Acceptance of an Offer Without Knowledge

I would like to critically examine and assert that the landmark judgement in Lalman Shukla vs Gauri Dutt 1913 11 ALJ 489 is obsolete and requires a revision. This is pertaining to the Indian Contract Act, 1872 (hereinafter referred to as “the act”). The ratio is that There cannot be acceptance of a proposal which has not come to the knowledge of the offeree.

The facts of the case are as follows:

• In January last the nephew of the defendant absconded from home and no trace of him was found. The defendant sent his servants to different places in search of the boy and among them was the plaintiff who was the munim of his firm. He was sent to Hardwar and money was given to him for his railway fare and other expenses. After this the defendant issued handbills offering a reward of Rs. 150 to any one who might find out the boy. The plaintiff traced the boy to Rishikesh and found him there. He wired to the defendant who went to Hardwar and brought the boy back to Cawnpore.

• He gave to the plaintiff a reward of two sovereigns and afterwards on his return to Cawnpore gave Rs. 20 more. The plaintiff did not ask for any further payment and continued in the defendant’s service for about six months when he was dismissed. He then brought this suit, out of which this application arises, claiming Rs. 499 out of the amount of the reward offered by the defendant under the handbills issued by him. The record shows that the handbills were issued subsequently to the plaintiff’s departure for Hardwar. It appears, however, that some of the handbills were sent to him there.

• The court below having dismissed the claim and an application for revision has been made by the plaintiff and it is claimed on his behalf that as he traced out the boy he is entitled to the reward offered by the defendant.

• The defendant contends that the claim can only be maintained on the basis of a contract, that there must have been an acceptance of the offer and an assent to it, that there was no contract between the parties in this case and that in any case the plaintiff was already under an obligation to do what he did and was, therefore, not entitled to recover. On the other hand, it is contended on behalf of the plaintiff, that a privity of contract was unnecessary and neither motive nor knowledge was essential. In any opinion a suit like the present one can only be founded on a contract. In order to constitute a contract there must be an acceptance of the offer and there can be no acceptance unless there is knowledge of the offer.

• Motive is not essential but knowledge and intention are. In the case of a public advertisement offering a reward, the performance of the act raises an inference of acceptance. This is manifest from S. 8 of the Contract Act, which provides that “Performance of the conditions of a proposal is an acceptance of the proposal.”

• In the present case the claim cannot be regarded as one on the basis of a contract. The plaintiff was in the service of the defendant. As such servant he was sent to search for the missing boy. It is true that it was not within the ordinary scope of his duties as a munim to search for a missing relative of his master but he agreed to go to Hardwar in search of the boy and he undertook that particular duty. Being under that obligation, which he had incurred before the reward in question was offered, he cannot, claim the reward. There was already a subsisting obligation and therefore, the performance of the act cannot be regarded as a consideration for the defendant’s promise. The application was dismissed.

Now, I would like to bring out a few points which should have merit consideration but were obviously ignored by the Plaintiff:

1. Were the handbills distributed in such a manner that only the persons they were distributed to would be able to claim the reward ? If no, then we have a standing offer on our hands and according to Carlil vs Carbolic Smoke Ball Co 1892 EEWCA Civ 1 a standing offer requires no means of communication of acceptance if the method of acceptance is so prescribed. Also, in Brogden v Metropolitan Ry Co[5], Lord Blackburn held that if notice of acceptance is required, the person who makes the offer gets the notice of acceptance contemporaneously with his notice of the performance of the condition. This is also reflected clearly in Section 8 of the act which says that performance of the terms of the proposal is acceptance.

1. Justice Lindley had pronounced in Carlil vs Carbolic Smoke Ball Co 1892 EEWCA Civ 1 :

“Supposing that the performance of the conditions is an acceptance of the offer, that acceptance ought to have been notified.” Unquestionably, as a general proposition, when an offer is made, it is necessary in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified. But is that so in cases of this kind? I apprehend that they are an exception to that rule, or, if not an exception, they are open to the observation that the notification of the acceptance need not precede the performance. This offer is a continuing offer. It was never revoked, and if notice of acceptance is required — which I doubt very much, for I rather think the true view is that which was expressed and explained by Lord Blackburn in the case of - if notice of acceptance is required, the person who makes the offer gets the notice of acceptance contemporaneously with his notice of the performance of the condition. If he gets notice of the acceptance before his offer is revoked, that in principle is all you want. I, however, think that the true view, in a case of this kind, is that the person who makes the offer shews by his language and from the nature of the transaction that he does not expect and does not require notice of the acceptance apart from notice of the performance.”

1. As per Section 9 of the act, the acceptance of a proposal can be done in ways other than words which would render it as implied acceptance. This too can be read in conformity with the Plaintiffs claim by stating that his act of finding the boy would be an implied acceptance of a standing offer. This to me, seems valid.

I would like to sum up by saying that the ratio in Lalman Shukla vs Gauri Dutt 1913 11 ALJ 489 can only apply when there is no standing offer which, in the said case there was. So, in my humble view, the said judgement needs revision.