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Section 5: Revocation of proposals and acceptances

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 4 All 266 Sections of Indian Contract Act Section 6
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Proposal Sec 2(a) Contract Sec 2(h)

Legal Commentary & Landmark Judgments: Section 5

Section 5 of the Indian Contract Act, 1872 specifies the statutory time limits within which a proposer may revoke an offer and an acceptor may revoke an acceptance before contractual rights crystallize.

  • Core Legal Standard: Under Section 5, a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
  • Operational Mechanism: Correspondingly, an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
  • Statutory Rights & Obligations: This rule prevents unilateral withdrawal once legal rights have attached.

Even if an offeror undertakes to keep an offer open for a specified period, that promise is revocable at will unless supported by independent consideration (an option contract).

Key Landmark Precedents:
  • Union of India v. Bhim Sen Walaiti Ram (1969) 3 SCC 722: The Supreme Court held that in a government auction where the highest bid is subject to final confirmation by an authority, the bidder is entitled to withdraw their bid before formal acceptance is communicated, without incurring contractual liability.
  • Dickinson v. Dodds (1876) 2 Ch D 463: The English Court of Appeal ruled that an offeror's bare promise to keep an offer open for a specified time is nudum pactum and can be revoked before acceptance, provided the offeree receives notice of revocation.
Legal Commentary:

In commercial tendering and bidding, bidders frequently attempt to revoke their offers before official award letters are issued. Section 5 guarantees that until acceptance is put in transmission, an offer remains purely revocable, unless a statutory or contractual earnest money forfeiture clause explicitly binds the tenderer under administrative law.

Section 4 All 266 Sections of Indian Contract Act Section 6