Communication! The most important essence of human life. Man is a social
animal, and imagining life without communicating with people, seems impossible.
If we are asked to imagine a life, where no one communicates with anyone.
Everyone would unanimously say that such imagination may feel good in a poet's
world, but these things don't work in real life.
I got reminded of a very beautiful Sanskrit shloka which read,
vachane kā daridratā,
which when translated to English literally says that one should not act as a
poor when speaking or rather communicating...
This is the importance that communication holds in our lives. An equal amount of
importance, communication holds, in the law of contracts.
The interpretation clause of the Indian Contract Act starts with the word saying
that when one signifies his willingness to do or abstain..
If someone asks me what is the one thing without which formation of a contract
is not possible, I personally say it is communication.
One may have the willingness, to do a task with another party; he may also be
competent to do it; the task is not one barred by law, but how will this
willingness be fulfilled, until and unless you signify it to the other party.
It is communication, which is the foundation of a contract. To prove this, I've
another example. We all know that consensus ad idem is required for an agreement
to take shape, how does this meeting of minds take place, it takes place only
when there is no gap in communication. If there is no communication or
miscommunication that happens then consensus ad idem cannot be established at
In the coming pages of the report communication, its importance and legal
consequences have been dealt with by far and wide.
It is hoped that this report will be light by you, the reader!
Effective communication with regards to the offer and its acceptance and clear
understanding of it is really essential to constitute a valid contract and avoid
any kind of misunderstanding and misconception. It's due to lack of
communication that many contracts fail, and people have to face legal
consequences. In order to remain unaffected by this, one needs to communicate
the terms of the contract well.
The section 3 of the Indian contract act says:
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
An offer can be communicated by any means to the offeree. The fact of such
communication should signify to the offeree, the offerors willingness to do or
abstain from doing a particular task. It can be spoken, face to face, over call,
by a letter or even by conduct. But there should be a communication that is
happening. No Communication = No contract.
Section 4 of Indian contract act says:
The communication of a proposal is complete when it comes to the knowledge of
the person to whom it is made.
It is very obvious that no acceptance of the offer can happen when the acceptor
does not even know about it; this was held in the case of Lalman Shukla vs Gauri
In this case the defendant's nephew went missing. His servant went to search for
the kid. After the servant had left, the defendant publicly announced, that he
will reward Rs.501, to anyone who finds his nephew. The servant got aware of the
offer after he had found the kid out. After knowing about the offer, he claimed
his reward, but the defendant denied to give the reward, on grounds that the
servant did not have the knowledge of the offer when it is made. Rather he came
to know about it, after he had found the child. The servantís intention was to
find the child and not claim monetary reward.
The Allahabad High court held that there was no contract that took place between
the parties, because the plaintiff did not have the knowledge of the offer and
no acceptance can occur before the knowledge of the offer.
This Lalman Shukla and Gauri Dutt case
signifies that communication the
complete communication is a necessity to constitute a valid contract if not as a
consequence the damages or rewards toward the plaintiff is declined which is
made in respect to the offer.
Importance of communication:
In the case of Felthouse vs Bindley,
The plaintiff, Felthouse had a talk with his nephew of buying horse, which his
nephew had. He replied to his nephew that if he did not hear from the nephew, he
would own the horse. The nephew was busy auctioning his other items. He had told
the auctioneer Mr Bindley not to auction the horse. Mr Bindley auctioned the
horse by mistake. Felthouse sued Bindley for a tort of conversion. The court
held that a contract between the plaintiff and his nephew did not arise as,
there was no acceptance of the offer from the nephewsí side. The court said,
acceptance of the offer needs to be communicated clearly in order to constitutes
This English case is a landmark case, which clears out the importance of
communication to form a contract. Without proper communication, no contract
comes into existence.
Communication of acceptance by the way of conduct.
As per section 8 of the Indian Contract Act:
Performance of the conditions of a proposal or the acceptance of any
consideration for a reciprocal promise which may be offered with a proposal is
an acceptance of the proposal
Words are not the only medium of expression to convey as clearly as words, a
promise or an ascent to a proposed promise.
