Termination of offers

Question 1

Termination of offers

Answer 1

Offers may cease to exist in a number of ways. Acceptance and express rejection are straightforward situations. If an offer is accepted then a contract is formed (provided that the other elements of the contract – intention to create legal relations and consideration –are present). The offer may simply be refused (in which case there is no contract)

Question 2

revocation

Answer 2

Revocation is an annulment or cancellation of a statement or agreement. In the context of contracts, revocation may refer to the offeror canceling an offer

Question 3

Bilateral contracts(Revocation)

Answer 3

In Payne v Cave , it was first established that it is possible to revoke an offer at any time before
the offer is accepted since no legal obligation exists until this event occurs.

Question 4

Bilateral contracts(Revocation)Routledge v Grant (1828

Answer 4

Routledge v Grant (1828)4 Bing 653, it was held that where a defendant made an offer to purchase the plaintiff’s house and gave him six weeks to accept the
offer, he was free to revoke and withdraw his offer before the six weeks had passed.

Question 5

Effectiveness of revocation

Answer 5

In order for the revocation to be effective, notice of the withdrawal of the offer must be
communicated to the offeree. It should be noted that the postal rule as seen in the context
of acceptance has no application here.

Question 6

Byrne v Van Tienhoven (1880)

Answer 6

On 1 October, a letter offering to sell tinplates was posted from Van Tienhoven in Cardiff
to Byrne in New York.
On 8 October, the offerors changed their minds and posted a letter of revocation
withdrawing the offer made by letter on 1 October.
On 11 October, Byrne received the letter offering to sell (from 1 October) and accepted by
telegram.
On 15 October, Byrne confirmed the acceptance (from 11 October) by letter.
On 20 October, Byrne received the letter of 8 October withdrawing the offer.
Legal principle
The offer of 1 October had not been withdrawn at the time that it was accepted and
therefore the contract was formed on acceptance on 11 October. This was so despite the
lack of agreement between the parties.

Question 7

Revocation by third party

Answer 7

Although any revocation of an offer must be communicated, it does not always have to be
communicated by the offeror themselves. Revocation made by a third party is valid provided that:
■ the third party is a reliable source of information; and
■ the third party is one on whom both parties can rely

Question 8

(Dickinson v Dodds

Answer 8

he defendant offered to sell his house to the claimant and promised to keep the offer open until Friday. On the Thursday the defendant accepted an offer from a third party to purchase the house. The defendant then asked a friend to tell the claimant that the offer was withdrawn. On hearing the news, the claimant went round to the claimant’s house first thing Friday morning purporting to accept the offer. He then brought an action seeking specific performance of the contract Held: The offer had been effectively revoked. Therefore no contract existed between the parties. There was no obligation to keep the offer open until Friday since the claimant had provided no consideration in exchange for the promise.

Question 9

Revocation and unilateral contract

Answer 9

If the offeree has started performance of the act specified in a unilateral offer then it may not
be revoked, even if the act is incomplete.

Question 10

Errington v Errington & Woods(Revocation and unilateral contract )

Answer 10

A father bought a house with a mortgage for his son and daughter-in-law to live in. He
promised that he would transfer legal title to the property to them if they paid off all the
mortgage repayments. The couple did not make any promise in return. The father died
after some repayments had been made. Other family members claimed possession of the
house, title to which remained in the name of the father. Their claim failed.Legal principle
The contract was a unilateral contract, since it involved an act (payment of the mortgage)
in return for a promise (to transfer the house once all the payments had been made).
Once performance had commenced (by the mortgage repayments being made) then
the father’s promise could not be revoked. However, Lord Denning also stated that the
promise would not be binding if the act was left incomplete and unperformed. Therefore,
as long as the couple continued to make all the mortgage payments until it was fully paid
off then the father’s promise to transfer the house to them would still be binding.

Question 11

Lapse of time

Answer 11

An offer may not stay open for ever. An offer may state that it is to terminate on a particular
date or after a certain fixed period, after which it is no longer capable of acceptance.
Alternatively, where there is no particular date specified for the offer to terminate, then it will
in any case lapse after a reasonable time has passed.

Question 12

Ramsgate Victoria Hotel Co Ltd v Montefiore (1866)

Answer 12

The claimant had offered to buy shares in the hotel company in June, but the company
did not issue the shares for sale until November.The court held that an offer would lapse after a ‘reasonable time’. What is reasonable
would depend on the offer and the subject matter of the contract. In cases where the
value of the subject matter of the contract could fluctuate rapidly (like the shares in
this particular case) or where the subject matter was perishable, then the offer would
terminate after a short time.

Question 13

Failure to comply with a condition precedent

Answer 13

An offer may also terminate if the parties to it had agreed to meet certain conditions and then
failed to do so.

Question 14

Financings Ltd v Stimson [1962] 3 All ER 386

Answer 14

The defendant, having seen a car at the premises of the dealer, decided to buy it on hire purchase. He
signed a form supplied by the dealer which stated that the hire purchase agreement became binding
only when signed by the plaintiffs, the finance company. The defendant paid a first instalment of £70
and took the car away on 18 March. On 20 March, the defendant returned the car, dissatisfied with its
performance, and stated to the dealer that he no longer wished to purchase it. On 25 March, the
plaintiffs signed the agreement, thereby purporting to accept the offer of the defendant. On the night
of 24/25 March the car was stolen from the premises of the dealer and badly damaged. The plaintiffs
eventually sold the car and claimed damages from the defendant, who counter-claimed for his first
instalment of £70. It was held that the defendant would succeed since by returning the car to the dealer
the defendant had revoked his offer and there was thus no concluded contract between the parties.
Further, on the facts of the case, there was an implied condition in the offer of the defendant that the
car would remain in substantially the same condition until the time of acceptance. Since the damage
occurred before acceptance, the plaintiffs were not in a position to accept the offer which had lapsed
due to the fact that the implied condition had not been complied with.

Question 15

Death of the offeror

Answer 15

Where the offeror dies before the offer is accepted, then the offeror’s personal
representatives may still be bound by an acceptance provided that:
■ the contract does not involve the personal services of the deceased; and
■ the offeree is ignorant of the offeror’s death

Question 16

Bradbury v Morgan [1862]

Answer 16

Leigh requested that Bradbury provide credit to his brother to the value of £100. Leigh guaranteed the account owned by his brother to this effect. Accordingly, Bradbury credited Leigh’s brother’s account and continued selling goods to Leigh in their usual manner. Unfortunately, Leigh died and Bradbury continued to supply his brother with goods on the credit which had been previously agreed. Bradbury had no knowledge or notice of the death of Leigh. Morgan, who was an executor on behalf of Leigh, did not pay Bradbury for the goods and refused to do so on the basis that the debts were contracted after Leigh’s death and as a result, Leigh was not liable for the payment. Bradbury brought an action for the payment that was due for the goods. The court found in favour of Bradbury. The court held that if the situation was dealing with an implied contract which had arisen out of a request, then it would be stopped by the death of a party. However, in this circumstance, there was no notice provided of the death of Leigh, and therefore there was no attempt to end the contract.