When communication is said to be completed?
1. The communication of acceptance is complete as against the proposer, when it is put in the course of transmission to him so as to be out of power of the acceptor.
2. Against the acceptor – When it comes to the knowledge of proposer.
‘A’ proposes by letter, to sell a house to ‘B’ at a certain price.
B accepts A’s proposal by letter sent by post.
The communication of acceptance is complete as against ‘A’, when the letter is posted, as against ‘B’ when the letter is received by ‘A’.
Thus when a letter of acceptance is posted, proposer becomes bound, but acceptor will be bound only when the letter is received by the proposer.
Complete contract arises on date when the letter of acceptance is posted and contract is deemed to have been made at the place where the letter of acceptance is posted.
Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas AIR 1966
In this case, Hon’ble Supreme Court made clear the confusion about the completion of contract by telephone or telex.
Majority of judges held that the communication on telephone or telex is like an exception of section 4 and held where a contract is made by telephone, the contract is complete only when acceptance is received by offer.
The contract is made at a place where acceptance is received, it means at the place of offerer.