Legal Guide

What is Section 4 of the Indian Contract Act?

by Bhavya Choudhary · 4 min read

Section 4 of the Indian Contract Act

Introduction

The Indian Contract Act of 1872 talks about the legislation revolving around contract and service agreements in India. Section 4 of the Indian Contract Act talks about the completion of the communication of the proposal which has been made for the Contract. 

This act makes all the contracts in the country an agreement that is enforceable by law. If we go deep into the meaning of the term agreement, we will observe that it talks about the free consent and will of two parties on the same topic of performance or promise; the two parties together form a contract with the objective of lawful consideration in return.

What is a Contract?

  • A Contract under the Indian Contract Act is an acceptance of an offer or proposal made by the offeror to the accepter to complete an obligation under Section 4 of the Indian Contract Act.
  • For example, A gives B an offer to buy his house. B accepts it. Now they are in a contract, which is enforceable by law.
  • To make a contract an agreement, there is always one party that makes the offer or a proposal, and the other party has to give their free consent or acceptance for the fulfillment of that agreement; the consent can be expressed or implied.

Essentials of a Contract

In the Indian Contract Act, certain terms have been defined as the essentials of a contract under Section 2 of the Indian Contract Act.

  • The proposal is defined as the point when any individual connotes his readiness to someone else to do anything or swear off doing anything to get the consent of both of such demonstration or abstention; then, at that point, we will say that individual is proposing.
  • A proposal, when accepted, becomes a promise.
  • The individual proposing is known as the “promisor,” and the individual who acknowledges the proposal is known as the “promisee.”
  • Consideration is when, at the choice of the promisor, the promisee or some other individual has done or ceased from doing, or does or abstains from doing, or vows to do or cease from doing, something, such demonstration or restraint or commitment is known as a thought for the commitment.
  • The agreement is when the promises are accepted with consideration. As per Section 4 of the Indian Contract Act, the offer and acceptance must be complete.
  • A legally enforceable agreement is a contract. Legal advice must be taken to get the Contract enforced.

Method of Communications for Proposal under Section 4 of the Indian Contract Act

In section 3 and Section 4 of the Indian Contract Act, it is mentioned that correspondence of proposal, acceptance of the proposal, and repudiation of proposal and acknowledgments, individually, are considered to be made by any demonstration or oversight of the party proposing, tolerating or denying, through which it means to impart this proposal, acceptance or renouncement, or which conveys it.

  • Express proposal – When a proposal is made by the words which may be written or spoken or by any action or conduct, or expression, then it is said as an express proposal. For example, if a person tells a person that he will sell his house to him for ten crores, then this is an expression or conduct for a proposal.
  • Implied proposal- When a proposal is made other than words written or spoken, then it is called an implied proposal in which there should be some action or conduct which shows the reasonability of implied action for the proposal to happen. 
  • Specific Proposal- This is a proposal in which conduct or action or words written on spoken are expressed for a particular person or particular class of a person, particularly for him or them. Then these proposals are called specific proposals.
  • General proposal– These are the offers of proposals made to the general public in which a large number of persons are involved, like the display of goods by a roadside vendor.

The communication of offer and acceptance is controlled by Section 3 and Section 4 of the Indian Contract Act.

When the completion of the Communication of the Proposal happens under Section 4 of the Indian Contract Act?

  • Section 4 of the Indian Contract Act says the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
  • The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made under Section 4 of the Indian Contract Act.
  • The communication of an acceptance is complete — as against the proposer when it is put in the course of transmission to him to be out of the power of the acceptor; as against the acceptor when it comes to the knowledge of the proposer. This is given under Section 4 of the Indian Contract Act.
  • The communication of a revocation is complete — as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge. This is given under Section 4 of the Indian Contract Act.

Illustration of Section 4 of the Indian Contract Act

  • A denies his proposal by phone call. The disavowal is finished as against A when the message is dispatched. The denial is finished as against A when the phone call is dispatched. It is finished as against B when B gets it.
  • It is finished as against B when B gets it. B denies his acknowledgment by phone call. B’s denial is finished as against B when the phone call is dispatched and as against A when it contacts him. B denies his acknowledgment by phone call.
  • B’s denial is finished as against B when the phone call is dispatched and as against A when it contacts him. This example is provided under Section 4 of the Indian Contract Act.

Conclusion

  • Section 4 of the Indian Contract Act talks about the communication of the proposal and acceptance by either of the parties involved in the Contract.
  • It can be seen that the proposal and acceptance of an offer cannot be communicated in cases where there is a possibility of nonfulfillment of any of the essentials mentioned above by either of the parties involved in the performance of the service agreements or contracts.
  • All the issues related to the communication of the contracts should be discussed through legal advice.

To make any service agreement enforceable, one must get the agreement registered. One must consult an attorney to get the right legal advice.

Bhavya Choudhary

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Bhavya Choudhary

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