Termination of Offer in Contract

Termination of Offer in Contract

TERMINATION OF OFFER

1. By Revocation

An offer may be revoked any time before acceptance. The revocation of an offer before acceptance involves no liability on the part of the offeror even though he promises to keep the offer open for a specific period of time and nevertheless revokes the offer before the expiration of that period of time because such promise is not supported by any consideration from the offereee.

Thus, in (Routledge v. Grant) the defendant wrote to the plaintiff offering to purchase the lease of his house, “with a definite answer to be given within 6 weeks.’’ He however changed his mind about the purchase and wrote to the plaintiff once again that he has withdrawn the offer. After receiving the second letter (which has revoked the offer), the plaintiff purport to accept the defendant’s offer.

The court held that the first letter did not bind the defendant to keep the offer open for a full 6 weeks, and as such it had been validly withdrawn by the defendant, and the plaintiff’s purported acceptance was ineffective.

However, it would have been a different case if the promise to keep the offer open had been met by some consideration moving from the offeree, i.e. on the above case, had it been the plaintiff had finished consideration to the offeror to have him keep the offer open for the stipulated time, the offeror cannot validly revoke the offer before the expiration of that period.

Thus, in (Mountfond v Scott), the defendant granted the plaintiff an offeror to purchase his house within the period of 6 months. Mountford then gave 1 Pounds as consideration for the offer to be left for the 6 months.
Scott then purported to withdraw the offer before the expiration of the 6 months. The court held that other withdrawal or revocation was void and invalid.

Also, the revocation of offer must be brought to the notice of the offeree before he accepts the offer. A revocation of offer that was done subsequent to the communication of acceptance would be invalid.

The communication of revocation can also be carried out by a third party whether with the knowledge of the offeror or not. i.e, where the offeree finds out about the withdrawal of the offer from a reliable fluid party, the revocation is effective and the offeree can no longer claim to accept the offer.

In (Dickinson v Dodds) the defendant offered to sell some houses to the plaintiff, giving two days in which to accept. A day later someone told the plaintiff that the defendant was negotiating to sell the housed to a third party. Shortly after that, the plaintiff purported to accept the offer.

However, the defendant had already sold the houses to the third party before the plaintiff’s acceptance.
The court held that the offer had been effectively revoked before any acceptance by the offeree. And that a communication by a friend or other party that an offer had been withdrawn was valid and would be treated as if it came from the person themselves.

However, the revocation of unilateral contracts raises peculiar problems. It has been said that in unilateral contracts, the acceptance takes the form of performance.

Thus, acceptance is not complete until the offeree completes performance. If this is followed to its logical conclusion, it means that even though the offeree has commercial performance, the offeror can revoke the offer any time before its completion.

As against this logical conclusion, it has been held that once performance commences, acceptance is taken to have been made and although the offeree is not entitled to the reward until he completes the performance, the offeror no longer has power to revoke.

In (Errington v Errington), a father bought a house for his son and daughter to live or (on a mortgage arrangement). He paid 250 euros in cash and borrowed 500 euros from a building society on the security of the house, the loan being repayable with interest by installments a week. The house was in the father’s name and he was responsible to the building society for the payment of the installments. He told his daughter in law and son that if they repaid the loan, the house would be theirs.

They accordingly commenced payment of the installments, and a substantial part of the loan had been thus repaid before the father died. After his death, his widow purported to revoke the father’s promise and revert the house to the father’s estate. It was held that the father’s promise was a unilateral contract and therefore the widow could not revoke, since the father could not have revoked were he to be alive.

2. By Lapse of Time

An offer may be terminated if there is no acceptance after an appropriate lapse of time. Where the offeror states that the offer is open for a specific period of time then the offer will be terminated after the passage of that period of time.

Where no particular period was stated, an offer would still lapse after the expiration of a reasonable period of time; what is reasonable would be determined by the nature, subject matter, and the peculiar circumstances of the offer in each case.

Thus in (Ramsgate victoria Hotel v. Montefoire) the defendant offered to buy shares in the plaintiff’s company at a certain price and he paid a deposit to his bank account to beg them on June. He did not hear anything until November when the offer was accepted by the plaintiff. By this time, the value of shares has fallen and the defendant was no longer interested.

The court held that the offer was no longer open as due to the nature of the subject matter of the contract. The offer lapse over a reasonable period of time.

3. BY DEATH OF THE OFFEROR OR OFFEREE

Where the offeree has noticed of the death of an offeror before acceptance, he cannot validly accept the offer.
Where the offeree accepts without notice of the offerer’s death whether the acceptance will lead to a contract depends on the nature of the contact itself. If the contract is such that can be performed from the offerer’s estate, the offer will not lapse.

Thus in (Bradbury v Morgan), Jim Leigh wrote, requesting the plaintiff to give credit to his brother promising to guarantee the repayment of the credit peradventure there is any default. After Leigh died the plaintiffs, who were ignorant of his death continued to give credit to his brother.

The executions of Leigh’s estate refused to repay any debts resulting from credits given to the deceased brother.
The court held that since this was not a contract requiring personal performance from Leigh, it could be performed from his estate.

With regard to the death of the offeree on the other hand, an offer lapses if the offeree dies before he accounts it.

4. REJECTION

An offeree might reject an offer made to him by the offeror.
A rejection has no effect unless it is actually communicated to the offeror. A counter offer also operates as a rejection of the initial offer.

 

Contributor: Adedokun Samuel

Leave a comment

%d bloggers like this: