Mode of Revocation under Section 6 of the Indian Contract Act, 1872: The Four Clauses Examined, and the Revocation of an Acceptance under Section 5

Section 6 is a short section with an exhaustive look about it. It states that a proposal is revoked in four ways, and the four are not of the same character: the first is an act done by the proposer, the second is the passage of time, the third is the acceptor's own default, and the fourth is an event neither party controls. The section is also incomplete, since rejection by the offeree terminates a proposal without appearing in the list. This topic takes each clause as a provision in its own right, then turns to the separate question of revoking an acceptance, which Section 6 does not touch at all.

1. The Provision

Section 6 answers the question how a proposal is revoked. Section 5 answers the question until when. The two must be read together, because a mode listed in Section 6 is ineffective if it operates after the moment fixed by Section 5, and the moment fixed by Section 5 is itself determined by Section 4.

2. Clause (1): Notice of Revocation

2.1 It must be communicated

Clause (1) requires the communication of notice, and the third paragraph of Section 4 provides that a revocation is complete as against the person to whom it is made when it comes to his knowledge. A decision to withdraw, a note on the file, or a letter posted but not delivered achieves nothing. The rule that treats despatch as sufficient belongs to acceptance alone, and Byrne & Co. v. Leon Van Tienhoven & Co., (1880) 5 CPD 344 is authority that a posted revocation which arrives after the acceptance has been despatched comes too late.

2.2 It must be given before the acceptance is despatched

Section 5 closes the proposer's window at the moment the communication of the acceptance is complete as against him, which under Section 4 is when the acceptance is put in a course of transmission out of the acceptor's power. The practical consequence is a narrow margin: the notice of revocation must not merely be sent but must arrive before the acceptor posts. In a postal exchange this is often impossible to achieve, which is why the Indian offeror who wishes to retain a real power of withdrawal uses a faster medium or stipulates for acceptance to take effect on receipt under Section 7(2).

2.3 A promise to keep the offer open does not bind

3. Clause (2): Lapse of Time

Clause (2) is the only mode that operates automatically. No act and no communication are required; the offer simply dies. Where the proposal prescribes a period, it lapses on expiry. Where none is prescribed, it lapses after a reasonable time, which is a question of fact turning on the subject matter, the medium used, the perishability of the goods, the conduct of the parties and any trade usage. An offer to sell a commodity whose price moves daily lapses in days; an offer relating to land may stand for weeks. The leading illustration is Ramsgate Victoria Hotel Co. v. Montefiore, (1866) LR 1 Ex 109, where an application for shares made in June had lapsed before the company purported to allot in November.

Two points follow from the closing words of the clause, 'without communication of the acceptance'. The period runs until the acceptance is communicated, so whether an acceptance was in time is answered by applying Section 4. And a proposer relying on lapse is in a stronger position than one relying on notice, because he need prove only the passage of time and not the fact of communication.

4. Clause (3): Failure of a Condition Precedent

Clause (3) revokes a proposal on the failure of the acceptor to fulfil a condition precedent to acceptance. The offeror is entitled to say what must be done before his offer can be accepted, and if it is not done the offer falls without any further act by him. Common conditions are the payment of earnest money or a deposit within a stated period, the furnishing of a bank guarantee or security, and the production of a licence or clearance.

Clause (3) should be distinguished from the situation where the condition is one the proposer or a third party must satisfy, such as confirmation by a superior authority. There the analysis is not that the proposal has been revoked, but that no absolute acceptance has yet been given within Section 7, so the proposal survives and remains revocable until the confirmation is forthcoming. That is the reasoning of Union of India v. Bhim Sen Walaiti Ram, AIR 1971 SC 2295 and Haridwar Singh v. Bagun Sumbrui, AIR 1972 SC 1242.

5. Clause (4): Death or Insanity of the Proposer

Clause (4) contains a qualification that English law does not: the death or insanity of the proposer revokes the proposal only if the fact comes to the knowledge of the acceptor before acceptance. The Indian rule therefore protects an acceptor who acts in ignorance.

• Acceptance in ignorance of the death is effective, and the contract binds the estate. Section 37 supports this, since promises bind the representatives of a deceased promisor unless a contrary intention appears from the contract.
• Acceptance with knowledge of the death is ineffective, and no subsequent act can revive the proposal.
• Contracts requiring personal skill are an exception to the estate's liability, because such an obligation cannot be performed by representatives, and Section 37 preserves that limit.
• Death or insanity of the offeree ends the proposal in every case, since a proposal is addressed to a particular person and Section 2(b) requires that person to signify assent.

6. What Section 6 Leaves Out

Two modes of termination are not in the list and operate nonetheless.

1. Rejection by the offeree. An express refusal ends the proposal on communication. A counter offer does the same, because a reply that varies the terms is not an acceptance within Section 7 and operates as a rejection. A mere inquiry does not.
2. Acceptance itself. A proposal that has been accepted is not revoked; it is spent, having become a promise under Section 2(b). The distinction matters because Section 5 forbids revocation after that point, and the remedy of a party who wishes to escape is then rescission or discharge, not revocation.

7. Revocation of an Acceptance

Section 6 says nothing about revoking an acceptance; the whole of the law on that subject is in the second paragraph of Section 5. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, that is to say before it comes to the knowledge of the proposer. The revocation must itself reach the proposer by then, because a revocation is complete against its recipient only on knowledge.

8. The Position Stated Shortly

1. Section 6 states how a proposal is revoked; Section 5 states until when; Section 4 fixes the moments both depend on.
2. Clause (1) requires notice by the proposer, and a revocation takes effect only on the offeree's knowledge, per Byrne v. Van Tienhoven.
3. Routledge v. Grant: naming a period for acceptance does not bind the offeror to keep the offer open during it.
4. Clause (1) is narrower than Dickinson v. Dodds on notice through a third party, though Section 3 covers conduct of the proposer that has the effect of communicating.
5. Clause (2) operates automatically on expiry of the prescribed or a reasonable time, and requires no communication.
6. Clause (3) applies to a condition the acceptor must fulfil; where the condition is confirmation by another authority, the analysis is that no absolute acceptance has yet been given.
7. Clause (4) revokes on the proposer's death or insanity only if the acceptor knows before accepting; Bradbury v. Morgan illustrates the same knowledge principle.
8. Rejection and counter offer terminate a proposal although Section 6 does not list them.
9. Revocation of an acceptance is governed only by the second paragraph of Section 5 and requires a faster medium to be effective in practice.

9. Related Topics and Provisions