UNIT 3

Termination of an Offer
2.3.1 Objectives

At the end of this unit you should be familiar with ways in which offers can be terminated.

2.3.2 Reading

Prescribed Reading:

Corrin Care pp 36-40

Poole pp 55-63

Precribed Cases:

Srivastava DK, Case Note on Tonolei Development Corporation Ltd v Lucas

Waka (1983) 10 (1&2) MLJ 175 (PLM).

2.3.3 Methods of Termination

An offer can be terminated at any time before it has been accepted. Once an offer has
been accepted it becomes irrevocable.i[i] An offer can be terminated by revocation, by
rejection of the offer, by a counter-offer, by lapse of time, by failure of a condition subject to
which the offer was made, or by death.

2.3.4Revocation

(a) Timing

The offeror is generally free to withdraw an offer at any point before it has been accepted.
This general rule will apply even if the offeror has promised to keep the offer open for a
certain amount of time, unless, the offeree has provided consideration for the time
allowance in some way. Consideration is discussed in Topic 4.

Example

Nathan offers to sell his bicycle to Sam for 10,000v. Sam says that he needs time to think
about it. Nathan says that he will give Sam a week to make up his mind.

In this example Nathan can revoke his offer at any time. It does not matter legally that he
promised to keep the offer open for a week. However, if Sam had said to Nathan that he
would, for example, pay 100v for the promise to keep the offer open for a week, then,
Nathan would not be able to revoke the offer before the end of a week.
(b) Communication

Revocation of an offer must be communicated to be effective. This was implicit in the

decision in Byrne v Van Tienhoven (1880) 5 CPD 334, Poole p55 where the withdrawal of
an offer, which was sent by telegram, was held not to be effective until it was received.

Nevertheless, the communication of revocation need not come directly from the offeror.
Provided that the offeree is fully aware at the time of a purported acceptance that the
offeror has decided not to proceed with the contract, then the offer will be regarded as
having been revoked, and no acceptance will be possible.

? Read over Dickinson v Dodds (1876) 2 ChD 463 (CA), Poole 57. What was
sufficient to be communication of revocation in this case?

? Read Srivastava DK, Case Note on Tonolei Development Corporation Ltd v

Lucas Waka (1983) 10 (1&2) MLJ 175. In this case was the offer revoked in
sufficient time?

2.3.5 Revocation in Unilateral Contracts

One difficulty that arises in respect of revocation of an offer is in relation to unilateral

contracts. If in a unilateral contract, acceptance means complete performance, then an
offeror would be able to revoke their offer at any point before performance was
complete.

In Great Northern Railway Co v Witham (1873) LR 9 CP 16, Poole 58 the court

suggested that revocation could occur before a person completed an action they had
undertaken. The court used the example that if someone offered you 100 pounds to
walk to York, that offer could be revoked any time before you reached York.

However, this result has been regarded by many as unfair. Leading on from this, there
have been attempts to argue that partial performance may in some circumstances
amount to a sufficient indication of acceptance so as to prevent withdrawal by the
offeror. In Errington v Errington [1952] 1 KB 290 (CA), Poole 58 a father promised his
son and daughter-in-law that if they paid off the mortgage on a house he owned that he
would transfer the house to them. The young couple started to re-pay the mortgage on
the house, but made no promise they would continue. The father died, and his estate
denied there was any binding contract. The Court of Appeal recognised this was a
unilateral contract, but nevertheless held that the offer could not be withdrawn. The
reasons behind this conclusion are unclear. Although, Lord Dennings approach has
clear links with the idea of estoppel, of which, as we shall see in Topic 5, Lord Denning
has made inventive use in other areas.ii[ii]

Lord Dennings approach in Errington received support in obiter dictum from the later
Court of Appeal decision in Davlia v Four Millbank Nominees Ltd [1978] 2 All ER 557
(CA), Poole 60. Pause to read Davlia now.
However, it may be significant that in both Errington and Davlia the offeror was aware
that the other person had embarked upon performance. It is not clear that in a case,
such as an offer of a reward or prize, where the offer is made to the world, that precisely
the same approach should apply. In the case, for example, of an offer of 1000v for a
lost dog, it does not seem right that where a person is seen bringing the dog home to
collect the reward, the offeror should be able to shout out a withdrawal of the reward. iii
[iii] But, if the the offeror runs into financial problems since he offered the reward and
does not know that anyone has found the dog and is returning it then it would seem
more reasonable that the offeror should be allowed, by giving notice in a reasonable
manner to withdraw the offer. However, there is no legal authority on this point.

2.3.6Lapse of Time

A lapse of time might occur due to an explicit statement in the contract or because of a
term that can reasonably be implied into the offer.

Example

Mere offers to sell her shares in a company registered on the stock exchange to Paul
for 400v each. 2 months later Paul decides to accept Meres offer.

In this example it is reasonable to imply that the offer would have lapsed. This is
because the nature of the share market fluctuates so greatly that a reasonable person
would consider it unrealistic to expect Meres initial offer to remain open.

2.3.7 Failure of a Condition

It is not uncommon for offerors to place conditions upon their offers. These sorts of
offers are referred to as conditional offers. This often happens in the context of land
sales. For example, an offeror might state that his or her offer is subject to finance or
subject to solicitors approval.

Workshop Materials - Week 3

E NDNO TE S
i[i] Great Northern Railway Co v Witham (1873) LR 9 CP 16.

ii[ii] Richard Stone Principles of Contract Law (3 ed) (Cavendish Publishing Ltd, London, 1997) 33.

iii[iii] Stone, 34.