Q.
Ali (seller) and Zamri (buyer) came to the conclusion of property transaction, with Zamri having to pay the RM5,000 within 7 days. Zamri eventually turn away from the deal. How should the communication of revocation of proposal be done?
A.
Similar question was asked in MIA QE 2011/9 Q3.
Contract Act, 1950 Section 4 - Communication, when complete - has specific subsections on this. Section 6 - Revocation how made is another section specific for this issue.
S.4(3) The communication of a revocation is complete-
(a) 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; and
(b) as against the person to whom it is made, when it comes to his knowledge.
[In the above case of Ali and Zamri, Ali is proposer, and Zamri is acceptor.
Revocation as complete against Ali (proposer) when Ali choose to revoke his proposal when he call Zamri to cancel his proposal. Of course, in this manner, a promise is a promise, and cannot be turned away if there is consideration received before 7 days lapses. See Goldsborough Mort & Co Ltd v Quinn (1910). However, if Zamri did not pay the deposit, Ali can still revoke his offer. This revocation is complete against Ali when he called Zamri to inform him of the change.
Revocation as complete against Zamri (acceptor) when Zamri despatch his communication to Ali. So, although Zamri has paid the deposit by transferring the money to Ali's Maybank A/C, he can still call Ali to inform of his change of mind. Whatever money paid is to be returned to Zamri as this revocation is in fact, valid.
Unless it is Ali who called, not Zamri. This means Ali calls Zamri to inform him that he has received the money as completing the acceptance. Zamri cannot turn away with revocation at this stage. If it was Zamri who called immediately before Ali, Zamri can still revoke the acceptance making the claim for the money deposited.]
Revocation how made
6. A proposal is revoked—
(a) by the communication of notice of revocation by the proposer to the other party;
(b) by the lapse of the time prescribed in the proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;
(c) by the failure of the acceptor to fulfil a condition precedent to acceptance; or
(d) by the death or mental disorder of the proposer, if the fact of his death or mental disorder comes to the knowledge of the acceptor before acceptance
[Here, there are a few important points:
- Revocation needs to be told
- Time period lapsed
- Failure of certain conduct
- Death of proposer
- Insanity of proposer
And, when is the proposal considered complete with acceptance? Time is the essence of revocation. If it is already a contract, then it cannot be revoked. It becomes frustrated or breached.
Therefore, revocation must happen before a proposal becomes a promise, ie before it is accepted. This is specified in S.5(1) CA50.]
Revocation of proposals and acceptances
5. (1) A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
(2) An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
ILLUSTRATION
A proposes, by a letter sent by post, to sell his house to B.
B accepts the proposal by a letter sent by post.
B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards.
Ref:Section 4, 5 & 6 of Contracts Act, 1950.
[X] Own account.