What happens when the offeror decides he is no longer interested in the contract? How does he terminate his offer? Or does an offer remain forever after it is made? To put things simply, an offer can become terminated if the offeree hasn’t accepted it.
Although this is simple enough, like in all things related to law, there is more involved in the termination of an offer.
Termination of offer by revocation
Revocation of an offer occurs when the offeror rescinds the offer before it is accepted by the offeree. Thus, an offer can be revoked by the offeror even if he has already promised to keep the offer open. The only time this will not happen is if the offeror received some consideration to keep the offer open.
In the case of Mountford vs Scott, the defendant granted the plaintiff an option to pay for the purchase of a property within a period of 1 month. The plaintiff also paid £1 to the defendant so that he would keep the offer open.
Subsequently, the defendant purported to revoke the offer, the court held that since he has received consideration for keeping the offer open, he had to keep it open.
However, it is open to contention if the rule of revocation of offer can be applied in the case of a unilateral offer.
It is reasoned that it would create injustice if the rule is strictly followed. For example, can A who offered a reward for the finding of his dog revoke the offer when he sees B coming along with the dog? There are four groups of opinion on this issue and they are:
- Revocation is possible if performance is incomplete.
- There is an implied collateral in a unilateral offer that the offer can’t be revoked once acceptance has already started.
- That the offeree is entitled to a quantum meirut to reward him for his trouble if the offer is revoked when he has already started performance.
- That once performance starts, it can’t be revoked but the performance has to be completed before the offeree would be considered entitled to the reward.
The view in the fourth position was the one applied by the court in the case of Errington vs Errington.
In this case, a father promised his daughter and her husband that they would be granted ownership of a house upon his death if they can repay the mortgage he borrowed on it.
His daughter and her husband had already commenced the repayment of the debt when his wife, who was his legal heir revoked the offer. It was held that the offer couldn’t be revoked once acceptance is already proven to have already started before revocation.
Termination of Offer By Lapse Of Time
An offer can be terminated if it is not accepted within the period provided by the offeror.
In a situation in which no time has been stipulated, the offer would be considered revoked after a reasonable period has elapsed. The calculation of the reasonable period depends on the individual circumstance of the case.
In the case of Ramsgate Victoria Hotel vs Montifiore it was held that the period of time from June to November is reasonable for an offer to lapse in the case of purchase of shares.
Termination of Offer By Death
An offer can be terminated by either the death of the offeror or the offeree.
Where an offeree has notice of the offeror’s death, the offer is automatically revoked.
However, if the offer was accepted before knowledge of the death of the offeror, the revocation would be dependent on the nature of the contract. If the contract is one that can still be performed even if the offeror is dead, the contract would still subsist.
In the case of Bradbury vs Morgan, the court held that a contract of guarantee still subsisted in spite of the death of the guarantor. This was due to the fact that it can still be carried out after the death of the guarantor.
With regards to the death of an offeree, an offer would lapse if the offeree dies before he accepts the offer. In the case of Kennedy vs Thomas, it was held that a contract for annuities no longer subsisted because the offeree died before accepting it.
Termination of Offer By Rejection
There will be a termination of offer if it is rejected by the offeree. However, if an offeree changes his mind after rejecting the offer, he can validly accept it. But this would only be applicable if the acceptance gets to the offeror before the rejection.
Termination By Counter-Offer
A counter offer as previously highlighted occurs when an additional term is added to the initial offer. The additional term cancels the initial offer and it becomes a new offer that could either be accepted or rejected by the former offeror. In the case of General George Innih vs Ferado Agro Consortiums Ltd, it was said by the court that even the addition of a request for extra time serves as counter offer which nullifies the initial offer.
Author: Olanrewaju Olamide
Olamide is an avid reader who believes that no knowledge is wasted. If he is not surfing the internet, he would be doing something else to get more information, whatever that is.