Contract | Formation
Offer: Termination
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Introduction
- an offer may be terminated by: revocation or withdrawal of the offer by the offeror, rejection by the offeree, lapse of time or occurrence of conditions
Revocation
- general rule: an offer may be withdrawn any time prior to acceptance but once it has been accepted it becomes irrevocable
Routledge v Grant (1828) 4 Bing 653
Facts:
- defendant (D) offered to buy plaintiff's (P) house for a specific price
with a definite answer to be given within six weeks
Issue:
- was D bound to keep the offer open for the six weeks?
Held:
- D was not bound to keep the offer open
- Best CJ:
.. if six weeks are given on one side to accept an offer, the other has six weeks to put an end to it. One party cannot be bound without the other...
- defendant (D) offered to buy plaintiff's (P) house for a specific price
Consideration
- a promise to keep an offer open for a specified time is usually not binding
- exceptions may apply if consideration is given for offer
Mountford v Scott [1975] 1 All ER 198
Facts:
- P paid £1 for option to buy D's house for £10000, within six months
Issue:
- can D revoke offer within the six months?
Held:
- offer was irrevocable within six month period becuase P had given consideration (paying nominal £1) for D's promise to keep offer open
Communication
- revocation of an offer must be communicated by offeror to offeree
Byrne & Co. v Van Tienhoven & Co. (1880) 5 CPD 344
Facts:
- 1 October: Ds, in UK, posted letter to New York offering to sell Ps 1000 boxes of tinplates
- 11 October: Ps received letter and immediately accepted by telegram
- 8 October: Ds sent letter to revoke their offer, which Ps received on 20 October
Issue:
- was the offer revoked prior to acceptance?
Held:
- there was a binding contract, as revocation only takes effect on communication, offer was still valid 11 October when Ps accepted
- exceptions where communication is effective without offeree necessarily realising offer revoked: if notice of withdrawal is sent to offeree's last known address or if offeree receives notification but decides not to read it
Public offers
- revocation of offers made to the public at large, raises question of whether communication is sufficient to constitute a withdrawal
Shuey v United States (1875) 92 US 73
Facts:
- American case which not binding in UK
- April 1865: D published proclamation of a reward in exchange for information leading to arrest of the assassin of President Lincoln
- November 1865: D published notice revoking offer
- April 1866: claimant (C) provided information, not knowing that the offer had been revoked
Issue:
- was the offer revoked?
Held:
- revocation of the offer was sufficient, therefore no binding contract existed
- Strong J:
.. the same notoriety was given to the revocation that was given to the offer...
Business hours
- if revocation is sent during normal office hours, when is it effective?
- depends on the reasonable expectations of the sender
The Brimnes [1975] QB 929
Facts:
- Ds hired a ship from P
- P sent a message by Telex (instant), withdrawing ship from service, during normal office hours
- Ds did not read the telex until next day
Issue:
- when was the offer revoked?
Held:
- notice of withdrawal had been sent during ordinary business hours so could be regarded as being communicated and effective revocation had occurred
- Megaw LJ:
I think the principle which is relevant is this: if a notice arrives at the address of the person to be notified, at such a time and by such a means of communication that it would in the normal course of business come to the attention of that person on its arrival, that person cannot rely on some failure of himself or his servants to act in a normal businesslike manner in respect of taking cognisance of the communication, so as to postpone the effective time of the notice until some later time when it in fact came to his attention...
Third party
- offeree must decide whether source is reliable, it seems to be an objective determination: whether a reasonable man would regard the informant reliable
Dickinson v Dodds (1876) 2 Ch D 463
Facts:
- 10 June: D offered to sell P a house and stated:
this offer remains open until 9.00am on 12 June
- P decided to accept on but did not communicate his acceptance to D immediately
- later on 11 June: P informed by third party that D had sold property to another person
- third party was known to P and he knew that he could rely upon his statement
- P then purported to accept the offer, D replied it was too late and the property had been sold
Issue:
- can an offer be revoked via a third party?
Held:
- revocation may be communicated by a reliable third party
- James LJ: .
. in this case, beyond all question, the plaintiff knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words...
