Key Takeaways

  • A contract becomes legally binding with the elements of offer, acceptance, consideration, mental competence, and mutual assent.
  • The revocation of contract can occur intentionally, by law, or through mutual cancellation.
  • Offers can be revoked before acceptance, and acceptances can be withdrawn before consideration.
  • Revocations may be express (written) or implied (based on circumstances like divorce or childbirth).
  • Wills and Powers of Attorney can be revoked in multiple ways, including by express statement or through new documents.
  • Contracts involving options are protected from revocation during the agreed period.
  • Counteroffers nullify the original offer and initiate a new negotiation.

Contract Revocation

Contract revocation can occur in several ways, the most common being when one of the parties revokes the contract. An act of revocation could include recalling, cancelling, or annulling the contract.

Offer, Acceptance, and Consideration

Particularly, a contract is a legally binding agreement between two or more parties that involves the necessary elements of offer, acceptance, and consideration.

An offer is made when one party communicates to another party his or her willingness to be bound by the terms of the offer that is being made. An acceptance is when the offeree accepts the offer that is made by the other party. The acceptance must not include a counter-offer, as this would not constitute an acceptance of the offer. After the offer is accepted, the parties must ensure that consideration is present. Consideration can be a mere promise to do something. Therefore, if John promises to sell his home to Mark, and Mark promises to pay a specified amount for the home, then that will establish consideration under the contract.

Keep in mind that in additional to these three elements, both parties must be mentally competent to enter into the agreement. Those who are not mentally competent include the following:

  • Those under the age of 18
  • Those who are incarcerated
  • Those who are mentally handicapped

After the offer, acceptance, consideration, and competence have been established, the element of mutual assent must be present. For example, if one of the parties were coerced into signing the agreement, then it wouldn’t be enforceable. Furthermore, if one of the parties was under duress at the time the agreement was signed, then the contract itself would be void and unenforceable.

Revoking an Offer vs. Revoking a Contract

The revocation of contract should not be confused with revocation of an offer. An offeror may revoke an offer anytime before it is accepted. Once accepted, a binding contract is formed, and revocation of the entire contract would then require legal justification such as breach, mutual agreement, or incapacity.

In contrast, revoking a contract typically involves more formal steps and legal scrutiny. It may require written notice, a justification like fraud or duress, or both parties agreeing to terminate the contract. The legal consequences differ significantly depending on whether the revocation pertains to a mere offer or a fully executed agreement.

Types of Revocation

There are different types of revocation depending on the circumstances of the contract and parties involved. Below are some of the types of revocations that might occur:

  • Intentional revocation
  • Revocation by operation of law
  • Mutual cancellation by both parties
  • Revoking an offer before it is accepted
  • Revoking an acceptance before consideration takes place
  • Revocation of a driver’s license
  • Revoking an actual document

An intentional revocation occurs when one of the parties voluntarily revokes the contract. An example of this could be a person canceling a Power of Attorney that he or she has given.

Revocation by operation of law, also referred to as constructive revocation, occurs based on law. For example, a Power of Attorney agreement will be canceled once the other party dies, since there would be no more duty to act as Power of Attorney.

Before the offer is accepted, the offeror can cancel the offer since there is no legally binding contract at this point. Similarly, the offeree (person accepting the offer) can cancel his acceptance before consideration takes place or prior to the contract being signed.

Other examples of revocation involve a driver’s license being revoked due to multiple traffic offenses or revoking an actual document like a will.

Legal Limitations and Exceptions to Revocation

Not all revocations are legally valid. Several exceptions apply:

  • Option Contracts: If an offer is accompanied by consideration to keep it open for a certain period, it cannot be revoked until the expiration of that period.
  • Unilateral Contracts: Once performance has begun, the offeror may be restricted from revoking the offer.
  • Promissory Estoppel: If the offeree has reasonably relied on the offer to their detriment, revocation may be barred.
  • Statutory Restrictions: Consumer protection laws and employment regulations may restrict revocation under certain conditions.

In these cases, courts assess fairness and reliance to determine whether revocation is enforceable.

Express vs. Implied Revocations

Revocations are either express or implied. An express revocation is one that must be in writing in order for it to be legally binding. For example, revoking a Power of Attorney agreement must usually be in writing, depending on the state’s laws.

An implied revocation doesn’t have to be in writing as it is implied. An example of this would be in the case of a will that is written before a divorce. Therefore, in some states, if a woman drafts a will leaving everything to her husband, but thereafter divorces her husband, that will is revoked based on the divorce. Similarly, if the couple doesn’t divorce but rather has a child, the will is also revoked immediately after birth of the child.

Timing and Communication of Revocation

Revocation must be communicated clearly and promptly to be effective. For offers, revocation becomes valid only once the offeree receives notice. If the offeree accepts the offer before learning of its revocation, the contract remains enforceable.

For contracts already in effect, written notice of revocation—such as termination letters or formal notices—is often required. The timing of revocation plays a critical role, especially in cases involving services, delivery schedules, or deadlines. Delays in communication can result in liability or breach.

How Can a Will or Power of Attorney Be Revoked?

A will can be revoked in one of the following ways:

  • By cancelling it
  • By writing a subsequent will
  • By writing an express revocation in a separate writing
  • By implied revocation, i.e. divorce or birth of child

A Power of Attorney can be revoked similar to that of a will by cancelling it, writing a subsequent Power of Attorney agreement, writing an express revocation in a separate writing, or once the principal dies.

Consequences of Improper Revocation

Improperly revoking a contract or legal document can lead to:

  • Breach of contract claims resulting in monetary damages.
  • Legal disputes over enforceability, especially with estate documents or powers of attorney.
  • Loss of contractual rights, if the revocation is deemed invalid or late.
  • Unintended obligations, such as continued liability for services or goods after attempted cancellation.

To avoid such consequences, parties should follow contract-specific revocation clauses, provide timely written notice, and, where required, obtain mutual consent.

Frequently Asked Questions

  • Can a contract be revoked after acceptance?
    Yes, but only under certain conditions like mutual agreement, legal incapacity, or breach. Once accepted, unilateral revocation isn't generally allowed without consequences.
  • What is the difference between revoking an offer and revoking a contract?
    Revoking an offer ends the possibility of contract formation, while revoking a contract cancels an agreement that already exists, often requiring legal justification.
  • When is a revocation legally invalid?
    Revocation is invalid if it occurs after acceptance (without proper cause), violates an option agreement, or is not properly communicated.
  • What happens if I revoke a contract improperly?
    You could be liable for breach of contract, including paying damages or facing legal action from the other party.
  • Do all revocations need to be in writing?
    Not always. Express revocations must be written, but implied revocations can occur through conduct or changed circumstances, depending on the situation and state law.

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