Examples of Offer Termination

How is an offer terminated? Please provide examples and case law in order to support your answer.

An offer remains open until it has been accepted, rejected, revoked or has lapsed. It is not possible to create a contract by accepting an offer that has been revoked or rejected or has lapsed. An offer is terminated in the following six ways:

The first one is lapse of time. An offer lapses if it is not accepted within the stipulated time or when no time is stipulated, the offer will lapse after a reasonable time. A reasonable time is a question of fact depending on the subject matter of the contact, the means used to communicate the offer, the language used and other circumstances of the case. Usually, it is viewed from the general public.

Ramsgate Victoria Hotel Co v. Montefiore [1866] indicated that Montefiore applied for shares on 8 June but he was not sure whether he was successful or not because no one informed him. On 23 November, his offer was accepted. On the same day, shares were allotted to him. Then, Montefiore was told to pay the balance owing on the share but Montefiore refused to do so.

It was held that the offer to allotment had not been made within a reasonable time and the offer had therefore lapsed. Thus, there was no contract. Between five months, the share price really fluctuates a lot.

The second one is revocation. An offer can be revoked at any time before its acceptance. Revocation has no effect until it is actually brought to notice of the offeree or be implied. There is no specific method or language, so it can be made by the offeror or the offeror’s agent, or comes to the offeree’s knowledge from a reliable source.

DICKINSON V. DODDS [1876] 2 CHD 463 stated that Dodds offered to Dickinson to sell a house for £800. Dodd’s offer letter stated that the offer was to be opened until 12 June, 9 a.m.’. On 11 June morning, Dodds sold the house to a third party and Dickinson was told of the sale by another person on that day evening. Before 12 June 9 a.m. on Friday Dickinson wanted to accept Dodds’ offer so Dickinson gave him a formal letter.

It was held that no acceptance was made. The offeree was aware that Dodds was no longer minded to sell property to him beforehand and therefore the offer was validly withdraw.

The third one is conditional offer. An offer may be subject to a condition that it will terminate on the happening of a particular event or conditions. The condition may be express or implied.

For example, a clause or term in the offer stating ‘reply by e-mail or phone call’ indicates a degree of urgency. Therefore, sending letter by offeree would not stick to the stipulation, thus it causes to termination of offer. Another typical example is the conditional offer made by university, usually for associated degree or high diploma students. Such condition requires student to get a prescribed GPA level. If the student cannot meet the requirement, the conditional offer will be terminated.

Then fourth one is the rejection. Rejection can be in form of words, conduct or counter- offer, of on offer by the offeree kills the offer. It can no longer be accepted by offeree.

Hyde V. Wrench [1840] 3 BEAV 334 showed that the defendant offered to sell his estate to the plaintiff for £1000 and the plaintiff just wanted to pay £950. However, the defendant’ offer is rejected and the new offer was made by plaintiff. The plaintiff finally accepted the offer of £1000.

It was held that the plaintiff rejected the defendant’s offers and at the same time, giving his new offer to defendant. The original offeror was changed to be an offeree and the original offeree became the offeror. One extra issue here is that plaintiff was by no means able to revive the original offer because it is terminated. It can be revived only by the offeror’s wishes.

A counter-offer is a kind of rejection of original offer. An offeree may, upon receiving an offer, suggest qualifications to the offeror, who may accept or reject the new offer. If the intention of the offeree is to reject the offer that he has received, then he is said to make a counter offer. The counter-offer kills the offer. This is contrasted with the situation of “request for information”, which generally will not cause the offer to lapse.

Stevenson, Jacques & Co v. McLean [1880] can be used as a supporting case law. The defendant offered to sell a quantity of iron to the plaintiff for 40s net cash. The plaintiff replied by telegram enquiring whether the iron could be paid for over two months instead of paying the whole price at once. It is a request for information but not a counter offer. So, it did not kill the defendant’s offer.

The fifth one is death. Death can be classified as death of the offeror or offeree. We have to consider two things. One is the nature of the contract; for instance whether it is in personal nature. Another is the knowledge of other party. Where the offeree accepts the offer unaware of the offeror’s death and the decreased’s contractual, obligations can be performed by his or her personal representative if it is not a contract for personal services.In contrast, an offer cannot be accepted if the offeree knows of the offeror’s death.

For offeree’s death, if the facts show that the offeror and the offeree intend that the offer can be accepted by the offeree’s son (or the offeree) even after the offeree’s death, the offeree’s death does not terminate the offer.

Cf. Carter v. Hyde [1923] showed that Carter offered Hyde an option to buy premises within three months. Hyde died before he exercised the option and so his executors did so.

The High Court held that the option was not aimed only for the personal benefit of Hyde, so the offer can be accepted by his executors and therefore signed a contract.

The last one is acceptance. When an offer has been unconditionally accepted, the act of acceptance creates a contract. To be binding, an acceptance of the offer must be actually communicated to the offeror. It can be made in writing, orally, a combination of both and by conduct. Silence does not amount to acceptance.

In case law Brodgen v. Metropolitan Railway Co [1877], the plaintiff sent a contract to the defendant setting out the terms and conditions on which it world supply coal to the defendant. The defendant did not expressly accept the offer. However, coal was supplied and accepted by the defendant, apparently on the terms set out in the plaintiff’s contract.

It was held that acceptance of the offer would be implied as the defendant accepted the offer by conduct. After the unconditional acceptance is made, the offer ceases to exist.

As a reminder and conclusion, acceptance is made after an offer will be done. Once the accepted is terminated, the only way that an offer can be revived is only if the original offeror wishes to revive it.