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Section 4 of the Indian Contract Act, 1872 reads as follows: Communication when…

CLAT 2021 · Legal Reasoning · 5 questions

Section 4 of the Indian Contract Act, 1872 reads as follows: Communication when complete - The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. 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; as against the acceptor, when it comes to the knowledge of the proposer. Thus, the provision makes no difference in the position of the offeror. The offeror becomes bound when a properly addressed and adequately stamped letter of acceptance is posted. The acceptor does not become bound by merely posting his acceptance. He becomes bound only when his acceptance comes to the knowledge of the proposer. The contract is concluded at the place from where the proposal is accepted and communication of acceptance is dispatched, i.e., the address at which the proposal was sent. The court at that place would have jurisdiction to entertain a cause of action under the contract. This rule, that the communication of an acceptance is complete as against the proposer when the letter is posted, is probably intended to apply only when the parties are at a distance and they communicate by post. Where, however, the parties are in each other's presence or, though separated in space, they are in direct communication, as, for example, by telephone, no contract will arise until the offeror receives the notification of acceptance.

Question 1

'S' wanted to purchase shares of a company and communicated his offer to buy shares on March 1, 2021. A letter of allotment of shares addressed to 'S', which is an acceptance of the offer to purchase shares, was posted by the company on March 10, 2021, but the letter never reached 'S' and was lost in transit. In the given situation, which of the following statements is true?
  1. A. Communication of acceptance is not complete as against 'S' and hence, there is no valid contract between 'S' and the company.
  2. B. Communication of acceptance is complete as against 'S' however not complete as against the company.
  3. C. Communication of acceptance is complete as against the company however not complete as against 'S'.
  4. D. Communication of acceptance is complete against both 'S' as well as the company.

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Question 2

'A', who is in Mumbai, makes an offer for supply of goods to 'B', who is in Delhi, via a mobile phone call. During the same call, A's offer is absolutely and unconditionally accepted by 'B'. According to the terms agreed between 'A' and 'B', goods are to be supplied at Pune and payment is to be made electronically. In the given situation, where is the contract concluded?
  1. A. Neither Mumbai, Delhi nor Pune as it is a telephonic contract
  2. B. Pune
  3. C. Delhi
  4. D. Mumbai

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Question 3

'X', who is in Gandhinagar makes an offer for sale of second-hand luxury car to Y, who is in Jammu, via an e-mail sent on January 15, 2021 at 2:03 p.m. X's offer is absolutely and unconditionally accepted by 'Y' via an e-mail sent on January 15, 2021 at 4:04 p.m. The e-mail communicating acceptance is read by 'X' on January 15, 2021 at 7:05 p.m. In the given situation, when is the contract concluded?
  1. A. As against 'X', on January 15, 2021 at 4:04 p.m. and as against Y, on January 15, 2021 at 7:05 p.m.
  2. B. As against Y, on January 15, 2021 at 4:04 p.m. and as against 'X', on January 15, 2021 at 7:05 p.m.
  3. C. January 15, 2021 at 4:04 p.m.
  4. D. January 15, 2021 at 7:05 p.m.

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Question 4

'X', who is in Agra, makes an offer for sale of secondhand luxury car to 'Y', who is in Jammu, via an e-mail sent on January 15, 2021 at 2:03 p.m. However, the email did not reach Y due to some technical error at the server which is located in Delhi. Thereafter, 'X' makes a mobile phone call to Y' on January 15, 2021 at 4:04 p.m. and makes him the same offer as was made in the e-mail. In the same mobile phone call, the offer is absolutely and unconditionally accepted by Y at 4:10 p.m. In the given situation, where is the contract concluded?
  1. A. Delhi
  2. B. Jammu
  3. C. Agra
  4. D. Neither Delhi, Jammu nor Agra as it is an electronic contract

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Question 5

"When the words of acceptance are spoken into the telephone, they are put into the course of transmission to the offerer so as to be beyond the power of the acceptor. The acceptor cannot recall them." In light of the given proposition, which of the following statements is/are true? I. The communication being instantaneous, the contract immediately arises. II. The communication being instantaneous, the communication of acceptance is immediately complete as against the proposer as well as the acceptor. III. The communication being non-instantaneous, the communication of acceptance is complete as against the acceptor when the words of acceptance are spoken into the telephone. IV. The communication being non-instantaneous, the communication of acceptance is complete as against the proposer when the words of acceptance are spoken into the telephone.
  1. A. Only I
  2. B. I and II
  3. C. III and IV
  4. D. Only II

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