Termination of an offer

Question 1

Explain termination of an offer by rejection.

Answer 1

• 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.

Question 2

What is an impact of a counter-offer?

Answer 2

• Where an offeree makes a counter-offer, the original offer is deemed to have been rejected and cannot subsequently be accepted (Hyde v Wrench (1840) 3 Beav 334).
• Where a counter-offer is accepted, its terms and not the terms of the original offer become the terms of the contract.
• Difficulties can occur as a result of counter-offers, especially if more are made by either side.

Question 3

How is a request for information different from a counter-offer?

Answer 3

• 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 instance, no counter-offer has been made and the original offer remains open for acceptance.
• Related case law is Stevenson, Jacques & Co. v McLean (1880) 5 QBD 346, where the court held that the claimant’s response to an offer was not a counter-offer but rather an enquiry which did not serve to reject the offer. Accordingly, a binding contract was made when the claimant accepted the offer.

Question 4

How does an offer terminate by lapse?

Answer 4

1. The passage of time
   * Where acceptance is not made within the period prescribed by the offeror.
   * Where no period is prescribed and acceptance is not made within a reasonable time. What is reasonable is dependent on the circumstances of the case.
2. Death of a party
   * If the offeree knows that the offeror has died the offer will lapse; if the offeree is unaware of the death of the offeror, it probably will not.
   * It seems that the death of the offeree will cause the offer to lapse and the offer cannot be accepted after the offeree’s death by the offeree’s representatives.

Question 5

How is an offer terminated by revocation?

Answer 5

• 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. It cannot be revoked after acceptance.
• Revocation of an offer is only effective 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).
• Revocation can be made by indirect communication provided clear intention to revoke the offer and notice has reached the offeree. 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).

Question 6

How are unilateral offers revoked?

Answer 6

• It is possible to revoke the offer at any time prior to the completion of the required act that constitutes acceptance of the offer (Great Northern Railway Company v Witham (1873)).
• However, it is very difficult to revoke a unilateral offer that has been made to the ‘whole world’ as there is no easy way to communicate the revocation of the offer. Moreover, in unilateral offers there is often no requirement that those embarking on performance should communicate their intention to accept the offeror (Carlill v Carbolic Smoke Ball Co (1893).

Question 7

What are the exceptions in the case of revoking unilateral offers?

Answer 7

• An exception may apply where the offeree has partly performed the obligation and is willing and able to complete – it would cause hardship to the offeree to allow the offeror to withdraw the offer in this situation. The offer may not be able to be revoked once performance has commenced.
• Key case law for this exception is 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 father sought to revoke the offer but the couple had already made several payments towards the loan. The court held that the promise could not be revoked after the couple had started to pay the instalments as long as they continued to be paid.