A Firm Offer, a Postal Acceptance and a Promised 'Incentive'
On 3 March, Vardhman Foods Ltd (VFL) couriered a signed offer to Kaveri Packaging: 40,000 printed cartons at ₹46 each, delivery by 31 March, with a line reading 'this offer remains open for acceptance until 15 March'. The letter reached Kaveri on 5 March. Kaveri posted its signed acceptance from Nashik on 10 March, after committing ₹6,20,000 to raw paper for the job; the acceptance reached VFL's Gurugram office on 13 March. On 11 March, however, VFL's purchase manager emailed a revocation of the offer, which Kaveri's proprietor read the same evening. Separately, on 18 March VFL's manager telephoned Kaveri asking for delivery by 26 March instead of 31 March and promised ₹1,50,000 as a 'special incentive' for early completion. Kaveri worked additional shifts and delivered on 25 March. VFL has paid the carton price but refuses the ₹1,50,000, saying Kaveri merely performed the existing contract. Kaveri also wants to know whether any contract exists at all, given the revocation email.
1. Was a binding contract concluded between VFL and Kaveri, and on what date did acceptance become complete? What is the effect of the 11 March revocation email?
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Acceptance is complete against the proposer when the letter is posted, not when it arrives. Section 4 of the Indian Contract Act, 1872 provides that 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; and as against the acceptor, when it comes to the knowledge of the proposer. Kaveri's acceptance therefore became complete against VFL on 10 March, when it was posted at Nashik, even though VFL read it on 13 March.
The revocation comes too late. Section 5 permits revocation of a proposal at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. VFL's email of 11 March reached Kaveri only after 10 March, when VFL was already bound. The revocation has no effect and a concluded contract exists from 10 March on the terms of the 3 March letter.
The 'open until 15 March' promise is not an option. A bare assurance to keep an offer open is unenforceable for want of consideration; it does not extend VFL's right to revoke. That point does not help VFL here, because acceptance preceded revocation in any event.
The raw-paper expenditure is irrelevant to formation. Section 10 requires offer, acceptance and consideration; the posted acceptance supplies the acceptance. Kaveri's purchases only evidence readiness, not contract formation.
2. Kaveri claims ₹1,50,000 for delivering by 25 March. VFL says this is a promise to perform an existing contractual obligation and is unsupported by consideration. Decide, with reasons.
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The existing-duty rule defeats the claim. Under section 2(d), consideration must be an act, abstinence or promise done 'at the desire of the promisor'. Where the promisee does nothing more than what he is already bound to do under an existing contract with the same promisor, there is no fresh consideration and a promise of extra payment is nudum pactum. Indian courts have adopted this rule (see Ramchandra Chintaman v. Kalu Raju), and section 63, which lets a creditor accept a lesser sum, does not convert a promise to pay more for the identical performance into a binding agreement.
Application. Kaveri was already obliged to deliver by 31 March. The ₹1,50,000 was promised for delivery by 26 March - a faster performance of the same duty. Nothing extra moved from Kaveri to VFL: no additional quantity, no surrender of a right, no new obligation. VFL therefore need not pay.
What would have changed the result. If VFL had sought something outside the original bargain - additional cartons, a waiver of Kaveri's detention claim, or a compromise of a genuine dispute about the delivery date - the promise would have been supported by consideration. Kaveri's extra shift costs show that a request was made, but a request alone is not consideration.
3. Would your answer on formation change if VFL had posted the revocation on 9 March by speed post reaching Kaveri on 12 March? What if the 11 March email had landed in Kaveri's spam folder and was never read?
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Posting the revocation earlier changes nothing. Under section 4, communication of a revocation is complete, as against the person who makes it, when it is put in a course of transmission to the other party, and as against the other party when it comes to his knowledge. Posting on 9 March therefore does not make the revocation operative against Kaveri until 12 March - after the acceptance was posted on 10 March. Under section 5 the revocation is still ineffective.
An unread email is a genuine difficulty. Section 5 requires the revocation to reach the offeree before acceptance is complete against the proposer. Two views are possible. Under section 13 of the Information Technology Act, 2000, an electronic record is received when it enters the addressee's computer resource, which suggests delivery into Kaveri's mailbox suffices even if unopened. The safer commercial view, and the one a court is likely to favour where the message was never brought to the proprietor's attention at all, is that knowledge must be established; VFL would have to prove that the revocation in fact came to Kaveri's knowledge before 10 March.
Practical consequence. VFL should have revoked by a mode it could prove was read - courier with acknowledgment, or a telephone call confirmed in writing - and certainly before Kaveri posted its acceptance.