PROPOSAL, ESSENTIALS OF PROPOSAL & REVOCATION OF
PROPOSAL
Introduction (30–40 words)
In contract law, every agreement begins with a proposal. It is the foundation of a valid
contract. A proposal expresses the desire to enter into a legal relationship. Without a
proper proposal and acceptance, no valid contract can exist.
1. DEFINITION OF PROPOSAL
Meaning of Proposal – Section 2(a), Indian
Contract Act, 1872
A proposal is made when one person signifies to another his willingness:
1. to do something, or
2. to abstain from doing something,
with the intention of getting the other person’s assent.
Thus, a proposal shows a clear readiness to act or not act, expecting approval from
the other side.
Example:
A says to B, “I will sell my car to you for ₹2,00,000.”
This is a proposal because A is ready to sell, and he expects B’s consent.
A proposal becomes a promise when the person to whom it is made accepts it.
2. ESSENTIALS OF A VALID PROPOSAL
The following essentials must be present for a proposal to be valid in the eyes of law:
(1) Intention to Create Legal Relationship
The proposer must intend to create a legal obligation. Agreements made for jokes,
social invitations, or friendly arrangements are not proposals.
Case Law – Balfour v. Balfour
A husband’s promise to pay money to his wife was held not a contract because there
was no intention to create legal relations.
(2) Clear and Certain Terms
A proposal must be definite, clear, and not vague.
If the terms are uncertain, the contract becomes void under Section 29.
Example:
A says, “I will sell you a car at a reasonable price.”
This is vague because “reasonable price” is not fixed.
(3) Communication of Proposal
According to Section 4, a proposal is complete when it is communicated to the
offeree.
Without communication, there can be no acceptance and therefore no contract.
Case Law – Lalman Shukla v. Gauri Dutt
A servant was not entitled to reward because he did not know about the offer; the
proposal was not communicated.
(4) Proposal Must Be Made to a Certain Person or
the Public
A proposal can be made to:
a specific person,
a group, or
the entire public.
Case Law – Carlill v. Carbolic Smoke Ball Co.
An advertisement promising reward to the public was treated as a valid proposal.
(5) Intention to Receive Assent
The proposer must be willing to enter into a contract as soon as the other party
accepts.
Statements made without such willingness do not amount to proposals.
(6) Proposal Must Show Readiness to Do or Abstain
Under Section 2(a), the proposer must show preparedness to perform the act or to
abstain from it.
(7) Lawful Object and Consideration
The proposal must relate to something legally acceptable.
Unlawful acts cannot form the basis of a valid proposal.
3. REVOCATION OF PROPOSAL
Revocation means cancelling or withdrawing the proposal before it is accepted. The
Indian Contract Act provides several ways for revocation.
Section 5 – Revocation of Proposal
A proposal may be revoked at any time before the communication of acceptance is
complete as against the proposer.
Thus, once acceptance is communicated, the proposal cannot be revoked.
MODES OF REVOCATION OF
PROPOSAL (Section 6)
A proposal can be revoked in the following ways:
(1) By Communication of Notice of Revocation
The proposer can revoke the offer by communicating a notice to the offeree.
Example:
A offers to sell his bike to B. Before B accepts, A sends a message that the offer is
withdrawn. The proposal stands revoked.
(2) Lapse of Time
If the offer is not accepted within the time specified, it automatically lapses.
If no time is mentioned, it must be accepted within a reasonable time.
Example:
A offers a job to B and asks for acceptance within 10 days. After 10 days, the offer
lapses automatically.
(3) Failure to Fulfil a Condition Precedent
If the proposal requires the offeree to fulfil a condition before acceptance and the
condition is not fulfilled, the proposal is revoked.
(4) Death or Insanity of the Proposer
If the offeree comes to know of the proposer’s death or insanity before accepting, the
proposal is revoked automatically.
Example:
A dies after making an offer. B, knowing this, cannot accept the offer.
(5) Rejection of Proposal by Offeree
If the offeree rejects the proposal, it stands revoked.
A counter-offer also amounts to rejection of the original proposal.
Case Law – Hyde v. Wrench
Acceptance with modification is not acceptance; it is a counter-offer that ends the
original proposal.
(6) Revocation by Non-Acceptance in the
Prescribed Mode
If the proposer prescribes a manner of acceptance and the offeree does not follow it,
the proposal can be revoked.
Example:
A asks B to send acceptance only through email. B sends acceptance by letter. A may
reject such acceptance.
Conclusion (30–40 words)
A proposal is the first step toward forming a valid contract. For a proposal to be legally
recognized, it must be clear, communicated, and intended to create legal relations.
The law also permits proposals to be revoked before acceptance is completed