- 10 June: D offered to sell P a house and stated:
Unilateral contracts
- revocation of unilateral contracts depends on when the promise is deemed to have been accepted
- Professor Treitel's example: an offer of £100 if you walk from London to York. Do you accept this offer when you first start the walk or when you actually arrive at York? ( Law of Contract)
- debate whether partial performance of a unilateral contract is sufficient to prevent revocation
- McGovney suggested that two separate offers in the offeror's statement in a unilateral contract: an express offer to pay on performance of the act and an implied offer not to revoke if the offeree begins the task within a reasonable time (27 Harvard Law Review 644)
- case law suggests an offer for a unilateral contract cannot be revoked once offeree has commenced performance
Errington v Errington and Woods [1952] 1 KB 290
Facts:
- father bought house for son and daughter in law, stating that he would transfer title to them once they repaid the mortgage, by weekly instalments
- father died before they paid off mortgage and widow sued for the house
Issue:
- can an offer be revoked once offeree commences specified task?
Held:
- father made an offer without requiring a promise in return, couple had commenced repayment in instalments, father's promise irrevocable as long as couple continued to pay mortgage instalments
- Denning LJ:
.. the father expressly promised the couple that the property should belong to them as soon as the mortgage was paid, and impliedly promised that so long as they paid the instalments to the building society they should be allowed to remain in possession...
Rejection
- acceptance must be to exact terms of an offer for contract to be binding
- if response to an offer suggests different terms it is a
counter offer
, not acceptance - a counter offer is an implied rejection of original offer and original offer cannot be revived by offeree and accepted
Hyde v Wrench [1840] EWHC Ch J90
Facts:
- D offered to sell his farm to P for £1200, P declined
- 6 June: D wrote to P offering to sell the farm for £1000, stating that it was his final offer
- 8 June: P wrote to D offering £950, on 27 June D refused to accept
- 29 June: P agreed to buy the farm for £1000, D refused
Issue:
- can a previous offer be accepted?
Held:
- Lord Langdale:
.. the plaintiff made an offer of his own, to purchase the property for £950, and he thereby rejected the offer previously made by the defendant. I think that it was not afterwards competent for him to revive the proposal of the defendant, by tendering an acceptance of it; and that, therefore, there exists no obligation of any sort between the parties...
- a query over payment, not the price, does not constitute a counter offer and there is no implied rejection of the offer
Stevenson, Jacques & Co. v McLean (1880) 5 QBD 346
Facts:
- D offered to sell P iron for
40s, net cash, open till Monday
- Monday morning: P telegramed:
Please wire whether you would accept forty for delivery over two months, or if not, longest limit you would give.
- D did not respond and sold to another party (without telling P)
- Monday afternoon: P sent telegram stating he accepted the offer
Issue:
- was the offer rejected by the query?
Held:
- P was making
mere query
so the offer was still valid and could be accepted - Lush J:
It is not 'I offer forty for delivery over two months' which would have likened the case to Hyde v. Wrench... Here there is no counter proposal... There is nothing specific by way of offer or rejection...
- D offered to sell P iron for
Lapse of time
- an offer may lapse after time
Routledge v Grant (1828) 4 Bing 653
Facts:
- the offeror expressly stated that the offer was only available for six weeks
Issue:
- could the offer lapse?
Held:
- after six weeks offer lapsed
- offer without an express time limit will lapse after a reasonable time
Quenerduaine v Cole (1883) 32 WR 185
Facts:
- D made an offer by telegram and P purported to accept by letter
Issue:
- was it reasonable to accept the offer by letter?
Held:
- an offer which was made by telegram (instantaneous), implied equally quick acceptance required
Ramsgate Victoria Hotel Ltd v Monte Fiori (1866) LR 1 Ex 109
Facts:
- P purported to accept D's offer to sell shares five months after offer was made
Issue:
- was five months a reasonable time?
Held:
- five month delay made offer ineffective
Failure to meet a condition
- offers can be conditional and if a condition is not met, offer cannot be accepted
- conditions may be express or implied
Financings Ltd v Stimson [1962] 3 All ER 386
Facts:
- case involved purchase of a second hand car on hire purchase terms
Issue:
- can conditions be implied?
Held:
- Dovovan LJ:
Who would offer to purchase a car on terms that if it were severely damaged before the offer was accepted, he, the offeror, would pay the bill?... There must be an implied term that, until acceptance, the goods would remain in substantially the same state as at the date of the offer...