Contract Act - The Tea Offer, Prescribed Mode and Telephone Revocation
On 2 April, Meghna, a tea trader in Siliguri, sends Arun a signed written offer: 800 kg of Darjeeling tea at ₹310 per kg, delivery by 20 April. The offer states: 'This offer remains open until 5 p.m. on 9 April. Acceptance must reach me by registered post only.' On 6 April Arun posts an ordinary letter accepting the offer; it reaches Meghna on 9 April at 11 a.m. On 7 April he also posts a registered letter of acceptance, which reaches Meghna on 10 April at 10 a.m. On 8 April, having heard a rumour that Arun is negotiating with another seller, Meghna telephones Arun and says, 'I withdraw the offer.' Arun replies, 'I have already accepted.' Arun later buys 800 kg elsewhere at ₹355 per kg and claims ₹36,000 as damages. Meghna refuses, saying no contract was ever formed because acceptance did not reach her in the prescribed manner by the deadline. Arun argues that posting the ordinary letter on 6 April completed the contract.
1. Did a contract come into existence between Meghna and Arun? Analyse the offer, the prescribed mode of acceptance, the postal rule, and the timing of revocation.
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Step 1 - Identify the offer. Meghna's written communication is a definite offer, not an invitation to treat: it names the goods, quantity, price, delivery date and a deadline. Arun is the offeree.
Step 2 - Prescribed mode. The offer says acceptance 'must reach me by registered post only' by 5 p.m. on 9 April. Under Sections 4 and 7 of the Indian Contract Act, 1872, an offeror may prescribe the mode of acceptance. If the offeree uses another mode, the offeror may insist on the prescribed mode within a reasonable time. The ordinary letter posted on 6 April was not the prescribed mode. Its posting does not complete acceptance against Meghna if she insists on registered post; at most it gives her an option to waive the defect.
Step 3 - Registered letter. The registered letter was posted on 7 April but reached Meghna on 10 April, after the stated deadline. Because the offer required actual receipt by 9 April, the postal rule is excluded; there is no valid acceptance by the deadline.
Step 4 - Revocation. Meghna's telephone call on 8 April reached Arun before any valid acceptance had been communicated to her. A revocation is effective if it reaches the offeree before acceptance is complete against the offeror. Therefore the revocation is effective.
Conclusion. No contract was formed. Arun's claim for ₹36,000 fails. The result would be different only if Meghna had waived the prescribed mode by accepting or retaining the ordinary acceptance without objection.
2. Would your answer change if Meghna had received the ordinary letter on 6 April and remained silent until 10 April, when she rejected it for the first time?
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Reasoning. The prescribed mode is generally for the offeror's benefit and can be waived. Under Section 7(2), if the offeror receives a non-conforming acceptance and does not insist on the prescribed mode within a reasonable time, the offeror is treated as having accepted the acceptance. If Meghna received the ordinary letter on 6 April and said nothing until 10 April, a court could hold that she waived the registered-post requirement. The acceptance was communicated within the offer period and the delay in objecting was four days.
But the offer expressly required receipt by 9 April, and Meghna might argue that 10 April was still a reasonable time to reject. The outcome is therefore fact-sensitive. The safer view: silence for four days after receiving the acceptance, coupled with the absence of any prompt objection, is likely to amount to waiver, so a contract would probably be formed. Meghna could not then rely on the telephone revocation of 8 April, because by then she had already received the ordinary acceptance and had not objected.
3. If a contract was formed, how should Arun's damages be assessed? What difference does it make that no contract may have been formed?
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Damages are measured by the expectation interest: Arun should be put in the position he would have occupied had the contract been performed. The prima facie measure is the difference between the market price and the contract price: 800 kg × (₹355 − ₹310) = ₹36,000. Arun must show that he bought in substitution at a reasonable price and at a reasonable time, and he cannot recover avoidable losses. Under Section 73, remote or indirect losses are not recoverable. If no contract was formed, there is no claim for breach; a promissory-estoppel argument would be weak because Meghna made no clear promise intended to create legal relations and Arun did not act on a representation by her. Thus, if the answer to the first task is no contract, damages are nil; if a contract is found, ₹36,000 is the starting point, subject to mitigation.