Termination of Offer Flashcards
Termination of an offer requires what first?
A valid legal offer has been made and communicated.
Can you accept a valid offer that has been terminated?
No, if it has been properly terminated.
There would thus be no meeting of the minds.
Can you terminate an offer that has been already accepted?
No.
Can the inquiry into price be considered a counter-offer?
-It is an inquiry as long as you ask for flexibility of the price of an offer without suggesting a different actual number.
What are the 3 ways to terminate an offer?
Revocation, rejection, lapse of time/expiration.
Dickinson v. Dodds (1876), 2 Ch. D. 463 (C.A.)
(Termination of Offer Through Implied Revocation)
Issues:
- When can an offer be terminated/revoked?
- What is the effect on a promise not to revoke, when you revoke an offer anyway?
- If an offer has been made for the sale of property, and before that offer is accepted, the person who has made the offer enters into a binding agreement to sell the property to somebody else, and the person to whom the offer was first made receives notice in some way that the property has been sold to another person, can he after that make a binding contract by the acceptance of the offer?
- 1) Is the seller obligated to keep the offer open for the amount of time he said he would?
- 2) Can the purchaser accept an offer when he knows the seller already sold it?
Rules:
- Once you know a contract has been made with someone else, you cannot argue your acceptance to form the contract/sale with the offeree.
- The offeror can revoke his offer any time before acceptance, as long as the revocation is valid. (communicated to offeree prior to their acceptance).
- Acting in any objective way inconsistent with an open offer can be implicit communication to the offeree.
- Can be either implicitly communicated through selling to someone else or directly in telling the offeree.
- If you no longer have something to offer/sell then there is implicit communication.
- If offeree learned about the offeror’s revocation indirectly or directly prior to his acceptance, he cannot accept.
- A gratuitous promise not to revoke can be revoked (non-binding).
- When you promise not to revoke your offer, the offeree is not committing anything back, so there isn’t really 2 parties bound to each other.
- If the offeree gave $ for the offeror not revoking the offer, there would be a binding contract not to revoke.
Conclusion:
- The seller was not obliged to keep the offer open, and the purchaser cannot accept an offer that he knows was already sold to someone else.
Byrne v. Van Tienhoven (1880), 5 C.P.D 344
(Revocation of Offer Must be Communicated (Mail))
Issues:
- Whether a withdrawal of an offer has any effect until it is communicated to the person to whom the offer has been sent to?
- Is the date of revocation when you mail a letter or when the party receives it?
Rules:
- There can be no offer and no contract if the offer has been terminated before acceptance, since there is no consent (simultaneous agreement of minds) from both parties, however, there was acceptance in this case before the communication of termination.
- A termination/revocation/withdrawal of an offer must be done with valid communication before acceptance whether explicitly or implicitly.
- The Offeree accepting an offer not known to him to have been revoked, shall be safe to act upon the footing that the offer and acceptance constitutes a binding contract.
- Unlike acceptance which is to occur when letter is sent, revocation is when letter arrives otherwise this would be hugely inconvenient and slow down business.
Analysis:
- Revocation of offer from D was inoperative since P had already accepted through immediate telegram and sent a subsequent letter of acceptance to D for confirmation.
- P had no idea otherwise that the offer made by D would ever be revoked after they had already accepted it. They could be waiting for years for it to be terminated.
- A binding contract was made as of the 11th when P immediately accepted the offer via telegram and then later confirming through letter on the 15th.
Conclusion:
- Cannot revoke a legally binding contract that has been already accepted.
- Revocation was not effective.
Errington v. Errington And Woods [1952] 1 K.B. 290, [1952] 1 All E.R. 149 (CA)
(Termination of Offer - Part Performance)
Issues:
- Is there a contract?
- Can you revoke a unilateral contract?
Rules:
- Once a party enters upon part performance of a unilateral contract, that prevents the offeror from revoking for a reasonable time in order to allow the offeree to complete the act.
- As long as the offerees are performing reasonably, then you must give the offeree a chance to complete
- If P fails to pay the instalments then D could revoke/terminate the offer/promise of giving the house since there would be no acceptance, and you can revoke an offer any time before acceptance.
- Once a party enters into the performance of an act in a unilateral contract, the offeror is suspended from revoking his offer. Offeror has to give the offeree a reasonable amount of time to complete the act in acceptance.
-As long as P completes the action of instalment payments, D cannot revoke/terminate the offer (unilateral contract).
Analysis:
- D’s contract with P was unilateral, as the action of paying instalments would satisfy the promise from D to give them the house later.
- P never bound themselves into paying for the instalments to the building society security, this was D’s legal responsibility, however, D could revoke/terminate his promise (offer) if the actions (acceptance) of P were not fulfilled in making instalment payments.
- D’s contract with P was unilateral, as the action of paying instalments would satisfy the promise from D to give them the house later.
- D told Errington and Woods that he would hand them the house once he would retire (explicit), but implicitly implied that they would need to pay the instalments in the mean time to stay in possession in the mean time.
Conclusion:
- P gets to maintain possession as long as they continue their action of paying instalments.
Dawson v. Helicopter Exploration Co. [1955] S.C.R. 868, [1955] 5 D.L.R. 404
(Bilateral Relationship Matters)
Issues:
- Can the mining company revoke his contract and not pay profits to Dawson?
