Offer, Acceptance and Communication, Including Online Contracts

Under the Indian Contract Act, 1872, a contract begins when one person signifies willingness to do or abstain from doing something (a proposal) and the other person signifies assent (acceptance). Section 4 then fixes the moment each step takes effect: a proposal when it reaches the other party's knowledge, an acceptance against the proposer when it is put out of the acceptor's power. For contracts made by email, website or app, Section 10A of the Information Technology Act, 2000 says a contract is not unenforceable merely because the proposal, acceptance or revocation was in electronic form.

This explainer is written for first and second year B.A. LL.B. and LL.B. students, and for anyone who has clicked "I agree" and wondered whether that created a binding deal. These are short sections, but questions on them appear in almost every contract law paper, and the same rules decide real disputes over shop orders, rent agreements and online bookings.

Which provisions govern offer and acceptance?

The Indian Contract Act, 1872 (Act 9 of 1872) came into force on 1 September 1872 and remains the governing statute. The 2024 criminal law changes (BNS, BNSS and BSA) do not touch these sections. The ones to know are:

• Section 2(a) to (e): definitions. Signifying willingness to another is a proposal. When the person to whom it is made signifies assent, the proposal is accepted. An accepted proposal becomes a promise, and an agreement enforceable by law is a contract.
• Section 3: communication, acceptance and revocation are deemed to be made by any act or omission of the party proposing, accepting or revoking that communicates it.
• Section 4: when communication is complete.
• Section 5: when a proposal or acceptance may be revoked.
• Section 7: acceptance must be absolute and unqualified, and expressed in some usual and reasonable manner unless the proposal prescribes the manner.
• Section 8: performing the conditions of a proposal, or accepting consideration offered with it, is acceptance.
• Section 9: a promise made in words is express. One made otherwise than in words is implied.

When is communication complete under Section 4?

Section 4 is the heart of the topic, and the statute's own illustration still works best. Suppose a landlord in Madurai writes to a prospective tenant in Nagercoil offering to let a house at a stated rent.

1. The proposal is complete when the tenant reads the letter, because the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
2. The acceptance is complete against the landlord the moment the tenant posts her reply, because it is then put in a course of transmission so as to be out of her power.
3. The same acceptance is complete against the tenant only when the landlord receives it.

This split is deliberate. For a short window, the landlord is bound but the tenant is not yet bound. Section 5 uses that window. A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of acceptance is complete as against the acceptor. Illustration (c) to Section 4 adds that a revocation sent by telegram is complete against the person revoking when it is despatched.

Can silence or conduct be acceptance?

Conduct can. Section 8 makes performance of the conditions of a proposal an acceptance, and Section 9 recognises implied promises. The English Court of Appeal applied the same idea in Carlill v Carbolic Smoke Ball Co (1892), holding that an advertisement was an offer to anyone who performed its conditions, and that performance itself was acceptance without separate notice.

Silence is different. In Felthouse v Bindley (1862), decided by the English Court of Common Pleas, an uncle wrote that if he heard no more, he would consider his nephew's horse his for £30 15s. The nephew never replied, and the court held that no sale had been made before the auctioneer sold the horse by mistake. The offeror cannot turn the other side's silence into acceptance. Keep the limits in mind, though. The case is about silence alone, and later English decisions have found acceptance where conduct, not mere silence, showed assent. Under Indian law, that conduct is caught by Sections 3, 8 and 9.

How do the rules apply to online contracts?

The Information Technology Act, 2000 adds the electronic layer. Read these four sections with Sections 4 and 5 of the Contract Act:

• Section 10A: where proposals, acceptances and revocations are expressed in electronic form or by an electronic record, the contract is not unenforceable solely on that ground.
• Section 11: an electronic record is attributed to the originator if he sent it himself, if a person authorised by him sent it, or if an information system programmed by or for him sent it automatically. This is why an automatic order confirmation from a shopping site binds the seller.
• Section 12: if the originator has not stipulated a form of acknowledgement, any communication or conduct of the addressee showing receipt is enough. If the originator has said the record binds only on acknowledgement, and none arrives, the record is treated as never sent.
• Section 13: despatch occurs when the record enters a computer resource outside the originator's control. Receipt occurs when it enters the designated computer resource, or, if none is designated, the addressee's computer resource. A record is deemed despatched and received at the parties' places of business.

So if a student in Nagercoil emails acceptance of a hostel offer, despatch under Section 13 happens when the email leaves her control, which lines up with completion of acceptance against the proposer under Section 4.

Instantaneous methods raise a separate question. In Entores Ltd v Miles Far East Corporation (1955), the English Court of Appeal held that the postal rule does not apply to telex, and that the contract is complete where and when acceptance is received. Section 4 of the Indian Act has no separate rule for instantaneous methods, so for telephone and email contracts in India, rely on the Supreme Court decision prescribed in your syllabus and read the full judgment, not a summary.

How should you write this in an exam?

1. Open with the definitions in Section 2(a) and (b) in one or two lines.
2. State Section 4 in three parts (proposal, acceptance against proposer, acceptance against acceptor) and use the letter illustration.
3. Link Section 5 to the gap between those moments, with the revocation timeline.
4. Deal with Sections 7 and 8: counter offers are not acceptance, and conduct can be.
5. For a problem on email or website orders, add IT Act Sections 10A, 11, 12 and 13, then apply them to the facts.
6. Cite cases accurately. A correct case name and year earns more than three half remembered ones.

If you are planning to study these subjects formally, the college's programmes page sets out the courses in which contract law is taught.

Sources

• India Code: The Indian Contract Act, 1872: official record of the Act, with enactment and enforcement dates.
• Indian Kanoon: Indian Contract Act, 1872: full text of Sections 2 to 9 with illustrations.
• Indian Kanoon: Information Technology Act, 2000: text of Sections 10A, 11, 12 and 13.
• Entores Ltd v Miles Far East Corp: summary of the 1955 English ruling on instantaneous communication.
• Carlill v Carbolic Smoke Ball Co: summary of the 1892 English ruling on offers to the world and acceptance by performance.
• Felthouse v Bindley: summary of the 1862 English ruling that silence alone is not acceptance.