The Indian Contract Act 1872 Section 4

Section 4. Communication when complete.—

The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

The communication of an acceptance is complete,—

• as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor;
• as against the acceptor, when it comes to the knowledge of the proposer.

The communication of a revocation is complete,—

• as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as 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.

Illustrations

(a) A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter.

(b) B accepts A’s proposal by a letter sent by post. The communication of the acceptance is complete, as against A, when the letter is posted; as against B, when A receives it.

(c) A revokes his proposal by telegram. The revocation is complete as against A when the telegram is despatched. It is complete as against B when B receives it.

(d) B revokes his acceptance by telegram. B’s revocation is complete as against B when the telegram is despatched, and as against A when A receives it.

Explanation of Section 4 The Indian Contract Act 1872

Section 4 of the Indian Contract Act, 1872 outlines the precise moments when the communication of proposals, acceptances, and revocations is deemed complete, a key factor in contract formation and termination in Indian contract law. It complements Section 3, which defines how communication occurs (via acts or omissions), by specifying when it is legally effective. Below is a detailed breakdown:

1. Communication of a Proposal:
   • A proposal (per Section 2(a)) is complete when it reaches the knowledge of the offeree.
   • Example: A sends a letter offering to sell a car to B. The communication of the proposal is complete when B receives and reads the letter (Illustration a).
2. Communication of an Acceptance:
   • Acceptance (per Section 2(b)) has dual completion points:
     • As against the proposer: Complete when the acceptor sends the acceptance (e.g., posts a letter), binding the proposer, even if the letter is not yet received. This reflects the postal rule.
     • As against the acceptor: Complete when the proposer receives the acceptance, binding the acceptor.
   • Example: B posts a letter accepting A’s offer. The communication of acceptance binds A when the letter is posted, but binds B when A receives it (Illustration b)
3. Communication of a Revocation:
   • Revocation (of a proposal or acceptance) also has dual completion points:
     • As against the sender: Complete when the revocation is sent (e.g., telegram dispatched), binding the sender.
     • As against the recipient: Complete when the recipient learns of the revocation.
   • Example: A sends a telegram revoking a proposal. The revocation of proposal binds A when the telegram is sent and binds B when B receives it (Illustration c).

Key Principle: Section 4 establishes the postal rule for acceptances and revocations, where dispatch (e.g., posting a letter) marks completion for the sender, ensuring clarity in determining when parties are bound. This contrasts with Section 3, which focuses on the mode of communication (acts or omissions).

Key Points The Indian Contract Act 1872

• Purpose: Section 4 determines the timing of proposals, acceptances, and revocations, crucial for contract formation and termination.
• Postal Rule: Acceptances and revocations are binding on the sender upon dispatch (e.g., posting a letter), a core concept for exam questions.
• Complement to Section 3: While Section 3 defines how communication occurs, Section 4 specifies when it is complete.