Key Takeaways

  • Revocation of acceptance cases arise when a buyer attempts to revoke a prior acceptance of goods due to nonconformity or defects.
  • Revocation must be timely and typically requires the defect to substantially impair the value of the goods.
  • Legal standards vary between jurisdictions but often hinge on buyer awareness, seller response, and UCC guidelines.
  • Courts evaluate whether buyers acted in good faith, discovered defects in time, and notified the seller properly.
  • Landmark cases like Jenkins v. Ford Motor Co. and Jackson v. Clinton Auto Auction clarify key revocation principles.
  • The timing of revocation is crucial; late revocations may be rejected if considered unreasonable or prejudicial to the seller.
  • Federal procurement contracts have distinct rules, especially under the Federal Acquisition Regulation (FAR).
  • Buyers and sellers should document transactions thoroughly and act promptly when disputes arise.

Revocation of offer case law can occur any time before an offer is accepted. If the party making the offer decides to revoke it, the revocation is effective as soon as the person receiving the offer becomes aware of it.

Examples of a Revocation

To better understand the concept of revocation, take the example of Byrne v. Van Tienhoven. In this case, Van Tienhoven sent Byrne a letter in which he offered to sell him some tinplates. He quickly had a change of heart and sent a second letter shortly afterward that revoked the first offer. However, Byrne had already accepted the offer, leading to a legal battle that would change the ruling on this matter forever.

Interestingly, the courts ruled that the revocation was not effective because it had not been communicated directly to Byrne. If Van Tienhoven had communicated his revocation to Byrne before he had accepted the offer, it might have been valid. He also could have used a third party to withdraw the offer for him.

Another example of revocation can be seen in Dickinson v. Dodds. Party A offered to sell his property to Party B but decided to sell it to Party C instead. Party B found out about the sale because Party D told him. This was legal, as Party A went through the revocation process legally by having Party D inform Party B about the sale.

Key Revocation of Acceptance Cases and Precedents

In the realm of contract law, revocation of acceptance cases often stem from disputes over defective goods or misrepresented conditions. Several significant rulings have helped define the standards under the Uniform Commercial Code (UCC), particularly §2-608, which governs revocation of acceptance.

Key examples include:

  • Jenkins v. Ford Motor Co.: The buyer revoked acceptance of a vehicle due to ongoing transmission failures. The court upheld the revocation, emphasizing that a defect substantially impairing the product's value can justify revocation, even if discovered post-delivery.
  • Jackson v. Clinton Auto Auction: In this case, the buyer purchased a used car that quickly developed engine issues. Despite initial repair attempts, the buyer revoked acceptance. The court ruled in favor of the buyer due to the seller’s failure to disclose prior defects and the buyer’s timely notification.
  • Truck Center v. Daimler Trucks: This case involved a commercial truck with chronic engine problems. The buyer successfully argued for revocation due to repeated failed repair attempts and loss of utility, illustrating how commercial buyers also have revocation rights under UCC §2-608.

These cases demonstrate the importance of timing, defect severity, and proper notice to the seller in asserting a revocation of acceptance. Courts generally require that the defect was not easily discoverable during inspection or that the seller promised to fix the issue but failed to do so adequately.

Automatic Expiration of Offer

If an offer is not accepted in a certain period, it can lapse and lose its validity. For example, say Party A said they would sell a car to Party B. Party A said they'd give Party B 10 days to decide. After the Day 10, Party A no longer has to hold the car for Party B. Even if Party A did not specify a time, laws stipulate that the offer stay on the table for a reasonable amount.

Consider another example taken from Barrick v. Clark. Party A said they would buy land from Party B. Party B replied with a counteroffer, requesting Party A to reply as soon as possible. However, Party A took their time sending a reply, accepting the offer outside of reasonable time. Therefore, Party B was under no obligation to sell the land to Party A, because the offer had expired.

Keep in mind that if the offerer dies, the offer does not expire automatically. If the offerer's next of kin can still perform the contractual obligations, the offer is still valid.

