Section 3:

“The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.”

Section 3 of the Indian Contract Act, 1872 deals with the communication of proposals, acceptance and revocation. It establishes that a proposal, acceptance or revocation is communicated through an act or omission intended to communicate it, or which has the effect of communicating it.

Communication of a Proposal

A proposal becomes legally relevant when it is communicated to the person to whom it is made. Communication may take place through words, writing, conduct or other appropriate means. Section 4 further provides that communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

Communication of Acceptance

Acceptance must generally be communicated to the proposer. A person’s private intention or mental decision to accept an offer does not, by itself, create a binding contract. There must be some external manifestation of acceptance through words, writing or conduct.

Communication of Revocation

Revocation means withdrawal of a proposal or, where legally permitted, withdrawal of an acceptance. Section 3 recognizes communication of revocation through an act or omission intended to communicate the withdrawal. The rules governing when revocation becomes complete are further provided under Sections 4, 5 and 6.

Important Judicial Decision

In Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas & Co., AIR 1966 SC 543, the Supreme Court examined communication of acceptance, particularly in relation to telephone communication. The Court emphasized that a mere mental intention to accept is insufficient and that acceptance ordinarily requires communication to the offeror. The judgment remains an important authority on Sections 3 and 4 of the Contract Act.

Conclusion

Section 3 provides the basic statutory foundation for determining whether a proposal, acceptance or revocation has been communicated. Together with Sections 4 to 7, it helps determine when contractual communication becomes legally effective and whether a binding agreement has been formed.