Communication of acceptance of an offer is also deemed to be complete by the
conduct of the offeree in direction of the offer such acceptance is called an
This was held in a landmark case of Carlill vs carbolic smoke ball
In this case, the defendant had advertised of a medicine called carbolic
. This advertisement claimed, that the said medicine is a
preventive medicine for the disease called influenza. It also claimed that any
one upon taking the medicine, caught influenza, will be awarded a reward of a
100 £. The said amount was also deposited with Alliance Bank, for the payment of
the reward. The plaintiff took the medicine as directed, but still caught
influenza. She claimed her award from the company, to which the company denied
stating that, there was no communication of the acceptance of the offer received
by the company.
The court held that this was a general offer to the public at large and this
offer became a contract when the plaintiff performed the required conditions and
the court granted the plaintiff the due rewards.
Offer and acceptance by a party can be spelt out from conduct of the parties
which covers not only their acts but also omissions
This case states that even if the plaintiff by her conduct intends to create
that contract. Her conduct in the direction of the offer will be equivalent to
the communication of the acceptance.
Communication must be done by the parties or the agent of the parties.
For an offer to stand valid it must be communicated by the party or the agency
of the party communication received the given to a third party is not recognised
as communication and does not amount to formation of a contract as per the
Indian contract act this was held in the case of Powell vs Lee
in this case the plaintiff had applied for a job and a manager that finalize
disappointment one person who had no authority communicated to the plaintiff
about his appointment but soon the managers decided to appoint someone else in
place of the plaintiff. the plaintiff brought a suit to action for a breach of
the contract. It was held by the court that, there was no authorised, official
communication received due to which the contract was never constituted.This
tells us that communication is an important essence, not only communication but
how the communication happened by whom did it happen also plays a crucial role
in the formation of a contract.
Offer of rendering services must be communicated
The offer of rendering services must be communicated to the receiver, if a
service is without the knowledge of the receiver, there remains no chance to ask
for the monetary remuneration of the said services.
For example, I, clean your terrace without asking about it to you or rather
without telling it you, and then show up at your house, saying, Iíve cleaned
your terrace, pay me Rs.500. Your answer would be why did you clean it? Did I
ask you to do so? So how can I help it?
This tells that any service before being rendered, should me communicated to the
receiver, only then a valid contract is constituted.
This was held in the case of Tailor v. Laird
Taylor was rendering his services in Lairds as the captain of the vessel. When
the vessel was returning from a foreign port, back home, he himself left his job
as a captain and started to work as any other crew member, but also helped the
ship to come back home. This change of position was not informed to the
defendant. And when they returned back home, tailor asked for the remuneration,
to get the ship back home.
The court held that he cannot recover his remuneration, because Laird was
unaware and had no option to accept or refuse the offer. Because, Tailorís offer
was not communicated, it did not result into a contract and tailor got no
This case tell that even when we are rendering our services, it does not bind
the receiver of the service to remunerate us, if the service so rendered was not
accepted by the receiver.
One cleans anotherís shoes; what can the other do but put them on? Is that
evidence of a contract to pay for the cleaning?.
In some cases, the services rendered are necessity and the need of the hour, one
may restitute for the said service voluntarily, but there is no contractual
From case laws and examples explained above in light of the Indian Contract Act,
1872, it is crystal clear that, without communication, no contract is formed
and, if so happens, the parties to the contract have to face legal consequences.
Before making any contract, consensus ad idem is necessary to be established and
that is done through effective communication only!!
- Lalman Shukla vs. Gauri Dutt, 1913 40 All LJ 489
- Felthouse v Bindley (1862) EWHC CP J 35
- Restatement, Contracts, American Law institute, S. 21.
- Carlill v Carbolic Smoke Ball Co,  EWCA Civ 1,  1 QB 256
- Coffee board v CCT, (1988) 3 SCC 263: AIR 1988 SC 1487
- Taylor v Laird (1856) 25 LJ Ex 329