What is Section 5 of the Indian Contract Act 1872?

Introduction

• The Indian Contract Act of 1872 talks about the legislation revolving around contract and service agreements in India. 
• This act makes all the contracts in the country an agreement that is enforceable by law.
• If we go deep into the meaning of the term agreement, we will observe that it talks about the free consent and will of two parties on the same topic of performance or promise; the two parties together form a contract with the objective of lawful consideration in return.
• In this blog, we will read about Section 5 of the Indian Contract Act, but before that, let us understand a basic concept.

What is a Contract?

• To make a contract an agreement, there is always one party that makes the offer or a proposal, and the other party has to give their free consent or acceptance for the fulfillment of that agreement; the consent can be expressed or implied.
• But there are times when either of the parties would like to revoke the contract in such cases Section 5 of the Indian Contract Act is taken into consideration. Often this revocation issue is solved with the help of legal consultancy services.
• The revocation under the Section 5 of the Indian Contract Act can be initiated by any of the parties involved in the contract.
  

  Section 5 of the Indian Contract Act 1872 and Its Implications on Contract Law

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What is the Revocation of Proposal and Acceptance?

• Section 5 of the Indian Contract Act talks about the revocation of proposal and acceptance. 
• That there can be revocation of a proposal made by a party at any given time before the communication of acceptance of that proposal has not been completed. 
• But if the proposal has been communicated between the parties involved in the formation of the contract, then there is no revocation of the proposal and acceptance by any means.

Section 5 of the Indian Contract Act 1872 says that: 

“Revocation of Proposals and acceptance.— A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterward. —A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterward.” An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterward.”

Illustration and Essentials of Section 5 of the Indian Contract Act, 1872

• If A sends a proposal for selling his house to B, then, the revocation of this proposal and acceptance under section 5 of the Indian Contract Act can happen only when –
• the letter of acceptance of the proposal sent by b has not been posted or is being posted,
• if the letter of B accepting the proposal has been sent to a, but it has not reached him, then also the revocation of the proposal can happen under Section 5 of the Indian Contract Act,
• B can also revoke its acceptance of the proposal at any time before it has reached A,
• The communication of acceptance or proposal should not have been communicated between the parties,
• If the communication has been completed, then there is no way possible for the revocation; now, the parties are legally bound for the performance of the contract.
  

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Revocation of the proposal and acceptance under Section 5 of the Indian Contract Act

• Revocation of offer and proposal in Section 5 of the Indian Contract Act can be initiated through the expressive or implied mode of communication, which can be done by either of the parties involved in the contract. 
• Just expressing the revocation of the acceptance and proposal in the Indian Contract Act is considered effective.
• Section 6 of the Indian Contract Act talks about the four major points through which the revocation of a proposal or acceptance can happen under Section 5 of the Indian Contract Act.
• Revocation of the proposal by giving a notice, specified in section 6, that a notice given to the other party for the revocation of the proposal or offer is itself effective for the revocation.
• Revocation of an offer or proposal under Section 5 of the Indian Contract Act can also happen due to the lapse of time which was fixed earlier for the acceptance of the offer by the party offering it as given in section 6 of the Indian Contract Act.
• An offer can also be revoked when any precedent condition or duty which had to be performed has not been fulfilled yet.
• The last point is that revocation can also happen due to death or insanity. In which the offeror either is not of sound mind or is not alive.

Difference between the revocation of an offer and revocation of an acceptance under Section 5 of the Indian Contract Act

An offer is considered to be bonding in nature according to the Indian Contract Act, from the moment when the acceptance is posted by the acceptors, that is when it goes out of the reach of the accepter to get it back, but in this case of acceptance, the acceptor is bound to the contract when the knowledge of acceptance has been communicated to the offeror.

Conclusion

• Section 5 of the Indian Contract Act talks about the revocation of the proposal and acceptance by either of the parties involved in the contract.
• It can be seen that the proposal and acceptance of an offer cannot be revoked in cases where there is a possibility of causing damage to either of the parties involved in the performance of the service agreements or contracts.
• All the issues related to the revocation of the contracts should be discussed through a legal consultancy service.