untitled

Acceptance 49

Termination of offers

As soon as an offer is accepted, a contract is created. However, an offer which has been
made might cease to exist in various ways, and once an offer has ceased to exist it can no
longer be accepted.

Revocation

If an offer is revoked, it is called off by the offeror. Once an offer has been revoked it can no
longer be accepted. A revocation is effective when it is received rather than when it is sent.
We have already seen that acceptance of an offer is also effective when received. Therefore,
cases involving revocation often amount to discovering which of the parties managed to
communicate with the other first. Was the acceptance communicated before the revocation
was communicated? If so, there will be a contract. Or was the revocation communicated
before the acceptance was communicated? If so, there will be no contract. The following
case provides an example of this type of dispute and also demonstrates that revocation can
be communicated by an unauthorised third party, if he can be regarded as reliable.

The postal rule, which we examined earlier, has always been confined to acceptance of
offers and has never applied to revocations. Revocations are always effective when received,
whether sent by letter or not.

Dickinson vDodds (1876)

On Wednesday 10 June the defendant wrote a letter to the claimant offering to sell his

house. The letter stated that the offer would be kept open until 9 a.m. on Friday 12 June.

On Thursday the defendant sold the house to a third party, Allen. Yet another person, Berry,

found out about this and told the claimant. At 7 a.m. on Friday 12 June the claimant

accepted the defendant’s offer. The defendant told the claimant that he was too late to

accept. The claimant sued for breach of contract.

HeldThere was no contract because the offer to sell had been revoked by Berry when he

told the claimant that the house had been sold to Allen. Therefore, the offer no longer

existed when the claimant attempted to accept it.

CommentIt might seem unfair that the offer could be revoked before the deadline. This

was allowed because no consideration was given in return for the promise to keep the offer

open, that is to say nothing of any value was given in return. Consideration is examined

later in this chapter.

Byrne & Co vVan Tienhoven & Co (1880)

On 1 October 1879 the defendants, who carried on business in Cardiff, posted an offer to

sell 1,000 boxes of tinplate to the claimants in New York. On 8 October the defendants

posted a revocation of their offer. The defendants’ offer was received by the claimants on

11 October and a telegram of acceptance was sent the same day. On 20 October the

defendants’ letter of revocation reached the claimants.

HeldA good contract came into existence on 11 October. The revocation was not effec-

tive until it was received on 20 October.