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You made an offer. Can this be terminated?

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As the offeror, you have extended an offer to the offeree. Can this offer be terminated? Are you locked in, waiting for them to accept or decline? Is your offer on the table forever? In fact, offers can be terminated before acceptance under specific circumstances. Understanding how and when an offer can be terminated is key to maintain clarity, ensure legal compliance in contractual dealings, and encourage parties to cooperate.
Withdrawal of an offer
As a general rule, an offer can be withdrawn at any time before it is accepted. However, the revocation must be communicated to the offeree to be effective. The notice to withdraw the offer must be given and must reach the offeree, or its agent (if the agent is authorised to receive notification of withdrawal).
The withdrawal must be communicated before the offeree has accepted the offer. Once an offer has been accepted, it cannot be withdrawn. The revocation can be communicated directly by the offeror or indirectly through a reliable third party (as established in Dickinson v Dodds). In the case of unilateral contracts revocation must occur before the offeree has begun performance.
Rejection of an offer
If the offeree rejects the offer, the offer is terminated. However, rejection must be communicated to the offeror, otherwise, it will have no effect. It is important to note that a counter-offer made by the offeree constitutes a rejection of the original offer, as established in Hyde v Wrench. This means that the original offer cannot be subsequently accepted unless the offeror agrees to renew it.
Lapse of time
An offer may terminate if it is not accepted within a specified period, or, if no time is specified at all, within a reasonable time. The reasonable time will be determined each time depending on the circumstances (for example, the nature of the subject matter, practices within the industry or means used to communicate the offer).
Occurrence of a condition
An offer can be conditional, meaning that its validity depends on the fulfillment or non-fulfillment of certain conditions. If the specified condition does not occur, the offer may be terminated. The example can be bidding at auction, where an offer will lapse if a higher bid is made. Another example can be an offer to purchase a property conditional upon the buyer secures financing. If the condition is not met, the offer terminates automatically, and no acceptance can occur.
Death
The death of either party can result in the termination of an offer, but the rules differ depending on the nature of the offer and other circumstances. If the party making the offer dies before acceptance, the offer is generally terminated. However, exceptions may apply, such as when the offeree has accepted the offer without knowledge of the offeror’s death or when the offer is a continuing one (for instance, in the case of continuing guarantees).
If the party to whom the offer is made dies before acceptance, it will mainly depend on the nature of the offer. If the offer pertains to a contract which is not “personal”, it might be construed to have been made to the offeree and his executors, and thus being capable of being accepted. In other cases, the offer is terminated because there is no longer a party capable of accepting its terms.
Supervening incapacity
If the offeror loses mental capacity, they are not bound by any acceptance made after the offeree is aware of the incapacity or after the offeror’s property is subject to a court order, but the offeree would still be bound. If an offer is made to a person who later lacks mental capacity, the offer can still be accepted, thereby binding the other party.
If a company makes an offer and later alters its articles of association so that it cannot enter into the contract, any acceptance of the offer will still be effective in favor of a person dealing with the company in good faith. Conversely, if the company is the offeree, accepts an offer, and then amends its articles of association to deprive itself of the capacity to fulfill the contract, the acceptance will still be effective in favor of the person who made the offer in good faith[1].
Conclusion
Offers do not last indefinitely, and their termination can occur under several circumstances, including withdrawal, rejection, lapse of time, non-occurrence of conditions, death, and supervening incapacity. Understanding these rules is essential to prevent disputes and ensure compliance with UK contract law. Whether you are the offeror or the offeree, seeking legal advice when handling offers can help protect your rights.
[1] Peel, E. (2020), Treitel on the Law of Contract (15th ed.), Sweet & Maxwell, p.50
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.