. He expected the prices of the shares to come down further. Convinced by his friend, Rajat had called up Thomas declining from buying the shares.
4
… Cond
Thomas says to Rajat, “I offer to sell 50 shares of Rubicon Ltd. to you for Rs. 700 a share.” Rajat replies, “I accept the offer but I will confirm this evening.” Later in the evening, Rajat calls up Thomas and says, “I am sorry I am not going to buy the shares.” Thomas insists that an agreement has got formed between the parties.
5
Summary
An acceptance with qualifications, riders or conditions is not an acceptance. An acceptance must be clear and definite. The Indian Contract Act states this principle in Section 7(1) as: 7. Acceptance must be absolute.- In order to convert a proposal into a promise, the acceptance must-
(i) be absolute and unqualified;
6
Case: Research Project
Maya got to know Shiraj through a friend Niraj. She submitted a proposal for a study to Shiraj. A week later, when Maya called Niraj, he congratulated her. He said that Shiraj had accepted the proposal. Maya had another assignment waiting. She declined it as she liked this one better. A few days later, Shiraj got back to her only to tell her that he had commissioned someone else for the study. Maya learnt from Niraj that other members working with the team advised Shiraj to opt for a person based in Chennai. Maya insists that her proposal was accepted by Shiraj and, thus, an agreement was formed between them. 7
Summary
Acceptance should be communicated to the person making the offer.
8
Case: Results on the Webpage
Aqua-jet, a company manufacturing irrigation equipment, sought tender from several parties for supplying components. The tender notice mentioned that the names of persons whose tenders were accepted would be put up on its webpage on September 5. Raman was happy he saw his name on the webpage in the list of successful candidates. He saved the page on his computer. Two days later, he received a later from Aqua-jet informing him that he was not successful in securing tender with them. He visited the webpage and noted that the entire list was removed. Raman contends that an agreement has been formed between the parties. Aqua-jet claims that they have turned down the tender-offer by their 9 letter of rejection.
Summary
The contracting parties can specify modality of communication. In the absence of this, acceptance should be communicated to the person making the offer.
10
Case: Acceptance through Email
Rakesh, a manufacturer, sent an email to a potential buyer, Anil: “Further to our discussion, I offer to sell 100 pieces of ergonomically designed computer work station chairs at Rs. 2000 a piece. Send acceptance by email or fax by 5.00 PM.”
Anil phoned Rakesh and said, “I accept the email offer sent by you this morning.”
11
… Cond
Rakesh replied, “Kindly acceptance by email or fax.” communicate your
Anil explained, “I do not have a fax machine and my internet is down to send an email.” Rakesh replied, “It is our practice to insist on acceptance by fax or email. Kindly arrange to communicate your acceptance through email or fax.” Rakesh did not receive a fax or email from Anil till 5.00 PM. Is a contract formed between them? 12
… cond
Let us take a variation of the case. Rakesh concedes Anil’s request of receiving acceptance on the phone. Soon thereafter, Anil receives an email terminating the contract for which he needed the chairs. Anil does not need the chairs any more.
Anil claims that the modality for accepting Rakesh’s offer was by fax or email. As he has not sent any fax or e-mail, Anil argues, no agreement has been formed between them.
Decide.
13
Summary
Acceptance must be by the communication indicated in the offer. means of
With mutual consent, the parties can waive the prescribed mode of communication.
14
Case: DVD for the Card Holder
Dear Sumi, Congratulations! Your are a lucky winner of a lottery conducted by us for all our valued customers to have earned a DVD priced at Rs. 4500 for just Rs. 1500! …
15
… cond
Sumi was not interested and she threw away the letter. In the next month’s statement, she was charged Rs. 1500 for the DVD. The credit card company pointed out the following in the letter they had sent.
“If we do not hear from you within a month, we would understand that you have accepted the offer. We would go ahead to charge Rs. 1500 in the next month’s statement and deliver you the DVD. After all, who would miss on such a fabulous offer!”
16
Summary
Silence can only imply rejection, not acceptance.
17
Case: Computer for Sale
Shanat says to Vishal, “I offer to sell this computer to you for Rs. 30,000.” Vishal responds, “No. Thank you.” Vishal comes back half an hour later and says to Shanat, “I accept your offer.” In the meanwhile, Shanat has sold the computer to another person. Is an agreement formed between Shanat and Vishal?
18
Case: Sale of Computer
Shanat says Vishal, “I offer to sell this computer to you for Rs. 30,000.” Vishal shakes his head, puts his hand in his pocket, takes it out and gestures that he has no money. Vishal comes back half an hour later and says to Shanat, “I accept your offer.”
In the meanwhile, Shanat has sold the computer to another person. Is an agreement formed between Shanat and Vishal?
19
Summary
An offer gets extinguished by express or implied rejection.
20
Case: 6.00 PM Deadline
Shanat says to Vishal, “I offer to sell this computer to you for Rs. 30,000. Kindly let me know by 6.00 PM, coming Monday.” Vishal phones Shanat on Tuesday evening and says, “I accept your offer”. Shanat sold the computer on Tuesday morning to another person. Vishal claims that an agreement is formed between the parties.
21
Summary
A offer gets extinguished by the expiry of the stipulated time.
22
Case: Long Silence
Shanat offers to sell his computer to Vishal for Rs. 30, 000 on the phone. Vishal tells him that he will think it over and let him know. Vishal gets back after six months. In the meanwhile, Shanat has sold the computer to another person. Vishal is claiming that he has formed an agreement by accepting the offer.
23
Summary
A long silence implies rejection of an offer.
24
Case: House for Sale
Sunil offers to sell 10 shares of a company to Arman, as Sunil needs money for buying a house. Arman is still considering the offer. In this while, Sunil manages to get additional loan for buying the house. He need not sell the shares any more. He calls Arman and tells him that the shares are not for sale any more. Arman insists that Sunil has to sell the shares.
25
Pane v. Cave
Mr. Cave made a bid of £ 40 in an auction of a tub, seemingly made of an expensive alloy. Instead of striking the hammer, the auctioneer, Mr. Pane, dwelt on the bidding. Cave said, “Why do you dwell? You will not get more.” Pane replied that the tub weighed 1,300 cwt and was worth more than £40. Mr. Cave retorted by asking him whether he would have the tub weighed. Pane ignored the suggestion. Mr. Cave then declared that he would not take it and refused to pay for it. It was re-sold the next day for £30. Pane was insisting that Cave as the highest bidder was obliged to take the tub. Thus, Cave should pay the balance of £10.
26
Pane v. Cave
Every bidding is nothing more than an offer on one side which is not binding on either side till it is assented to. But according to what is now contended for, one party would be bound by the offer and the other not, which can never be allowed.
27
Revocation in Contract Act
Section 5. Revocation of proposals and acceptances.- A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
28
doc_773776095.ppt