ACCA F4 - Corp and Business Law (ENG)

44 3: Formation of contract I  Part B The law of obligations

6 Termination of offer

An offer may only be accepted while it is still open. In the absence of an acceptance, an offer may be

terminated in any of the following ways.

 Rejection  Revocation by the offeror

 Counter-offer  Failure of a condition to which the offer was subject

 Lapse of time  Death of one of the parties

6.1 Rejection

As noted earlier, outright rejection terminates an offer. A counter-offer, when the person to whom the

offer was made proposes new or amended terms, also terminates the original offer.

Hyde v Wrench 1840

The facts: The defendant offered to sell property to the claimant for £1,000 on 6 June. Two days later, the

claimant made a counter-offer of £950 which the defendant rejected on 27 June. The claimant then

informed the defendant on 29 June that he accepted the original offer of £1,000.

Decision: The original offer of £1,000 had been terminated by the counter-offer of £950.

6.2 Counter-offer

Acceptance must be unqualified agreement to the terms of the offer. A purported acceptance which

introduces any new terms is a counter-offer, which has the effect of terminating the original offer.

A counter-offer is a final rejection of the original offer. If a counter-offer is made, the original offeror may

accept it, but if they reject it, their original offer is no longer available for acceptance.

A counter-offer may of course be accepted by the original offeror.

Butler Machine Tool Co v Ex-cell-O Corp (England) 1979

The facts: The claimant offered to sell tools to the defendant. Their quotation included details of their

standard terms. The defendant 'accepted' the offer, enclosing their own standard terms. The claimant

acknowledged acceptance by returning a tear-off slip from the order form.

Decision: The defendant's order was really a counter-offer. The claimant had accepted this by returning

the tear-off slip.

6.2.1 Request for information

It is possible to respond to an offer by making a request for information. Such a request may be a request

as to whether or not other terms would be acceptable – it is not a counter-offer.

Stevenson v McLean 1880

The facts: The defendant offered to sell iron at '40s net cash per ton, open till Monday'. The claimant

enquired whether he would agree to delivery spread over two months. The defendant did not reply and

(within the stated time limit), the claimant accepted the original offer. Meanwhile the defendant had sold

the iron to a third party.

Decision: There was a contract since the claimant had merely enquired as to a variation of terms.

Key term

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