DR.

RAM MANOHAR LOHIYA NATIONAL

LAW
UNIVERSITY , LUCKNOW

PROJECT
ON
CONTRACTS

TOPIC Various Aspects and Modes of Communication

of Offer

SUBMITTED BY: SUBMITTED TO :

Malika Nigam
Roll No : 72
Madhurima Dutta
Roll No. : 71
Semester : II

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 ACKNOWLEDGEMENT

I would like to thank my Contract law teacher, Ms. Visalakshi for guiding me and helping me

in making this project. I would also like to thank my family all my friends who supported and

helped me in this task.

MALIKA NIGAM and MADHURIMA DUTTA

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 Table of contents

1) Introduction....................................................................................................4

Modes and Aspects of Communication of Offer

2) The general postal rule....................................................................................5

Scope of the postal rule..........................................................7

Misdirected postal communication..........................................8

3) Mailbox Rule..................................................................................................9

4) Instantaneous Communication......................................................................10

5) Telegraphed Communication.........................................................................15

6) Hand Delivery................................................................................................17

7) FAX...............................................................................................................17

8) Email..............................................................................................................17

9) Conclusion......................................................................................................18

10) Bibliography...................................................................................................19

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Introduction:
'A contract is an agreement which gives rise to obligations which are enforced or recognized

by law. The factor which distinguishes contractual [relations] from other obligations is that

they are based on the agreement of the contracting parties.'

To enter a legally binding bilateral contract there must be an offer and an acceptance. An

offer is defined by Paul Richards in the Law of Contract as: 'An expression of willingness to

contract on certain terms made with the intention that a binding agreement will exist once the

offer is accepted.'

Section 4 of the Indian Contract Act, 1872 says that the communication of a proposal is

complete when it comes to the knowledge of the person to whom it is made

For an offer to be valid it must be communicated. This might seem rather obvious; however

circumstances in real life may be more blurred as illustrated by the case of Taylor v Laird.1

The captain of a ship, employed for a trading and exploring voyage, refused to go any further

and resigned his command. He subsequently helped to work the ship home and wanted to

claim his wage for this work. It was held however that he could not do so as his offer to help

bring the ship home was not communicated, therefore there had been no opportunity to

accept or reject his offer.

The Communication between parties is an important step for the formation of a contract

between them. Among various factors, this one is important as it determines the time of

coming in force of a contract and the place. The mode of communication is also important

and Indian Courts have evolved a principle for the same, first in case of communication

1 (1856) 1H & N 266; 25 LJ Ex 329.

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which takes place between parties in each other presence and second when the

communication is through telephone.

In the following project,

First, we will discuss the following modes of communication, (a) a communication between

the parties in presence of each other, (b) a communication by means of post, and (c) a

communication by means of telephone.

Second, we will then discuss the recently evolved mode of communications which are based

on new technological advancements, such as emails, chats, etc.

MODES AND ASPECTS of COMMUNICATION Of OFFER

The general postal rule:

In modern times, contracts negotiated at a distance tended to be made by correspondence

exchanged through the post administered by the Post Office. Except as stated below, all

communications with respect to the formation of a contract which are sent through the

medium of the Post Office have the legal effects previously outlined. However, where such a

communication is sent through the medium of the Post Office, there's said to be a general rule

that a properly-addressed postal acceptance is complete when the letter of acceptance is

posted. Ordinarily, a letter isn't 'posted' until it's put in a Post Office letter box. Therefore, the

delivery of a letter to a postman outside the course of his ordinary duties isn't a posting of the

letter, nor will such a letter be assumed to be in the lawful custody of the Post Office as soon

as the postman enters the office.

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The following consequences are said to follow from this 'postal rule': (1) a postal revocation

of an offer only takes effect on receipt, provided that the revocation is communicated, so that

an acceptance posted at any time before that receipt prevails; (2) a postal acceptance takes

effect on posting even though accidentally lost or delayed in the post; and (3) a postal

acceptance of an offer relating to title of goods takes effect in priority to another contract

affecting the same subject-matter but made after posting of the first acceptance.

This analysis leaves undecided two questions, namely the operative time and effect of a

revocation of postal acceptance and of a postal rejection of an offer. What's more, there are

special complications which may arise in the case of communications by international

telegram and international sales. From these postal communications must be distinguished

instantaneous communications.

