Termination of an Offer Flashcards
What are the 3 ways an offer can come to an end?
· Rejection
· Lapse
· Revocation
In each case, the offer loses its legal effect and becomes incapable of acceptance.
RLR
What is termination by rejection? When does it take effect?
An offer is terminated by rejection. Once an offer is rejected, it cannot then be accepted (unless the offeror makes the same offer again).
A rejection does not take effect until it is actually communicated to the offeror as only then will the offeror know that they are free from the offer.
What is a Counter Offer?
Difficulties can occur when an offer is made on the standard terms of the offeror and the purported acceptance is made on the standard terms of the offeree. If these terms are different in any way, the offeree has in fact made a counter-offer
It is sometimes said that the person who fires…
the last shot wins the battle, in the sense that the person who last asserts that their own terms and conditions should apply is likely to prevail (although if each side simply continues to assert that its own terms and conditions prevail, and the parties do not move past this, then no contract will be formed)
Where an offeree makes a counter-offer…
the original offer is deemed to have been rejected and cannot be subsequently accepted (Hyde v Wrench (1840) 3 Beav 334).
Counter offer vs request for information
if an offeree makes a counter-offer then this amounts to a rejection of the offer, after which the offer cannot be accepted.
However, if an offeree responds seeking clarification of the extent and terms of the offer, or to ascertain if the offeror would consent to changing certain ancillary aspects of the offer, then the offeree’s request may be construed as a request for further information.
In this event, since there has been no counter-offer, the original offer remains open for acceptance. Stevenson, Jacques & Co. v McLean (1880) 5 QBD 346
What is termination by lapse?
An offer may lapse and thus become incapable of acceptance:
a) by passage of time;
b) by the death of one of the parties.
PD
An offer will lapse through passage of time in the following circumstances:
a) where acceptance is not made within the period prescribed by the offeror;
b) where no period is prescribed and acceptance is not made within a reasonable time. What is reasonable will depend on the circumstances of the case.
What happens in the Death of a party?
In relation to the death of the offeror it appears that, if the offeree knows that the offeror has died, the offer will lapse; if the offeree is unaware of the offeror’s death, it probably will not.
It seems that the death of the offeree will cause the offer to lapse and so that the offer cannot be accepted after the offeree’s death by the offeree’s representatives.
What is termination by revocation?
The offeror may withdraw (i.e. revoke) their offer at any time before acceptance (Payne v Cave(1789) 3 Durn & E 148). However, once a valid acceptance has been made, the offeror is bound by the terms of their offer. An offer cannot be revoked after acceptance.
Communication is essential.
Revocation of an offer is effective only upon actual notice of it reaching the offeree. Where revocation is communicated by post it takes effect from the moment it is received by the offeree and not from the time of posting (Byrne v Van Tienhoven (1880) 5 CPD 344).
What is Indirect communication of revocation
Provided the offeror has shown, by words or conduct, a clear intention to revoke their offer and notice has reached the offeree, the revocation is effective.
The means of communication do not matter, so the revocation will be effective even if communicated by a third party (Dickinson v Dodds (1876) 2 Ch D 463).
There is a danger arising from this rule: if the offeree receives notice of revocation from a third party, how do they know that the information from the third party is reliable?
What is Revocation of a unilateral offer
In relation to unilateral contracts, acceptance is perceived as the complete performance of the act(s) required by the terms of the unilateral offer.
Consequently, it remains possible to revoke the offer at any time prior to the completion of the required act (Great Northern Railway Company v Witham(1873)).
However, an exception to this rule may apply where the offeree has partly performed the obligation and is willing and able to complete - it would undoubtedly cause hardship to the offeree to allow the offeror to withdraw the offer in this situation.
In these circumstances the offeror may be under an implied obligation not to revoke the offer once performance has commenced. The offeree’s acceptance and consideration for this implied promise is starting to perform the required act.
In Errington v Errington & Woods [1952] 1 KB 290 a father agreed to give his house to his son and daughter-in-law if they paid off the mortgage on the house.
The act required of the couple was therefore paying off a building society mortgage loan. The couple had made several payments towards paying of the loan when the father sought to revoke the offer.
The court held that the promise could not be revoked after the couple had started to pay the instalments and as long as they continued to be paid.
Communication of revocation in unilateral contracts made to the whole world
It has been stated that a unilateral offer can be made to the ‘whole world’ and that there is no requirement that those embarking on performance should communicate their intention to accept to the offeror: Carlill v Carbolic Smoke Ball Co (1893).
Consequently, where such an offer has been made, the offeror may well have no knowledge of who or, indeed, how many, potential offerees may be responding to the offer.
In such circumstances, communication of revocation is almost impossible and it seems likely that revocation will be effective if the offeror takes reasonable steps to bring the revocation to the attention of all those who may have read the offer.
