Formation of Contract Proposal and Acceptance :- Learn Formation of Contract under the Indian Contract Act, 1872 (Ss 6–10) — proposal, acceptance, communication, and revocation.
Section 6 of the Indian Contract Act, 1872 – Revocation of Proposal
Section 6 of the Indian Contract Act, 1872 explains how a proposal (offer) can be revoked or withdrawn. In simple words, it tells us the situations in which an offer comes to an end before it becomes a binding contract. The section provides four main ways in which a proposal can be revoked.
Important: Section 5 tells us when a proposal can be revoked, while Section 6 explains how the proposal is revoked.
1. By Communication of Notice
A proposal can be revoked when the proposer communicates a notice of revocation to the other party.
Example
A offers to sell his car to B for ₹5 lakh.
Before B accepts the offer, A sends B a message:
“I withdraw my offer to sell the car.”
Here, A has communicated the revocation of the proposal.
2. By Lapse of Time
An offer may also come to an end when the time fixed for acceptance expires.
If no specific time is mentioned, the offer may lapse after a reasonable time, depending on the circumstances.
Example
A offers to sell a car to B and says:
“This offer will remain open until 10 August.”
If B does not accept the offer by 10 August, the offer lapses.
What if no time is mentioned?
Suppose A offers to sell B a quantity of fresh vegetables but does not specify a time for acceptance. B cannot reasonably wait for several months and then accept the offer. The offer may lapse after a reasonable period, depending on the circumstances.
3. Failure to Fulfil a Condition Precedent
A proposal can be revoked if the acceptor fails to fulfil a condition that had to be fulfilled before acceptance.
What is a Condition Precedent?
A condition precedent is a condition that must be satisfied before the proposal can be accepted or become effective.
Example
A tells B:
“I will sell you my car for ₹4 lakh if you provide proof of a valid driving licence before accepting the offer.”
B fails to provide the required proof.
In such circumstances, the condition precedent has not been fulfilled, so the proposal can be treated as revoked under Section 6(3), subject to the terms of the offer.
4. Death or Insanity of the Proposer
A proposal is revoked by the death or insanity of the proposer if the fact of death or insanity comes to the knowledge of the acceptor before acceptance.
Example
A offers to sell his house to B.
Before B accepts the offer, B learns that A has died.
If B had knowledge of A’s death before accepting the offer, the proposal is revoked.
Important Point
The death or insanity itself is not enough for this rule. The fact must come to the knowledge of the acceptor before acceptance.
Let’s Understand Section 6 With One Story
Suppose Rahul offers to sell his laptop to Amit for ₹50,000.
There are four possible situations:
Situation 1 – Rahul withdraws the offer
Rahul messages Amit:
“I no longer want to sell the laptop.”
➡️ Proposal revoked by notice.
Situation 2 – Time expires
Rahul says:
“Accept this offer within 3 days.”
Amit does nothing for 3 days.
➡️ Proposal lapses.
Situation 3 – Condition is not fulfilled
Rahul says:
“I will sell you the laptop if you provide your student ID before acceptance.”
Amit fails to provide it.
➡️ Condition precedent is not fulfilled.
Situation 4 – Rahul dies
Rahul dies before Amit accepts, and Amit learns about Rahul’s death before acceptance.
➡️ Proposal is revoked.
Section 6 Exam Point
Section 6 deals specifically with revocation of a proposal. It does not say that an offer automatically becomes irrevocable merely because it has been made. The circumstances and timing of acceptance must be considered along with Sections 4 and 5.
Conclusion
Section 6 of the Indian Contract Act, 1872 explains the four ways in which a proposal may be revoked: by communication of notice, by lapse of the prescribed or reasonable time, by failure to fulfil a condition precedent, and by the death or insanity of the proposer when that fact becomes known to the acceptor before acceptance. Understanding these four methods makes the concept of revocation much easier to remember and provides a strong foundation for studying the next provision, Section 7 – Acceptance Must Be Absolute.
Section 7 of the Indian Contract Act, 1872 – Acceptance Must Be Absolute (Formation of Contract Proposal and Acceptance)
Section 7 of the Indian Contract Act, 1872 explains the rules for a valid acceptance of a proposal. According to this section, acceptance must be absolute and unqualified. In simple words, the person accepting an offer must accept it exactly as it was made, without adding new conditions or changing its terms.
Section 7 also explains the manner in which acceptance should be communicated when the proposer has prescribed a particular method.
1. Acceptance Must Be Absolute and Unqualified
The first rule under Section 7 is that acceptance must be absolute and unqualified.
This means that the acceptor must agree to the proposal as a whole and without any condition or modification.
Example
A offers to sell his laptop to B for ₹40,000.
B says:
“I agree to buy your laptop for ₹40,000.”
This is an absolute and unqualified acceptance because B has accepted exactly what A offered.
Therefore:
Offer + Absolute Acceptance = Promise
2. Acceptance With a Condition Is Not Valid Acceptance
Suppose A offers to sell his laptop to B for ₹40,000.
B replies:
“I will buy your laptop for ₹40,000 if you provide a new battery.”
B has not accepted A’s offer as it stands. He has added a new condition.
Therefore, this is not an absolute acceptance. It is effectively a counter-proposal that A may accept or reject. The Supreme Court has repeatedly recognized that an acceptance containing a variation is not an acceptance of the original offer.
Easy Example
A: “I will sell my bike for ₹80,000.”
B: “I will buy it for ₹70,000.”
❌ No valid acceptance.
Why?
Because B has changed the price.
A: “I will sell my bike for ₹80,000.”
B: “I accept your offer for ₹80,000.”
✅ Valid acceptance.
3. Acceptance Must Match the Offer
Think of an offer as a question.
A: “Will you buy my car for ₹5 lakh?”
The answer must be:
B: “Yes, I will buy it for ₹5 lakh.”
Not:
“Yes, but I will pay ₹4 lakh.”
The second response changes the terms of the original offer.
Remember
Acceptance must be a mirror of the offer.
If the acceptance changes the terms, there is no acceptance of the original offer.
4. Acceptance Must Be Made in the Prescribed Manner
Section 7 also states that acceptance should be expressed in a usual and reasonable manner, unless the proposer has prescribed a specific manner of acceptance.
Example
A sends B a letter:
“I offer to sell my car to you for ₹5 lakh. Please accept this offer by email.”
If B accepts through email, the acceptance follows the manner prescribed by A.
What If the Prescribed Manner Is Not Followed?
Suppose A says:
“Please accept my offer by email.”
B instead sends his acceptance by post.
The acceptance does not automatically become invalid.
The proposer may, within a reasonable time after receiving the acceptance, insist that the acceptance be made in the prescribed manner. If the proposer does not insist on that requirement, the law treats the proposer as having accepted the acceptance.
Example
A asks B to accept an offer by email.
B sends acceptance by post.
A receives the letter but does not object and continues with the transaction.
In such circumstances, A may be treated as having accepted the acceptance despite the different mode.
Landmark Case: M/s Padia Timber Company Pvt. Ltd. v. Board of Trustees of Visakhapatnam Port Trust
This Supreme Court decision is useful for understanding absolute and unqualified acceptance.
The Court emphasized that an acceptance containing a new condition or variation is not a valid acceptance of the original offer. It operates as a counter-proposal, which must itself be accepted before a contract can arise.
Simple Understanding
Suppose:
A: “I will sell my house for ₹50 lakh.”
B: “I accept, but only if you include the furniture.”
B has added a new condition.
Therefore:
B’s response = Counter-offer
A must accept that new condition before a binding agreement can arise.
Another Important Case: Union of India v. Bhim Sen Walaiti Ram
The Supreme Court has also explained that an acceptance which is conditional does not create a binding contract until an absolute acceptance takes place.
This case is useful for remembering the basic principle:
Conditional acceptance is not final acceptance.
Section 7 With a Simple Story
Let’s take one complete example.
Step 1 – Offer
Rahul tells Amit:
“I will sell my phone to you for ₹30,000.”
This is a proposal.
Step 2 – Absolute Acceptance
Amit says:
“I agree to buy your phone for ₹30,000.”