Taylor v Jones2. In the nineteenth century the view was held that offers sent by post were

continuing offers, i.e they should be regarded as being made during every instant that the

letters were being carried by the Post Office from the offerors to the offerees: see: eg Adams

v Lindsell3, obiter; Newcomb v De Roos4; Evans v Nicholson (2)5; Taylor v Jones above;

Bennett v Cosgriff6. All these cases, other than Adams v Lindsell above, were, however,

concerned with jurisdictional issues; but the view taken in the nineteenth century may help to

2 (1875) 1 CPD 87 at 90, obiter per Lord Coleridge CJ.

3 (1818) 1 B & Ald 681 at 683.

4 (1859) 2 E & E 271

5 (1875) 32 LT 778

6 (1878) 38 LT 177, DC

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explain certain difficult cases, eg (1) cross-offers sent by; (2) offers of reward accepted in

ignorance of the offer.

The scope of the postal rule:

It is presumed that, unless the offeror exclusively prescribes some different mode of

acceptance, an offer made through the post may be accepted by post. What's more, even

where an offer isn't made by post, if the circumstances are such that it must have been within

the contemplation of the parties that, according to the ordinary usages of mankind, the post

might be used as a means of communicating the acceptance, the offer may be accepted by a

letter sent through the post. Such posted acceptances Prima facie take effect on posting.

However, if an offer doesn't fall within the above circumstances, or if it does but the postal

rule is ousted, a posted letter of acceptance will have one of the following effects: (1) the

acceptance may fail entirely, as where it's too late; or (2) it may take effect only on receipt, as

where the offer specified for 'notice in writing to' the offeror. Contracts made by international

telegram are in substantially the same position.

Various unconvincing reasons for the postal rule have been judicially suggested. First, it has

been argued that, if the rule didn't exist, no contract could ever be completed by post because

neither party should be bound until he knew the other had received his communication.

Secondly, it has been explained on the basis that the Post Office is the common agent of both

parties; but, of course, the Post Office is only the agent to carry, not to receive, the

communications. Thirdly, it has been said that English law favours the offeree because it's the

offeror who 'trusts the post'. Fourthly, by way of explanation it has been argued that the

offeror must be considered as making the offer all the time his offer is in the post, and

therefore the agreement is complete as soon as the acceptance is posted. In truth, the rule is

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an arbitrary one, being little better than the possible alternatives; and it's, perhaps, linked with

the Post Office practice that a posted letter can't be retrieved.

Misdirected postal communications:

It would seem probable that the postal rule is Prima facie limited to properly addressed and

stamped letters of acceptance, and that if the letter of acceptance is misdirected because, for

example, it's wrongly or incompletely or illegibly addressed, or inadequately stamped, the

acceptance would date from the time of actual communication, as under the ordinary rule; but

it's unlikely that the postal rule would be ousted if the misdirection is immaterial, or if the

offeror is estopped from setting up the misdirection.

Even if an offer sent by post operates as an offer from the time of posting, it's considered that

a materially misdirected posted offer should only operate from receipt. Moreover, where a

misdirected posted offer asks for a reply by return of post, it's thought that the position should

be as follows: the ordinary rule that such an offer may be accepted by an answer posted on

the day of receiving the offer should only apply where either the misdirection has not caused

a delay in receipt of the offer, or any such delay isn't obvious to the offeree; and that in all

other cases the offer is incapable of acceptance because it has expired before acceptance.

Is a given type of communication effective when it is dispatched or when it is received?

These rules were first established when the basic modes of communication were either face-

to-face, by snail mail, and somewhat later telephone or telegram. The traditional rule

surrounding the before mentioned modes of communication is that a communication is

effective when received.

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Mailbox Rule:

For face-to-face communication, offer, acceptance, and revocation are likewise effective

when received. Restatement applies a similar rule to telephones or other medium of

substantially instantaneous two-way communication. However, if the acceptance is through

a non-instantaneous medium, such as regular mail, acceptance is effective when dispatched,

unless otherwise specified by the offeror. This rule is known as the mailbox rule, and its

first exposition was in the English case, Adams v. Lindsell,7. Ordinarily, any form of

acceptance must be communicated expressly to an offeror; however, it was found that where

a letter of acceptance is posted, an offer is accepted as soon as the letter leaves the offeree's

control. 8

Instantaneous communications:

Whilst telegraphed communications generally fall within the postal rule, that rule won't apply

to forms of communication which are instantaneous, or virtually so, whether made orally, as

by telephone, or in writing, as by telex or telephoned facsimile (fax). It has been said that the

rule about instantaneous communications between the parties is different from the rule about

the. The contract is only complete when the acceptance is received by the offeror and the

contract is made at the place where the acceptance is received. These instantaneous forms of

7 1 Barn. & Ald. 681 (K.B. 1818).

