What Is a Revocation of Offer?
A revocation of offer is the withdrawal of a previous offer to engage in some sort of legally binding contract.3 min read
A revocation of offer is the withdrawal of a previous offer to engage in some sort of legally binding contract. The previous offer had to have been such that it would have immediately become legally binding if the other party had formally agreed to it.
Revocation of offer is used by the offering party to formally cancel the offer before the other party has accepted it. The offering party must communicate the revocation to the other party before they accept the offer, but once the revocation has been communicated the offer it pertains to is no longer considered valid and cannot legally be accepted. Revocation goes into effect as soon as it has been communicated to the relevant party.
Valid Revocation of Offer
A core ruling defining revocation of offers was established by Payne v. Cave. This case established that neither party is bound to an agreement until an offer has been made by one and formally accepted by the other.
If an offer has been made, the offering party has a right to withdraw it up to formal acceptance by the offeree. Revocation basically serves as formal, legally verifiable notice that a withdrawal was made, and it's valid so long as it is communicated to the offeree before they accept.
The case of Byrne v. Van Tienhoven supports this by establishing that the withdrawal of an offer by telegram is only valid if the telegram is received before the offer is accepted. The case of Dickinson v. Dodds further establishes that the party making the offer can communicate the revocation through a third party.
What If an Offer Is Open for a Specified Period?
The case of Routledge v. Grant establishes that it is possible for an offerer to revoke an offer even if it is declared open for a certain period of time, so long as the offer is not supported by consideration.
This case also establishes that acceptance sent by postal mail becomes valid at the time the mail is sent. A revocation made after the acceptance was mailed is no longer valid. Revocation is also not possible after an offer has been accepted and acted upon.
Cases Involving Unilateral Offers
Errington v. Errington establishes that so long as performance requirements (such as ongoing payments) are being made as agreed, an offer cannot be revoked.
Counter-Offers and Revocation
Hyde v. Wrench establishes that a counter-offer qualifies as a rejection of the original offer. If the offeree makes their own offer in response, it automatically invalidates the original offer.
Jacques v. McLean draws a distinction between counter-offers and requests for more information. An offeree can make an inquiry about the offer and its terms without invalidating it.
What Constitutes a Revocation of Offer?
The main criteria for a binding revocation is that it's communicated to the offeree before they accept the offer.
Communication of revocation can be direct or indirect and can be made by a third party. If the communication is indirect, it must meet several requirements. It needs to be:
- Communicated by a reliable source
- Able to be understood by a “reasonable person”
Selling an item to someone else is considered a legal revocation so long as the original offeree is notified of the sale before they accept the offer.
Offers made through a publication are something of a special case. These offers can be revoked by a notice in that publication without specifically contacting the offeree.
When Are Offers Considered Irrevocable?
Offers are considered irrevocable under the following conditions:
- If it is stated that the offer shall be kept open as part of consideration.
- If the offeree relied on the offer being open to their detriment (detrimental reliance).
- If the contract is unilateral, has been partially completed or is underway and the offeree is still in compliance with the terms.
- Signed offers with firm terms that guarantee a party will buy or sell goods that include an assurance that the offer must be held open, even if no consideration is present.
- If a stated period is provided, the offer is irrevocable for the lesser of that period or three months time.
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