Contract: Termination of an Offer

Termination of an Offer

Withdrawal

Withdrawal of an offer must be communicated before it has been accepted. If the acceptance has taken place a contract will be in existence. A revocation of an offer is only effective if the party making the offer has brought it to the attention of the offeree.

Luxor v Cooper [1941]: The defendant wanted to sell his property, he said to an agent ‘if you find me a buyer willing to pay £175,000 I will give you £10,000 commission’. The agent found a buyer but the defendant decided not to sell. The agent sued. Acceptance would take place when the buyer was found, which is when a contract is exchanged, as a buyer can walk away at any time. The defendant had withdrawn his offer prior to the acceptance.

Dickinson v Dodds [1876]: The defendant had offered a house and a promise to keep the offer open for 14 days until Friday at 9am. On Thursday the claimant heard from a friend that the house had been sold. On Friday he handed in his acceptance and sued for breach of contract. Held, there was no contract as the claimant knew that the house had been sold to someone else.

Byrne v Van Tienhaven [1880]: Held, the revocation of the offer took place on the 20^th when it arrived at the claimant’s address. It was still in existence when the claimant accepted it, creating a contract.

Death

Death does not automatically terminate the majority of offers for the ‘thing’ offered will be still in existence. If the offer involves a personal capacity then obviously the offer will cease on death.

Errington v Errinton and Woods [1952]: An old man decided to buy a house. He pays 3750 for it, £500 via a mortgage. He tells his son and daughter-in-law that they could live in it and if they paid off the mortgage he would transfer the house to them. The couple never verbally accepted but did start paying the instalments. The old man died. The executor of the will realises that they have not paid off all the mortgage yet and revokes the offer as acceptance takes place when it is fully paid off. Held, the couple had embarked on acceptance and therefore should be left to run its course until the acceptance was completed.

Expiry of a fixed time limit

A promise to keep an offer open is not binding unless given under a seal or given in exchange for consideration.

Payne v Cave [1789]: Establishes that an offer can be revoked any time until acceptance is made.

Routledge v Grant [1828]: The defendant made an offer to purchase the claimant’s property. The defendant requested an answer within 6 weeks. Before the 6 weeks expired the defendant withdrew the offer. The claimant argued that the defendant was in breach of contract, he should have kept the offer open for 6 weeks. The claimant lost the case.

Expiry of a reasonable time

If there is no expressed time limit imposed the offer will lapse after a reasonable amount of time.

Ramsgate Victoria Hotel v Montefiore [1866]: The investor offered to buy shares in June. He heard nothing until November when he no longer wanted to buy shares. Held, the offer had expired as the value of shares had changed.

Counter offer

The offer will end when the offeree makes a counter offer. This is where the offeree changes the terms of the offer slightly. As soon as the counter offer is made the original offer will come to an immediate end.

Hyde v Wrench [1840]: Wrench offered to sell his farm for £1000. Hyde replied ‘I will give you £950’. Wrench refused. Hyde said ‘I will give you £1000 as asked by you’. Wrench didn’t reply. Hyde sued. Held, Hyde’s counter offer of £950 ended Wrench’s offer of £1000. There is no matching offer and acceptance.