PROBLEM NO.

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QUESTION
"A" the owner of four thoroughbred horses employed two trainers to look after them. Of
these horses "Toofan" a 3 year old stallion was the pride of the stable. Being in dire
financial straits, A decided to sell "Toofan" and accordingly informed his trainees to look
out for prospective buyers. B approached the first trainer and offered Rs.1,50,0001-

for

"Toofan". This price was telegraphed to A on 1.4.94. On 12.4.94 A sent a reply that he
won't accept less than Rs.4,OO,OOOI-, which was received on 15.4.94. On 17.4.94 B
telegraphed his acceptance of the price. Meanwhile on 12.4.94 the other trainer sent
another offer of Rs.4,25,0001-,
of acceptance

which reached A on 19.4.94. A had already sent a letter

to B on 18.4.94, so he sent a telegram dated 19.4.94 revoking his

acceptance and another to his other trainer accepting the second offer. B didn't receive
the telegram but the other party did. Now both of them claim that they have a right to buy
"Toofan'.

ISSUE:
Which of the parties B or the party brought by trainer 2 is entitled to get the horse toofan?
Whose claim is valid?

ANSWER:
A receives offer for his horse "toofan" from B on 12.4.94 for Rs.1,50,000 which he
rejects and sends a letter to B that nothing less Rs.4,OO,OOOmay be accepted by him. Here
B sends his acceptance for Rs.4,OO,OOOto A by telegram on 17.4.94 and A accepts the
offer ,and sends a letter to B on 18.4.94. With the acceptance letter posted and out of
control of A now it stands to be a valid contract according to Section 4 and 5 of Indian
Contract Act, 1872 which reads thus:

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Communication when complete - The communication of a proposal is complete when it

comes to the knowledge of the person to whom it is made. The communication

of an

acceptance is complete:

as against the proposer, when it is put in a course of transmission, to him so as to

be out of the power of the acceptor.

as against the acceptor, when it comes to the knowledge of the proposer.

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, so as 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.

When the parties are at a distance and are contacting through post or by messengers, the
question arises when is the contract concluded?

Does the contract arise when the

acceptance is posted or when it is received?

The question first arose in England in Adams v. Lindsell.
On September 2, 1817, the defendants sent a letter offering to sell quantity of wool to the
plaintiffs. The letter added, "receiving your answer in course of post". The letter reached
the plaintiffs on September 5. On that evening the plaintiffs wrote an answer agreeing to
accept the wool. This was received by the defendants on September 9. The defendants
waited for the acceptance up to September 8 and not having received it, sold the wool to
other parties on that date. They were sued for breach of contract.
It was contended on their behalf that till the plaintiffs' answer was actually received there
could be no binding contract and, therefore, they were free to sell the wool on

8th.

But the

court said;
"If that were so, no contract could ever be completed by post. For if the defendants were
not bound by their offer when accepted by the plaintiffs till the answer was received, then
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the plaintiffs ought not to be bound till after they had received the notification that the
defendants had received their answer and assented to it. And so it might go on infinitum
(endlessly).
The result of the decision is that a complete contract arises on the date when the letter of
acceptance is posted in due course.
This rule was affirmed by the Court of Appeal in Household Fire & Accident Insurance
Co. v. Grant as well as in the case Dunlop v. Higgini,

where an acceptance letter posted

in due time was delayed by one day as the slippery state of Roads from frost prevented
the mail bag from reaching the station before the departure of the train, nevertheless the
defendants were held to be bound.
The offerer becomes bound when a properly addressed adequately stamped letter of
acceptance is posted. This aspect was emphasized by the Allahabad High Court in
Ramdas Chakrabarti v. Cotton Ginning Co Ltd wherein "a letter of allotment of shares
was claimed to have been posted by a company, but the applicant denied to have received
it.
The high court said: "it follows from this (section 4 and 5) that a notice of allotment,
which is the acceptance of the offer to purchase shares, is communicated to the allottee
when it is dispatched, and from that moment there is a complete contract for him.
Whether he receives the letter or not is absolutely immaterial.
Taking the precedence of these cases and considering the section 4 and 5, A's acceptance
letter to B on 18.4.94 constitutes a valid contract and hence his revocation telegram and
selling the horse to the third party is not valid.

(1848) 1 HLC 381

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CONCLUSION:
A's acceptance letter to B constitutes a valid contract and his contract with third party
sell the horse to him is not valid. B can file a suit and claim for the right of Toofan and
will succeed.

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