CONCEPT OF REVOCATION IN CONTRACT LAW

Revocation of an offer is the withdrawal from a previously made offer to avoid getting into a legal contract. The offer which has revoked must be of such nature that as soon as the party formally agrees to an offer, it would make a legal obligation on the party to fulfil it. 

The revocation of an offer gets completed only when it’s communicated to the other party. Section 3 of the Indian Contract Act 1872 talks about the communication of revocation and it states “The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.”

As per section 4 of the Indian Contract Act, communication of Revocation gets completed “as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge.”

For example, if A offers to send 50 sacks of wheat to B at $100 per sack via letter. B received that letter and agreed to the condition. A can revoke the letter at any time before B posts his letter of acceptance but not afterwards.

A vivid description of the revocation of an offer has been given in the case of Payne v. Cave. In this case, the court held that for a valid contract, one party must have made an offer and others must have formally accepted that offer. A letter of revocation is a legal withdrawal from the duties offered in the proposal and its valid as long as it’s communicated to the offeree before its acceptance and it’s duly mentioned under section 5 of the Indian Contract Act 1872 as “A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.” 

The case of Byrne v. Tienhoven court held that revocation by telegram is valid only if it’s reached to the person before its acceptance. Similarly, in the case of Dickinson v. Dodds, the court held that offeror can make the revocation through the third-party as well.

The case of Routledge v. Grant demonstrates that an offeror can withdraw an offer even though it is to open for a specific time until it is not supported by consideration. This case also establishes that the acceptance sent by the postal mail gets valid as soon as it is sent. Once the offeree mailed the letter of acceptance, then there is no scope for revocation. Also if the offeror acted as per the conditions mentioned in the offer even then the revocation is not possible.