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Two traders in different cities negotiate by telephone, and the offeree accepts the offer during the call. When is the acceptance communicated, so that the contract is concluded?

Question and options

Two traders in different cities negotiate by telephone, and the offeree accepts the offer during the call. When is the acceptance communicated, so that the contract is concluded?

  1. When the offeror hears the acceptance

  2. When the acceptance is put in course of transmission

  3. When the offeree speaks the acceptance

  4. When the offeree confirms the acceptance in writing

Answer and explanation

Correct answer: A - When the offeror hears the acceptance

In Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas (1966), the Supreme Court held that telephone communication is instantaneous, so acceptance is complete only when the offeror hears it, and the contract is made where it is heard. The postal rule in section 4 of the Indian Contract Act, 1872, under which acceptance is complete against the proposer once put in course of transmission, does not extend to telephone conversations. Merely speaking the words is not enough if they do not reach the offeror.

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