X sends offer to Z by post, Z posts acceptance but subsequently sends telegram revoking acceptance. Is there enforceable contract? Will answer be different if X receives both letter and telegram simultaneously?

The Foundation: How Indian Law Permits Revocation of Acceptance

In England, once a letter of acceptance is posted, both parties are irrevocably bound — the acceptor cannot take back what has been set in motion. The Indian Contract Act, however, in its characteristic wisdom, builds in a window of time during which the acceptor may still pull back. Section 5 of the Act declares that an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor — that is, before the acceptance comes to the knowledge of the proposer. This creates an interval of time, between the posting of the letter and its delivery to the proposer, during which Z can still undo what has been done, provided a faster communication overtakes the letter.

Section 4 makes this architecture clear. The communication of acceptance is complete as against X (the proposer) when Z posts the letter — from that moment, X is bound. But it is complete as against Z (the acceptor) only when the letter actually reaches X. Until that second moment, Z remains free to revoke. The illustration to Section 4 of the Act expressly states: "B revokes his acceptance by telegram. B's revocation is complete as against B when the telegram is despatched, and as against A when it reaches him."

Situation One: The Telegram Arrives Before the Letter

X sends an offer to Z by post. Z posts his letter of acceptance but, having second thoughts, sends a telegram to X revoking that acceptance. The telegram, being a faster medium, reaches X before the letter of acceptance arrives.

The legal outcome here is clear: no contract comes into existence. The revocation of acceptance is valid and effective. The communication of acceptance was complete as against X only when the letter reached X, but before that moment arrived, X had already received the revocation. When the letter of acceptance finally lands in X's hands, Z has already withdrawn it — there is nothing left to accept. The acceptance has been annulled. It is as though the letter was never sent.

This principle was confirmed in Dhanraj Mills Ltd v Narsingh Prasad Bodona (AIR 1949 Pat 270), where the court emphasised that for a contract to arise, the acceptance must reach the proposer without having been previously revoked. Where the telegram revoking the acceptance reaches the proposer before the letter of acceptance, no contract is concluded.

Situation Two: The Letter and Telegram Arrive Simultaneously

What if X receives the letter of acceptance and the telegram of revocation at exactly the same time — simultaneously? Does a contract come into existence?

This is a question that Indian law addresses with a notable clarity that even English law has not fully resolved. Section 4, read with Section 5, provides the answer. An acceptance may be revoked "at any time before the communication of the acceptance is complete as against the acceptor" — that is, before it comes to the knowledge of the proposer. If both communications arrive at precisely the same moment, the acceptance has not yet "come to the knowledge" of the proposer at the point the revocation also arrived. The revocation, in reaching the proposer at the same time as the acceptance, operates to neutralise it.

This conclusion draws remarkable support from an early draft of the Indian Contract Act of 1866, which expressly stated that acceptance by letter or telegram "is not cancelled by some communication which reaches the proposer before or at the same time with the letter or telegram of acceptance." This language implies that if the cancellation reaches simultaneously, the acceptance is indeed cancelled. The inference is that simultaneous arrival of the revocation telegram operates as a valid revocation, and no enforceable contract comes into existence.

The underlying logic is sound: since the communication of acceptance is complete against the acceptor only when it comes to the knowledge of the proposer, and the proposer cannot be said to have received the acceptance when the revocation arrives at the identical moment, the acceptance never ripens into a binding obligation against Z. X, of course, was already bound from the moment the letter was posted — but Z was not bound, and the revocation cuts off that remaining contingency.

A Comparative Glance: India's Unique Advantage

In England, no such revocation would be possible after posting, for the postal acceptance rule binds both parties from the moment of dispatch. In Scotland, the question was once left open. Under the UNIDROIT Principles and the UN Convention on Contracts for the International Sale of Goods, a withdrawal of acceptance is permissible if it reaches the offeror before or simultaneously with the acceptance. The Indian Contract Act, through the express language of Sections 4 and 5, independently arrived at the same practical result — and did so over 150 years ago.

Summary of Positions

While the proposer X becomes bound the moment the letter is posted, the acceptor Z enjoys a narrow but deliberate window — the transit time of the letter — within which to reconsider. Indian law, unlike English law, consciously chose to protect this right of the acceptor to revoke, provided the revocation outpaces or matches the acceptance in reaching the proposer. It is a rule born not of logic alone, but of a fair and practical instinct that a party ought not to be irrevocably bound before the other has even received the communication that binds them both.