Contract Revocation: Everything You Need to Know
Contract revocation can occur in several ways, the most common being when one of the parties revokes the contract. 3 min read
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.
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.
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.
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.
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