8 Refer<http://inretentis.com/law-school/mailbox-rule>

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communication are therefore treated like contracts made face-to-face: they are governed by

the general rule that acceptance must actually be communicated. The reason has been said to

be that, unlike postal communications, those made by telex or telephone are generally

acknowledged by the recipient; and, from this reasoning, it would follow that an acceptance

by international telegram dictated over the telephone follows the postal rule, that is, where the

contract is governed by English law the acceptance takes effect when dictated.

The above analysis has been applied to communications by telex or telephone. Whilst there

are as yet no specific authorities, on the basis of the criterion of whether or not the acceptor

will know that his message has, or has not, been received, it could be that the rules considered

in this paragraph will also apply to acceptances sent by fax, e-mail or electronic data

exchange.

The first case which evolved the telephonic conversation was Bhagwandas Goverdhandas

Kedia vs M/S. Girdharilal Parshottamdas and Co. Andrs. 9The respondents entered into a

contract with the appellants by longdistance telephone. The offer was spoken by the

respondent at Ahmedabad and the acceptance was spoken by the appellants at Khamgaon.

Alleging breach of the said contract the respondents Mod a suit at Ahmedabad. On the issue

of jurisdiction raised by the appellants, the trial court found that the Ahmedabad Court had

jurisdiction to try the suit. The High Court rejected the appellant's revision petition in limine

whereupon by special leave, he came to this Court.

It was held that:

9 1966 AIR 543.

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 (i) Making of an offer at a place which has been accepted elsewhere does not form part

of the cause of action in a suit for damage-, for breach of contract. Ordinarily it is the

acceptance of offer and intimation of that acceptance which result in a contract. The

intimation must be by same external manifestation which the law regards as sufficient.

[660 C-E]

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Baroda Oil Cakes Traders v. Purshattam Naravandas and Anr. and Sepulechre

Brothers v. Sait Khushal Das Jagjivan Das Mehta, I.L.R11, referred to.

(ii) On the general rule that a contract is concluded when an offer is accepted and

acceptance is intimated to the offerer, is engrafted an exception based on grounds of

convenience which has the merit not of logic or principle in support, but of long

acceptance by judicial decision. The exception may be summarised as follows : When

by agreement, course of contract or usage of trade, acceptance by post or telegram is

authorised, the bargain is struck and the contract is complete when the acceptance is

put into a course of transmission the offeree by posting a letter or dispatching a

telegram.

(iii) The rule that applies to acceptance by post of telegram does not however

apply to contracts made by telephone. The rule which applies to contracts by

telephone is the ordinary rule which regards a contract as complete only when

acceptance is intimated to the purchaser. In the case of a telephonic conversation in a

sense the parties are in the presence of each other, each party is able to hear the voice

of the other. 'Mere is an instantaneous communication of speech intimating offer and

-acceptance, rejection and counter-offer. Intervention of an electrical impulse which

10 I.L.R. [1954] Bom. 1137.

11 [1942] Mad. 243.

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 results in the instantaneous communication of messages from a distance does not alter

the nature of the conversation so as to make it analogous to that of an offer and

acceptance through post or by Telegram. [664 A-B] It is true that the Posts and

Telegraphs Department has general control over communication by telephone and

especially over long distance Telephones, but that is not a ground for assuming that

the analogy of a contract made by post will govern this mode of making contracts. In

the case of correspondence by post or telegraphic communication, a third agency

intervenes and without the effective intervention of that third agency, letters or

messages cannot be transmitted. In the case of a conversation by telephone, once

connection is established there is in the normal course no further intervention of

another agency. Parties holding conversation on the telephone are unable to see each

other; they are also physically separated in space, but they are in the hearing of each

other by the aid of a mechanical contrivance which makes the voice of one heard by

the other instantaneously and communication does not depend on external agency.

Emtores Ltd. v. Miles Far Eastern Corp. 12relied on.