✅ Valid acceptance.
Step 3 – Conditional Acceptance
Instead, Amit says:
“I will buy your phone for ₹30,000 if you give me a one-year warranty.”
❌ This is not absolute acceptance.
It is a counter-proposal.
Step 4 – Changed Price
Amit says:
“I will buy it for ₹25,000.”
❌ Again, there is no acceptance of Rahul’s original offer.
Conclusion
Section 7 of the Indian Contract Act, 1872 establishes an important rule for the formation of a contract: acceptance must be absolute and unqualified. The person accepting an offer cannot change its terms or add new conditions and still call it an acceptance. If the terms are changed, the response generally becomes a counter-proposal, which must itself be accepted. Section 7 also provides rules regarding the manner of acceptance when the proposer has prescribed a particular method. Understanding this section is essential because a valid and unconditional acceptance is one of the basic steps in converting a proposal into a promise.
Section 8 of the Indian Contract Act, 1872 – Acceptance by Performing Conditions
Section 8 of the Indian Contract Act, 1872 deals with acceptance by performance. It means that in certain situations, a person does not need to expressly say or write “I accept.” Instead, performing the condition mentioned in the proposal can itself amount to acceptance. The section also recognizes acceptance through accepting consideration offered for a reciprocal promise.
What Does Section 8 Mean?
In simple words:
If an offer asks a person to do a particular act, performing that act can amount to acceptance of the offer.
This is also called acceptance by conduct or performance.
Simple Example
A announces:
“I will pay ₹5,000 to anyone who finds and returns my lost watch.”
B finds the watch and returns it to A.
B did not need to tell A:
“I accept your offer.”
By performing the condition of the offer, B has accepted it.
1. Acceptance by Performing the Conditions
The first part of Section 8 says that performance of the conditions of a proposal amounts to acceptance.
Example
A offers ₹10,000 to B if B repairs A’s computer.
B repairs the computer as required.
Here, B’s act of repairing the computer amounts to acceptance of A’s proposal.
Easy Formula
Offer + Performance of Condition = Acceptance
2. Acceptance Through Conduct
Acceptance does not always have to be in words.
Sometimes a person’s actions clearly show that they have accepted the offer.
Example
A shop displays a notice:
“₹500 reward to anyone who returns this lost bag.”
B finds the bag and returns it to the shop.
B’s conduct shows acceptance of the offer.
Remember:
When the offer itself invites acceptance through an act, performing that act can be sufficient acceptance.
3. Acceptance of Consideration
Section 8 also covers a situation where a person accepts consideration offered in return for a reciprocal promise.
Example
A tells B:
“I will pay you ₹2,000 if you deliver these documents to Delhi.”
A gives B ₹2,000 as the consideration associated with the proposal, and B accepts it in circumstances where the offer is structured that way.
The acceptance of the offered consideration can amount to acceptance of the proposal.
The important point is that the consideration must be connected with the reciprocal promise contemplated by the proposal.
Landmark Case: Har Bhajan Lal v. Har Charan Lal
This is a useful Indian case for understanding acceptance by performance under Section 8.
In the case, a public notice offered a reward, and the court recognized the principle that a person could accept such an offer by performing the condition stated in the offer.
Why is this case important?
It shows that when an offer is made in such a way that acceptance is expected through performance, separate communication of acceptance may not be necessary.
Example to Remember
Imagine a public notice says:
“₹50,000 reward for finding and returning a missing person.”
A person finds and safely returns the missing person.
The required act has been performed, so the act can constitute acceptance of the offer, subject to the applicable legal requirements.
Another Important Case: Carlill v. Carbolic Smoke Ball Co.
Carlill v. Carbolic Smoke Ball Co. is a famous English case commonly studied with Section 8 because it illustrates acceptance of a unilateral offer through performance.
The company advertised a reward to people who used its product as directed but nevertheless contracted influenza. Mrs. Carlill fulfilled the stated conditions and became entitled to the reward. The case illustrates that where an offer invites acceptance by performing specified conditions, performance can constitute acceptance.
Simple Lesson from Carlill
Offer: “Do X and receive ₹X.”
