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Can a Valid Contract Be Formed Over the Telephone and Postage?
A contract is formed when the acceptance of an offer was made by the offeree comes to the knowledge of the offeror, and this acceptance can be communicated to the offeror either personally or by using any other mode of communication. As there is no specific mode of communication of offer or acceptance provided in the Indian Contract Act, 1872. Therefore, it is understood in general that any mode that is either prescribed in the offer or prevalent in the usual course of business can be used for the purpose.
How is Acceptance or an Offer is Communicated?
A contract is initiated once the offeror makes the offer known to the offeree, and the contract is completed when the offeree makes the acceptance of the offer known to the offeror. The offeree has two options to communicate the acceptance to the offeror i.e., either it can be made in the mode and manner prescribed in the offer or it can be made by using a mode that is feasible and convenient for both parties to receive communications.
The following are the ways through which acceptance or an offer is communicated −
Modes of communication − Contracts can be formed by using any mode of communication that is prevalent and in general use by the public at the time of making the contract. For example, in the present time, electronic methods are widely used, but old methods are also in existence, although their usage level is decreasing due to the rapid effects of electronic methods.
However, in ancient times, contracts were generally formed by people in person, while in mediaeval times, with the advent of telegraph and telephone services, these modes were widely used for forming contracts, especially by people living afar.
Telephone and Postage − Telephone and Postage are two of the most commonly used modes of communication for the formation of contracts for centuries. These two methods are way more efficient and effective, as they not only provide proof of the different stages of contract formation but also provide time and space for the parties to the contract to rethink their decision before making it final.
Section 4 of the Indian Contract Act − Section 4 of the Indian Contract Act, 1872 seems like it was made in the context of telephone and postage as modes used for communicating the acceptance and refusal of an offer. As the pattern and procedure provided in the section resonated with the working processes of telephone and postage, it is widely interpreted that postage is one of the legally authorised modes of creating a valid contract.
How a Valid Contract is made over the Telephone and Postage?
A contract is a valid contract if it is created and formed after following the due procedure. Telephone and Postage are used not only for making the offer known to the offeree but also for making the acceptance known to the offeror.
Telephone − Telephone is an electronic and instant mode of communication; therefore, the moment consent is signified by one person and received by the other, the contract comes into existence, along with the rights and liabilities of the parties at the same time.
Postage − Postage is a bit complicated, as here the liabilities and rights of parties do not arise concurrently; rather, they come into existence with the development and completion of different stages of postage.
For instance, when the offeror puts the offer in transmission for the offeree, then the offeror becomes bound by the offer, but it can be revoked before it comes to the knowledge of the offeree.
Further, an acceptance is complete against the offeree when it is put into transmission, and it is complete against the offeror when it comes to his knowledge. Thus, the offeree can revoke the acceptance before that if he desires, but not once the communication is complete as the contract comes into existence thereafter.
Conclusion
Telephone and Postage are two significant and effective modes of communication at different stages of contract, however, operating distinctively in their respective spheres. The telephone makes the contract instantly, and the rights and liabilities of the parties come into existence concurrently. Although postage takes time to complete, the rights and liabilities of parties arise with the completion of each step, and a contract is only formed at the end. Nevertheless, both are prevalent methods of communication; therefore, any promise made using them forms a valid and legal contract.
Frequently Asked Questions
When can the right of revocation be exercised by a party?
A right of revocation can be exercised by a party when a communication is put in transmission against that person however, before the communication is complete against the person to whom it was made, thus it is basically revoking a consent or acceptance given beforehand.
Whether communication given by telephone be revoked at any stage?
If acceptance is communicated on the telephone however it was not received either by the offeror or his authorised agent, then before the acceptance comes to the knowledge of the offeror, if the revocation is communicated to him, then the acceptance stands revoked.
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