- Can you revoke an offer in a bilateral contract?
Rules:
- An implied promise from correspondence in a bilateral contract counts as acceptance to an offer prior to revocation.
- There is not a unilateral contract, there is actually a bilateral contract through the exchange of promises.
- Mining company promises Dawson money if Dawson promises to take mining company to the site.
- A unilateral contract can be changed to a bilateral one if you change when acceptance has occurred before revocation through an exchange of promises, rather than performance obligations.
- Courts will fix the date of acceptance earlier than revocation in order to avoid revocations in circumstances that are instinct with obligation from both parties.
- The exchange of letters (evidence) clearly showed a sense of mutual undertaking. It would not be fair to avoid giving legal obligation to this instinct/intention.
Analysis:
- It was implied that the mining company would participate in the promise in awarding Dawson 10% of profits and the answer to the proposal would be either a refusal or a promise on the part of Dawson to participate in giving the tour (bilateral contract).
- Mining company’s letter from March 5th was an offer and promise in request of Dawson for a “definite arrangement”. Dawson’s letter from April 12th constitutes an acceptance of the offer as long as he promised to perform his part of the deal.
- Mining company cannot revoke the contract since D has already accepted.
- Mining company’s lack of response to Dawson not willing to survey the area shows termination/abandonment of the contract.
-There is the intention of both parties to close a business deal on the strength that they will plan the details later on through their promises (bilateral contract).
-The offer from the mining company was contemplated by Dawson on a performance subject to the condition that a pilot could be obtained by the company.
-With the company’s duty of obtaining a pilot, he was also obligated to take Dawson on the survey. Not only did he not do so but he took others which was a constitutional breach of the contract.
-A promise may be lacking from one party, but the whole writing may be “instinct with an obligation” which the courts will regard as supplying the necessary reciprocal promise.
- Characterised as a bilateral rather than unilateral contract because the mining company had promised 10% of profits for Dawson to show them the area and Dawson implied promise when he wrote back
- The point of the promise was not the performance of the act of taking them there but when he promised to take them up – matters because was made prior to the revocation so revocation wasn’t effective
Conclusion:
- Revocation not allowed, Dawson had accepted this bilateral contract before revocation could occur.
Livingstone v. Evans [1925] 3 W.W.R. 453, [1925] 4 D.L.R 769 (Alta. S.C.)
(Counter-Offer = Rejection)
Issues:
- Was P’s offer a direct rejection of D’s offer, or was P making a counter-offer?
Rules:
- Once an offer is rejected it cannot be accepted until the offeror gives consent to revive the original offer.
- Making a counter-offer is in essence the rejection of an original offer.
- An inquiry into an offer is not a rejection of an offer since it is not the same as a counter-offer.
Any changes to an essential term of the contract will be a new proposal, which is treated as a counter offer, and therefore, a rejection of the original offer, which terminates the original offer.
Analysis:
- “I will give you $1,600 cash. If you won’t take that wire your lowest cash price” is a counter-offer and then dependent on D whether or not to accept P’s counter-offer.
- D saying “can’t reduce any further” is a rejection of P’s counter-offer and a renewal of D’s original offer of $1,800 saying it still stands for acceptance if D chooses to revive it.
- There was a binding contract once between D and P, if P is ok with accepting D’s original offer.
Conclusion:
- Yes, Livingstone response was a counteroffer, but it was revived by Evans so binding contract.
Barrick v. Clark [1951] S.C.R. 177, [1950] 4 D.L.R. 529
(Lapse of Time/Expiration)
Issues:
- What is a reasonable time to accept an offer?
- Can offers expire?
Rules:
- An offer stays open until the specified time stated within the offer, if there is no specific date, then it will be open for a “reasonable amount of time” which is determined by intent assessed through reasonable objective person.
- Assessed on the following factors:
* Evidence of intent in the language used: for example, a sense of urgency
* Overall contextual factors of the deal: in this case closing date vs. date offer made
* Commercial market of thing being sold: market volatility and perishability of goods.
Analysis:
- There was an implied revocation of offer from Barrick, but it never was fully communicated to Clark.
-Therefore, there was no revocation and Clark is allowed to communicate acceptance, however, Clark did not accept Barrick’s offer within a reasonable time.
- Indications of reasonable time: there were other offers for the land, the offeror wanted to sell it as fast as possible, the closing date suggested was January 1st and the deal on December 10th would have been too short of a time frame.
- “could be close immediately” – indicated there should be no delay in acceptance
- Asked to get answer immediately
- The request from the wife has no effect – the offeror determines how long to keep it open.
- Barrick could not argue he revoked offer to Clark because was not communicated – contrast to Dickinson v Dodds.
Conclusion:
- Clark’s acceptance was not valid, offer expired.
Manchester Diocesan Council of Education v. Commercial & General Investments Ltd. [1969), [1970] 1 W.L.R 241 (Eng. Ch. Div.)
(Lapse of Time)
Rules:
1. By implication the offer is made on terms that, if it is not accepted within a reasonable time, it must be treated as withdrawn.
-What is considered to be reasonable depends on the circumstances and negotiation of the parties.
- If the offeree does not accept within a reasonable time, he must be treated as having rejected it.
-This is in order to be fair to both parties.