(iv)In the administration of the law of contracts the courts in India have generally been

guided by the rules of English common law applicable to contracts, when no statutory

provision to the contrary is in force. The courts in the former Presidency towns by the

terms of their respective letters patents, and the courts outside the Presidency towns

by Bengal Regulation III of 1793, Madras Regulation 11 of 1802 and Bombay

Regulation IV of 1837, and by diverse Civil Courts Acts were enjoined in cases where

no specific rule existed to act according to 'law and equity' in the case of chartered

High Courts and elsewhere according to 'justice, equity and good conscience' which

12 [1955] 2 Q.B.D. 327

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 expressions have been consistently interpreted to mean the rules of English common

law, so far as they are applicable to the Indian Society and circumstances.

(v) The draftsmen of the Indian Contract Act did not envisage use of the telephone as a

means of conversation between parties separated in space and could not have intended

to make any rule in that behalf. The trial Court wag right in the view which it took

that a part of the cause of action arose within the jurisdiction of the City Civil Court

Ahmedabad, where acceptance was communicated by telephone to the plaintiffs. Per

Hidayatullah, J. (dissenting) (i) In the Entores case Lord Denning no doubt held that

acceptance given by telephone was governed by the principles applicable to oral

acceptance where the parties were in the presence of each other and that the analogy

of letters sent by post could not be applied. But the Court of Appeal was not called

upon to construe a written law which brings in the inflexibility of its own language. It

was not required to construe the words found in s. 4 of the Indian Contract Act,

namely, "The communication of an acceptance is complete as against the proposer

when it is put in a course of transmission to him, so as to be out of the power of the

acceptor." Entores Ltd. v. Miles Far East Corporation.13, distinguished.

(vi) The law under consideration was framed at a time when telephone, wireless, Telstar

and Early Bird were not contemplated. If time has marched and inventions have made

it easy to communicate instantaneously over long distance and the language of our

law does not fit the new conditions it can be modified to reject the old principles. But

13 [1955] 2 Q.B.D. 327

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 it is not possible to go against the language by accepting an interpretation given

without considering the language of our Act.

(vii) The language of s. 4 of the Indian Contract Act, covers a case of

communication over the telephone. Our Act does not provide separately for post,

telegraph, telephone, or wireless. Some of these were unknown in 1872 and no

attempt has been made to modify the law. it may be presumed that the language has

been considered adequate to, cover cases of these new inventions. It is possible today

not only to speak on the telephone but to record the spoken words on a tape and it is

easy to prove that a particular conversation took place. Telephones now have

television added to them. The rule about lost letters of acceptance was made out of

expediency 'because it was easier in commercial circles to prove the dispatch of letters

but very difficult to disprove a statement that the letter was not received. If the rule

suggested on behalf of the plaintiffs is accepted it would put a very powerful defence

in the hands of the proposer if his denial that he heard the speech could take awry the

implications of our law that acceptance is complete -as soon as it is put in course of

transmission to the proposer.

(viii) Where the acceptance on telephone is not heard on account of mechanical

defects there may be difficulty in determining whether at all a contract results. But

where the speech is fully heard and understood there is it binding contract, and in such

a case the only question is -.is to the place where the contract can be said to have

taken peace.

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 (ix)In the present case both sides admitted that the acceptance was clearly heard -, it

Ahmedabad. The acceptor was in a position to say that the communication of the

acceptance in so far as he was concerned was complete when he (the acceptor) put his

acceptance in transmission to him (the proposer) as to be out of his (the acceptor'.,,,)

power of recall in terms of s. 4 of the Contract Act. It was obvious that the word of

acceptance was spoken at Khamgaon and the moment the acceptor spoke his

acceptance he put it in course of transmission to the proposer beyond his recall. He

could not revoke acceptance thereafter. It may be that the gap of time was so short

that one can say that the speech was heard instantaneously, but if we are to put new

inventions into the frame of our statutory law we are bound to say that the acceptor by

speaking into the telephone put his acceptance in the resource of transmission to the

proposer.

The contract was therefore made at Khamaon and not Ahmedabad.

Telegraphed communications:

Whilst contracts made by telex or telephone follow the ordinary rules of offer and acceptance,

those made by inland telegram were in much the same position as those made by posted letter

in that, within the scope of the rule, acceptance Prima facie dated from the time the telegram

of acceptance was given to the person authorised to receive it for transmission. Since 1982,

the system of telegrams operated by the Post Office has been replaced with regard to the

inland service but there's still an international telegram service which is now operated by

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British Telecommunications plc. As with posted letters, telegrams may not be intercepted

(except in obedience to a warrant issued by the Secretary of State), from which it could be

deduced that where the contract is governed by English law, telegrams should follow the

same legal rules as posted letters.