Person: Performs X.
Result: Performance can amount to acceptance.
Conclusion
Section 8 of the Indian Contract Act, 1872 recognizes that acceptance can sometimes be shown through action rather than words. When a proposal requires or invites a person to perform a particular condition, performing that condition can amount to acceptance of the proposal. This principle is particularly important in reward offers and unilateral contracts, where the offer is accepted by performing the act requested by the proposer. Understanding Section 8 also helps students distinguish between ordinary acceptance under Section 7 and acceptance by conduct or performance under Section 8.
Section 9 of the Indian Contract Act, 1872 – Express and Implied Promises
Section 9 of the Indian Contract Act, 1872 explains that promises can be either express or implied. If a proposal or acceptance is made in words, the promise is express. If it is made through conduct or circumstances rather than words, it is implied.
In simple words:
Express Promise = Promise made in words
Implied Promise = Promise understood from conduct or circumstances
1. Express Promise
An express promise is made clearly through spoken or written words.
Example
A says to B:
“I will sell my laptop to you for ₹40,000.”
B replies:
“I agree to buy it for ₹40,000.”
Both parties have expressed their promises through words. Therefore, this is an express promise.
Another Example
A signs a written agreement with B stating:
“A will supply 100 chairs to B for ₹50,000.”
The promise is written clearly in the agreement, so it is an express promise.
Remember
Words → Express Promise
2. Implied Promise
An implied promise is not made through specific words. Instead, it is understood from the conduct or actions of the parties and the circumstances of the transaction. Section 9 expressly recognizes promises made otherwise than in words as implied promises.
Example: Taking a Bus
You enter a bus and travel to your destination.
You do not say to the bus operator:
“I promise to pay the bus fare.”
However, your conduct of using the bus implies an obligation to pay the applicable fare.
The promise is therefore implied from the conduct of the parties.
Another Example: Restaurant
You go to a restaurant, order food, eat it, and ask for the bill.
You may never verbally say:
“I promise to pay for this food.”
But your conduct clearly indicates an obligation to pay the bill.
This is an example of an implied promise.
A Simple Example to Understand Both
Suppose A owns a shop.
Situation 1 – Express
A tells B:
“I will sell you this phone for ₹20,000.”
B says:
“I accept.”
The promise is express because the parties communicated through words.
Situation 2 – Implied
B walks into a parking area where a clearly displayed board says:
“Parking Fee: ₹50.”
B parks his vehicle and uses the parking facility.
B has not verbally promised to pay ₹50, but his conduct indicates acceptance of the service subject to its stated terms.
This is an example of a promise or contractual obligation arising by implication from conduct and circumstances.
Conclusion
Section 9 of the Indian Contract Act, 1872 recognizes two ways in which a promise may be made: express and implied. When the proposal or acceptance is communicated through words, the promise is express. When it is communicated through conduct or circumstances rather than words, it is implied. This distinction is important because contracts and contractual obligations are not always created through formal written agreements. In everyday transactions such as using transportation, parking services, or ordering food, obligations can arise from the conduct of the parties. Understanding Section 9 therefore helps students recognize both clearly expressed promises and promises inferred from conduct.
Section 10 of the Indian Contract Act, 1872 – What Agreements Are Contracts?
Section 10 of the Indian Contract Act, 1872 is one of the most important provisions for understanding when an agreement becomes a legally enforceable contract. It lays down the basic requirements that an agreement must satisfy to become a valid contract.
In simple words:
Every contract is an agreement, but every agreement is not a contract.
An agreement becomes a contract only when the legal requirements are fulfilled.
What Does Section 10 Say?
Section 10 provides that an agreement becomes a contract when it is:
- Made by free consent of the parties.
- Made between parties competent to contract.
- Supported by lawful consideration.
- Made for a lawful object.
- Not expressly declared void by law.
There may also be other legal requirements under the Act or another applicable law, such as writing, witnesses, or registration, where specifically required.
1. Free Consent
The parties must enter into the agreement freely.
