During the formation of contracts, it is important to know rules that deal with the communication of proposals, acceptances and revocations and this is done under Section 4 of the Indian Contract Act, 1872. Let's say, this section stipulates when parties' communication is legally effective in reality, and in this sense, it is clear regarding what's been settled between parties.

It defines that a proposal is complete only when delivered to the person to whom it is made, an acceptance is complete when delivered to the proposer, a revocation is complete when delivered to the proper party. Section 4 makes sure that the actions and intentions it delineates are binding on both parties and prevent that vagueness and dispute that can happen in contract formation. In Section 4 we consider its meaning and how it is applied in interaction with legal practice; we also discuss how useful it remains today in the modern contract law.

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Section 4 of Indian Contract Act, 1872

Section 4 of Indian Contract Act, 1872, states:

• A proposal is communicated to the person to whom it is made when he gets to know about it. Every acceptance is complete, when put in the course of transmission to the proposer, so as to be out of the power of the acceptor and when it is in the knowledge of the proposer as against the acceptor. 

• This revocation is "complete" (as against the person making it) when put in a course of transmission to him to whom it is made as to be out of the power of him making it (as against the person to whom it is made), when the latter comes to know of it."

A) Communication of Proposals

In the first part of Section 4 of Indian Contract Act, 1872, the first point is emphasised when a proposal is communicated and it becomes complete. 

• Under Indian Contract Act, 1872, a proposal may only be considered communicated if it comes to the knowledge of the offeree and reaches the offeree. 

• For example, if the offeree receives a proposal by mail, such proposal is communicated as soon as the offeree accesses and reads the email. A definite point in time is guaranteed for the offer becoming legally anchored, thus clarifying the provision.

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B) Communication of Acceptance

According to the two fold criterion as mentioned in section 4 of Indian Contract Act, 1872, completion of acceptance is determined. It distinguishes between the perspective of the proposer and the acceptor:

1. Against the Proposer: When the acceptor places the item beyond their control, it is considered as acceptance into the course of transmission. For example, the sending of a letter of acceptance by post achieves this requirement as soon as the letter is put in the Post.

2. Against the Acceptor: The proposer accepts when it receives and acknowledges it. The dual framework guarantees that the elements of both are aware of the obligations and binding nature of the contract.

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C) Communication of Revocation

Revocation of offers and acceptance is an integral part of contract law, and Section 4 of Indian Contract Act, 1872, specifies the point at which revocation becomes effective:

1. Against the Person Revoking: Revocation is effective once it is placed in a course of transmission incapable of being controlled by the revoking party. For example, posting a letter revoking an offer does qualify.

2. Against the Recipient: Revocation is complete as of the time it is received, and acknowledged. This makes sure the person who is revoking is well informed about that.

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D) Practical Implications of Section 4 of Indian Contract Act

The principles enshrined in Section 4 of Indian Contract Act, 1872, play a crucial role in various practical scenarios:

• Postal Rule of Communication: The Act follows the postal rule of acceptance is complete on dispatch. Revocation, however, does not happen if the recipient does not acknowledge it. That’s how a balance between the rights of all the proposers and all the acceptors takes place.

• Electronic Communication: Since we are living in the digital era, Section 4 of Indian Contract Act, 1872 also applies to electronic communication like email and messages. This section's principles are often used by courts to resolve disputes about electronic contracts.

• Business Transactions: Section 4 ensures that there is a transparency and certainty in business transactions and that offers, acceptances and revocations are to be deemed communicated in a clear manner.

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Relevant Case Laws

Following are some cases that are relevant under Section 4 of Indian Contract Act, 1872:

Carlill v. Carbolic Smoke Ball Co. (1893)

The court considered the offer and acceptance of the unilateral contract in this English case. It was held that the defendant’s promise to pay £100 to whoever drank their smoke ball and still came down with the flu was an offer good in law. An interesting point here is that the offer and acceptance also hinge on communication, and so if there’s no communication, there’s no offer and no acceptance.The court decided Carlill’s action of using the smoke ball and then getting ill was adequate acts of acceptance thereby making a binding contract.

Lalman Shukla v. Gauri Dutt (1913)

In this case Gauri Dutt, sent his servant, Lalman Shukla, to seek his nephew, who went missing. When the servant had left, the defendant offered to pay Rs. 501 to anybody who finds the boy. The servant got to know about the offer after he already found the boy. The court held that the servant did not communicate his acceptance of the offer of payment before he did the task and only the acceptance of an offer of payment was required for acceptance. This case exemplifies that under Section 4 acceptance must be preceded by prior communication.

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M. N. Subramanyam v. M. N. R. Ramaswamy

Here, the court made clear that silence, standing alone, cannot be taken to be acceptance on the part of the offeree unless the offeree has agreed in express terms to its effect as an acceptance. Section 4 stands for the principle that acceptance must be clear and communicated and this is the principle for which the judgement laid down the principle.

Summary

Section 4 of Indian Contract Act is a one of the very essential provisions of the Act that deals with the communication of proposal, acceptance and revocation of proposal. It lays out how these communications are considered complete, so that these kinds of contractual dealings are done fairly and transparently. It is effective in the traditional forms of communication, but adaptation to digital and international situations requires continual reworking. Section 4 of Indian Contract Act, 1872 lays to ensure a good foundation of contractual relationship and ensures the principles of certainty and equity in the area of Indian jurisprudence.

Section 4 of Indian Contract Act, 1872: FAQs

Q1. What does Section 4 of the Indian Contract Act, 1872 deal with? 

Section 4 narrates the event of a contract becoming valid: 'Whereas a proposal is received by the acceptor, a proposal is accepted to that as appears from the communication of acceptance to the proposer.'

Q2. How does Section 4 of Indian Contract Act, 1872 provide for the communication of acceptance? 

Acceptance is communicated in the event when there is a communication of the acceptance to the offeror, either verbally or otherwise, except if it is provided in the case of the offer.

Q3. Can the contract be valid in case of non-communication of acceptance? 

No, it won't make the contract valid as per Section 4 unless acceptance is duly communicated to the offeror.

Q4. Does silence imply acceptance as per section 4? 

No, silence or inactive condition shall not be deemed as acceptance except in the cases where it is agreed between the parties that it would be so.

Q5. What will happen in a case of acceptance that is delayed? 

Delayed acceptance will not be valid unless the offeror has agreed to accept it despite the delay clearly.