A duly posts a letter of acceptance to B. But the letter is lost in transit by the negligence of the post office. What effect, if any, does this have on the formation of the contract?

Question: A duly posts a letter of acceptance to B. But the letter is lost in transit by the negligence of the post office. What effect, if any, does this have on the formation of the contract? [Punjab JS 1995(11)]

Find the answer to the mains question only on Legal Bites. [A duly posts a letter of acceptance to B. But the letter is lost in transit by the negligence of the post office. What effect, if any, does this have on the formation of the contract?]

Answer

It is necessary to make a binding contract so that, not only that the proposal is accepted, but also that the acceptance is notified. An acceptance is not complete unless and until it is communicated to the proposer in some perceptible form which may be by speech, writing or other acts or omissions. The reason is that the proposer is entitled to know whether a contract has been concluded by the acceptance, and it would be unfair to hold him bound by an acceptance of which he has no knowledge.

There are two essential factors that determine communication of acceptance:

1) The mode of acceptance and

2) Then the time of acceptance.

As per Section 5 of the Indian Contract Act, a proposal can be accepted by the offeree at any time before the communication of revocation is complete against him. Once the proposal is accepted by the offeree the communication of acceptance is said to complete:

1. As against the Offeror: For the offeror, the communication of the acceptance is complete when he puts such acceptance in the course of transmission. After putting the acceptance in course of transmission, this becomes out of offeree’s hand to revoke such acceptance, so his communication of acceptance will be completed as soon as it becomes out of his hand to revoke it. So, for example, X accepts the offer of Y via a letter post. He posts the letter on 1st January and the letter reaches Y on 4th January. For Y (the proposer) the communication of the acceptance is completed on 1st January itself.
2. As against the Acceptor: The communication is complete against the acceptor when the offeror acquires knowledge of such acceptance. So, in aforesaid example, against the acceptor Y communication is complete when the letter reaches to X on 4th January.

Applying the above rules of communication of acceptance given under Section 5 of the Indian Contract Act, in the present case at hand, where A duly posts a letter of acceptance to B but the letter is lost in transit by the negligence of the post office, it can be said that the communication of acceptance is not complete as against the acceptor. Since acceptance could not be notified in this case to A because of the reason that letter got lost in transit, no contract is said to be concluded between the parties. There is no contract concluded because the communication of acceptance via letter has not reached A (offeror).

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

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