This rule regarding the operative date of the telegraphed acceptance applies wherever there's

express or implied permission to accept by telegram. Therefore, an offer made by telegram

may Prima facie be accepted by telegram, as may an offer made by letter. On the other hand,

an offer made by telegram, even a reply-paid telegram, doesn't necessarily require acceptance

by telegram; Prima facie it's merely a request for a prompt reply. Where, however, the

acceptance is sent by telegram, then Prima facie the postal rules apply not only regarding the

operative date of acceptance, but also regarding the risk of loss or delay, revocation of

acceptance and rejection of offer.

A problem peculiarly likely to arise in this form of communication is that the telegram may

be garbled in transmission. As British Telecommunications plc is only the agent of the parties

to carry their communications, neither party is responsible if the error is wholly the fault of

British Telecommunications plc. Therefore, a garbled offer cannot, in such circumstances, be

accepted in terms other than those in which the offeror communicated it; but it could be

otherwise if there's ambiguity due to the fault of the offeror. On the other hand, it would

follow from the postal rule of acceptance that the offeror is, Prima facie, bound by a telegram

of acceptance even though garbled in the course of transmission.

In other words:

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An offer or revocation of an offer is effective only when it is received by the offeree.

However, in non-instantaneous communication, acceptance of an offer is effective when

dispatched (or postmarked)

Examples of the application of the mailbox rule:

Crossed Revocation and Acceptance

Delay or Failure of Transmission

The Date of Contractual Liability

HAND DELIVERY:

This is a mode of communication suitable in cases where parties are resident of same city.

Example if a party has a presence in the city where the other party trades, may be by way of a

trading office then one should not forget to mention that such communication by hand

delivery will be deemed as received on actual delivery of communication.

FAX:

In cases where communication is being sent by way of fax it will be deemed as delivered if

the party sending the fax has the receipt of successful delivery of the fax. In this case also, as

this communication is instant, the communication can be deemed as received by the other

party on the same day when the fax was sent.

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Quadricon Pvt. Ltd. V Bajarang Alloys Ltd., 14 has held that in the case of communication

by fax, the normal rule would apply and the contract would be completed only when the

acceptance was received by the offeror.

EMAILS:

Technology has brought with it new modes of communication. The most novel being

communication through the internet, whether those communications be specifically email,

instant messaging, or otherwise.

Most of the business communication is done now a days by emails, as it is the preferred mode

of business communication since delivery of an email is dependent on the server and

availability of internet connectivity , one should be careful while including email as a mode

of communication. In practise businesses should advice their employees, to include/use the

return received feature of the email client. Like Fax, communication by the way of email can

be deemed as received by the recipient if the return received email is retained by the centre.

In Sapna Ganglani v M/s. R.S. Enterprise 15 , the Karnataka High Court has observed

whether a contract in respect of immovable property, entered into through E-mail, was

14 A.I.R 2008 Bom. 88.

15 A.I.R 2008 Kar.178.

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enforceable, was a mixed question of facts and law. The question, the court said could be

decided by the trial court after full fledge trial.16

CONCLUSION:

Out of the four mode communication postal communication is an age old and most preferred

mode of communication in contracts, as it is easy to prove in a court of law. Proving other

modes of communication in a court of law is a bit tricky as in India Evidence Laws are still

under development. Moreover proving and effective email communication is also dependent

on external agencies and more burdensome. The advantage of choosing email as a mode of

communication is that there is a little chance of doctoring it.

16 Dr. R.K Bangia, Law of Contract I, pg 37.

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 Bibliography

Dr. R.K Bangia, Law of Contract I

Law of Contract and specific relief by Avtar Singh
http://blog.contractdrafting.co.in/Blog/
http://www.legalnorms.com/offer-and-acceptance.php

www.google.com

www.wikipedia.com

http://www.indiankanoon.org/doc/1386912/

http://blog.contractdrafting.co.in/Blog/index.php/2011/04/08/are-you-looking-for-a-
template-of-an-agreement-please-do-not-unless-you-are-ready-for-loss/

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