Timing and Reasonableness in Revocation of Acceptance

Revocation of acceptance must occur within a "reasonable time" after the buyer discovers or should have discovered the nonconformity. The Uniform Commercial Code does not define "reasonable time" precisely, so courts assess it based on circumstances like:

  • The buyer’s diligence in inspecting the goods.
  • The nature and complexity of the defect.
  • The seller’s efforts to repair or address the issue.
  • Any prejudice to the seller resulting from the delay.

A notable case from government contracting, ASBCA No. 62008, shows how revocation was denied because the government waited nearly a year to revoke acceptance of defective software components. The Board found that such a delay was unreasonable, particularly since the agency continued to use the products.

This principle reinforces the need for both private and government buyers to act swiftly once defects are identified. Inaction or continued use of the goods can undermine the buyer’s ability to revoke acceptance.

How to Reject an Offer

There are two ways to reject an offer: communicating a rejection to the offerer and counteroffering the offerer.

When rejecting the offer, the offeree simply has to let the offerer know they don't want to take the offer. This destroys the offer. Only the offeree, not the offerer, can complete this process.

For example, say Joe said he'd sell his car to Susan. Susan wanted more information on the car before accepting, and instead of providing that, Joe sold his car to Bob. Susan decides to accept the offer before the deadline, but finds Joe has already sold the car. Susan has the right to sue Joe because she never rejected the offer.

To see how this works in a real case, look at Stevenson v. McLean. McLean made an offer to sell Stevenson some iron. Stevenson sent a telegram to McLean asking if he could pay for the iron over a two-month span. McLean never responded to the telegram and instead sold the iron to another party. Unaware, Stevenson accepted the iron offer before the deadline, but because McLean had already sold the iron, he could not deliver it. Stevenson sued McLean because he never rejected the offer.

The other way to reject an offer is through a counteroffer. The offeree will provide new terms to the offerer, which eliminate the terms of the old offer. This means they can no longer decide to accept the original offer if the offerer refuses their counteroffer.

An example of this is Hyde v. Wrench. Wrench said he'd sell his estate to Hyde for 1,000 pounds. Instead of accepting, Hyde said he would pay 950 pounds. This counteroffer nullified the original offer of 1,000 pounds.

Distinguishing Rejection of an Offer from Revocation of Acceptance

While rejecting an offer and revoking acceptance might seem similar, they apply at different stages of a transaction:

  • Rejection of Offer: Occurs before a contract is formed. The offeree declines the terms of an offer, and no contract is created.
  • Revocation of Acceptance: Happens after the contract is formed and goods are delivered. The buyer initially accepts but later revokes based on a material defect or misrepresentation.

This distinction is crucial in litigation. A buyer attempting to back out of a contract must show not only that the goods were defective, but that the defect was significant enough to justify revocation under the law.

Common requirements for revocation of acceptance include:

  • The defect substantially impairs the product’s value.
  • The buyer was unaware of the defect at acceptance or was misled.
  • The revocation is communicated within a reasonable time.
  • The buyer stops using the goods after revocation.

Frequently Asked Questions

1. What qualifies as a valid revocation of acceptance? A valid revocation must show that the goods were nonconforming and that the defect substantially impairs their value. The buyer must notify the seller in a reasonable time and stop using the product.

2. Can a buyer revoke acceptance after using the product? Possibly, but continued use may weaken the claim. Courts evaluate whether the use was unavoidable or if it indicates acceptance despite defects.

3. How is revocation of acceptance different from rejection? Rejection occurs before a contract is finalized; revocation happens after acceptance and delivery, requiring stronger legal justification like hidden defects.

4. What happens if the seller refuses to accept a revocation? The buyer may need to pursue legal remedies, including refund, replacement, or damages. Courts may enforce the revocation if the legal requirements are met.

5. Are revocation of acceptance cases common in government contracts? Yes. Under the Federal Acquisition Regulation (FAR), the government may revoke acceptance if defects are discovered later, but the revocation must be timely and justified.

If you need help with revocation of offer case law, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.