Communication of Offer

Communication of Offer in Contract Law

Importance of Communication of Offer

In order for a valid contract to occur, the proposal made by one party must be communicated to the other party. According to Section 4 of the Indian Contract Act of 1872, “the communication of offer (or proposal) is complete when it comes to the knowledge of the person to whom it is made”. For example, assume that A, proposes by letter, to sell a piece of land to B at a certain price. The communication of the proposal made by A will be complete when B receives the letter.

If an offer has not yet been communicated, then even if someone acts in accordance with the terms of the offer, he cannot be considered to be the acceptor of that offer. Because acting in ignorance of an offer does not give rise to the acceptance of that offer. Therefore, the knowledge of an offer is a must before it can be accepted. There can’t be consent or assent to something of which the party has never heard about.

Communication of offer is necessary irrespective of whether the offer is general or specific. General offers are typically communicated through mass media such as TV, newspapers, etc.

A leading case of Lalman Shukla v Gauri Dutt

In the case of Lalman Shukla v Gauri Dutt [(1913) 11 All L.J. 489], the nephew of the defendant had absconded from home. The plaintiff, who was the defendant’s servant, was sent in pursuit of the missing boy. After the plaintiff had gone in search of the missing boy, the defendant issued handbills declaring a reward of Rs. 501 to anyone who would find out the boy. The plaintiff did not know of this offer and he came to know of this only when he had already traced and informed the defendant about the boy. Later, he brought an action for the claim of reward.

The Court held that since the plaintiff was ignorant of the offer of reward, his act of finding and bringing the missing boy to the defendant did not constitute acceptance of the offer. Hence, he was not allowed to claim the reward.

The Court emphasized that only a contract may serve as the basis for a lawsuit like the one in question. An offer must be accepted in order for there to be a contract to exist, and an acceptance is only possible if there is knowledge of the offer.

By addressing another view, the Court further observed that in the case of public advertisements offering a reward, the “performance of the act” raises an inference of acceptance (Section 8 of the Indian Contract Act). But, in the present case, the plaintiff was already under an obligation to do what he did (acting under the servant’s duty) and therefore, the performance of the act cannot be regarded as a consideration for the defendant’s promise.

Regardless of this, the most important point here was that the plaintiff wasn’t aware of the offer of reward and no act of performance in ignorance of the offer would amount to its acceptance.

The contention of the plaintiff was that the privity of contract was unnecessary and neither motive nor knowledge was essential for the acceptance of an offer. The Court observed that the motive is not essential, but knowledge and intention are. This is illustrated by the case of Williams v Carwardine (1833) given below.

Williams v Carwardine case (1833)

In this case, the defendant (Mr. Carwardine) had offered a reward of £20 for information leading to the discovery of the murderer of Walter Carwardine, his brother. Mrs. Williams (the plaintiff) gave information about the incident which eventually led to the conviction of her husband, not so much for reward, but to assuage her feelings. It was held that if an offer has been accepted with knowledge of the reward that is offered therein, the mere fact that the informer was influenced by motives other than claiming the reward shall be immaterial. Read the full case here.

R v Clarke (1927)

R v Clarke (1927) is another contract law case from Australia that talks about the same issue.

In this case, the government of Western Australia had offered a reward for information leading to the arrest and conviction of the individuals who were responsible for the murders of two police officers. A suspect, Evan Clarke provided this information after being arrested for this offense. Even though Clarke had once known about the offer, however, at the time when he provided the information, he had no intention of claiming any reward and had, in fact, forgotten about it.

The Court said that how can there be consent or assent to something that the party has never heard of? Assent cannot occur in the absence of knowledge of the offer; hence, ignorance of the offer is the same whether it results from never hearing about it or from forgetting it after hearing about it.

Held that he could not recover the reward.

Conclusion (Communication of Offer)

Communication of offer is necessary for every agreement or contract. Unless the party is aware of the offer made to him, he cannot be deemed to be the acceptor of that offer.

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