Section 6: A proposal is revoked

(1) by the communication of notice of revocation by the proposer to the other party;

(2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;

(3) by the failure of the acceptor to fulfil a condition precedent to acceptance; or

(4) by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.”

Explained:

Section 6 of the Indian Contract Act, 1872 explains the circumstances in which a proposal or offer can be revoked. It is an important provision governing the formation of contracts because an offer does not remain open indefinitely. The section identifies four circumstances in which a proposal comes to an end.

1. Communication of Notice

A proposal may be revoked when the proposer communicates a notice of revocation to the other party. Mere intention to withdraw an offer is generally insufficient; the revocation must be communicated to the person to whom the proposal was made.

2. Lapse of Prescribed or Reasonable Time

An offer is revoked when the period specified for acceptance expires without acceptance. If no period is specified, the proposal may lapse after a reasonable period, depending upon the circumstances of the transaction.

3. Failure of a Condition Precedent

Where acceptance is subject to fulfilment of a condition precedent, failure by the acceptor to satisfy that condition can result in revocation of the proposal.

4. Death or Insanity of the Proposer

A proposal is revoked by the death or insanity of the proposer if the fact becomes known to the acceptor before acceptance. Mere death or insanity, without the acceptor having knowledge of it, does not by itself satisfy this statutory requirement.

Important Judicial Decisions

In Kuldip Gandotra v. Union of India, the Court explained that an offer could be withdrawn before communication of acceptance was complete against the proposer. The case highlights the connection between Sections 4, 5 and 6.

In Amar Industries v. Union of India, the Court considered the effect of lapse of time under Section 6(2) and observed that where an offer was subsequently accepted and a contract came into existence, the argument that the proposal had automatically lapsed was not sustainable on the facts.

In Keshav Krishna Londhe v. Adarsh Gruha Nirman Sahakari Sanstha, the Bombay High Court applied Section 6 while considering withdrawal of a plot allotment and held that revocation could not be relied upon after acceptance had resulted in a concluded contractual arrangement.

Thus, Section 6 protects certainty in contractual dealings by clearly identifying the circumstances in which an offer ceases to remain open for acceptance.