Consent should not be obtained through:
- Coercion
- Undue influence
- Fraud
- Misrepresentation
- Mistake, where the law makes it relevant
These concepts are dealt with in Sections 13 and 14 and the following provisions of the Act.
Example
A threatens B and forces B to sell his car for ₹2 lakh.
B’s consent was not freely given.
Therefore, the agreement may be voidable at B’s option, subject to the applicable provisions of the Act.
Easy Point
Free Consent = Agreement made voluntarily
2. Competent Parties
The parties entering into a contract must be competent to contract.
Section 11 explains that a person is competent if they:
- Have attained the age of majority according to the applicable law;
- Are of sound mind; and
- Are not disqualified from contracting by any law.
Example
A 25-year-old person of sound mind enters into an agreement to purchase a laptop.
If there is no other legal disability, the person is competent to contract.
On the other hand, a minor generally cannot make a binding contract in his or her own capacity.
Important Case: Mohori Bibee v. Dharmodas Ghose
This is a leading case concerning the contractual capacity of minors. The Privy Council held that a minor’s agreement is void, rather than merely voidable. The case is important when studying the requirement of competency under Section 10 read with Section 11.
3. Lawful Consideration
A valid contract generally requires lawful consideration.
Consideration means something given, done, or promised in return for a promise.
Example
A agrees to sell his laptop to B for ₹40,000.
- A promises to give the laptop.
- B promises to pay ₹40,000.
The promises provide consideration for each other.
However, the consideration must be lawful.
Example of Unlawful Consideration
A promises to pay B ₹1 lakh if B helps A obtain a government job through an illegal arrangement.
The consideration or object is unlawful, so the agreement cannot become a valid contract.
4. Lawful Object
The purpose or object of the agreement must also be lawful.
Example
A agrees to sell a car to B for ₹5 lakh.
The purpose is an ordinary lawful sale.
✅ Lawful object.
But suppose A agrees to pay B to commit a crime.
❌ The object is unlawful.
Therefore, the agreement cannot be treated as a valid contract.
5. Agreement Must Not Be Expressly Declared Void
Even if the parties have consented and the consideration and object appear lawful, an agreement may still be invalid if the Contract Act expressly declares it void.
For example, the Act contains provisions dealing with certain agreements that are void, including agreements in restraint of marriage, certain agreements in restraint of trade, and agreements by way of wager, subject to the relevant statutory provisions.
Example
A and B agree that B will never marry anyone.
Such an agreement is void under the relevant provision of the Contract Act.
Therefore, the parties cannot make it enforceable simply by giving their consent.
Let’s Understand Section 10 With One Simple Example
Suppose Rahul wants to buy a car from Amit for ₹6 lakh.
They enter into an agreement.
Now check the requirements:
Step 1 – Consent
Both Rahul and Amit agree voluntarily.
✅ Free consent.
Step 2 – Competency
Both are adults, of sound mind, and not legally disqualified.
✅ Competent parties.
Step 3 – Consideration
Rahul agrees to pay ₹6 lakh and Amit agrees to provide the car.
✅ Lawful consideration.
Step 4 – Object
The purpose is the lawful sale of a car.
✅ Lawful object.
Step 5 – Not Void
The agreement is not one that the law expressly declares void.
✅ Not expressly void.
Result
The agreement can become a valid contract, assuming any other applicable legal requirements are satisfied.
Important Case: Sri Tarsem Singh v. Sri Sukhminder Singh
The Supreme Court explained the requirements contained in Section 10 and emphasized that the essential requirements include free consent, competent parties, lawful consideration, and lawful object. The Court also noted that a contract does not necessarily have to be in writing unless a particular law requires it to be written.
Why is this case useful?
It provides a useful overview of the essential requirements of a valid contract under Section 10.
Conclusion
Section 10 is the foundation for determining whether an agreement can become a valid contract under the Indian Contract Act, 1872. An agreement must be made with free consent by competent parties, must have lawful consideration and a lawful object, and must not be expressly declared void by law. The section should be read together with provisions such as Sections 11, 13, 14, and other relevant provisions dealing with the validity of agreements. For law students, remembering the five basic requirements of Section 10 makes it much easier to understand the formation and validity of contracts.
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