Introduction Before we discuss the topic of “how is an offer terminated”, we should have a general view on what is an offer. An offer is a definite promise or proposal to be bound on specific terms, and cannot be vague. If the offer had terminated, a contract would never be completed. Offer can be terminated in number ways and I will make use of examples or case law to show how an offer can be terminated. 1. Acceptance When an offer was accepted by someone, it would bring the offer to the end. For example, Mary offered John to sell her computer for $5000 on Sunday, and ask John to reply no later than this Wednesday.
John sent an acceptance to Mary on Tuesday noon. And Mary sent revocation to John on Tuesday night. It was held that the revocation is not valid and a contract was formed. So Mary had to sell her computer to John. 2. Rejection Rejection means that offeree think the offer is unacceptable and the offeree rejects the offer. However, we should notice that it is impossible for the offeree to accept the offer again once he rejected the offer. For example, Mary sent a notice to John to say that she is willing to sell her computer to John for $5000. And John replied that it is too expensive and he was not willing to buy.
It was held that the reply from John is a rejection. After rejecting Mary’s offer, John cannot accept the offer again and the offer was terminated. 3. Counter offer A Counter offer is the rejection of offer from offeree to offeror and subsequently, the offeree make an alternative offer to the offeror. A counter offer would terminate the original offer and introduce a new offer to the original offeror. This principle laid down in Hyde v Wrench(1840). Wrench offered to sell his estate for ? 1000 and Hyde offered to purchase for ? 950. Wrench rejected and Hyde replied that he accepted Wrench’s earlier offer.
Wrench rejected Hyde’s offer. Hyde sued for breach of contract. It was held that Hyde’s replied was a counter offer to Wrench. The counter offer would terminate Wrench’s offer. The decision is that Hyde could not enforce Wrench to sell the estate since the offer from Wrench had been considered rejected and terminated. However, if the offeree was willing to accept the offer but just want to ask for more information to make the offer more favorable, it would not treat as counter offer. In Jacques & Co v. McLean (1880 QBD 346), the fact is A ask B for more information about the payment method, and B ignored.
After that, B sold the product to third part and A accepted the offer before deadline. It was held that A just want to ask for more information and it is not a counter offer or rejection. 4. Conditional offer A conditional offer is an offer which contains some conditions. If the condition is not met, the offer is terminated. For example, John gave Mary an offer that he would purchase her car if her car was in a good state. However, before acceptance, the car was crashed. It was held that since the offer contains a condition that the car must be in a good state, but the condition was not met and hence, the decision is the offer is terminated. . Revocation Revocation of an offer means withdrawal of an offer. The requirements are that a revocation requires communicated to offeree that the offer is no longer exist and the announcement should be made before the offer was accepted. This principle was shown in Dickinson v. Dodds (1876). The fact is Dodds offered Dickinson his house on Wednesday. On Thursday, Dickinson knew that Dodds’ property had sold to third party. On Friday before the deadline, Dickinson sent an acceptance to Dodds. It was held that Dickinson knew that Dodds’ property had sold to third party.
If offeree noticed that the offer is revoked, the offer had been revoked and terminated. 6. Lapse of time An offer would terminate after the expiry time for which the offeror intended the offer to remain open. This principle had been demonstrated in Horne vs. Niver (168 Massachusetts Reports) Niver wrote a letter to Horne on 17thJuly, 1895, offering “We beg to quote you $2. 50 on cars at that place, wire us at our expense on receipt of this. ” On 19thJuly, Horne replied for acceptance. But Niver had sold the coal to third party already. Thereupon, Horne sued for damages.
In this case, Niver had already stated that the offer should be accepted on receipt of the offer. However, Horne’s reply was late for two days; therefore the offer was no longer open to him. The decision is the offer had been terminated due to lapse of time and the acceptance is of no effect. Besides, if there was no time defined, the offer is effective in a reasonable time. This principle lay down in Park vs. Whitney (Volume 148, Massachusetts Reports). Park was the owner of stock in the Equitable Water Meter Company. On 16thMay, 1884, Whitney wrote an offer to Park and guaranty to take the meter stock from Park at cost, without interest.
Park sent a reply on 8thJuly, 1886 to accept the offer. Whitney refused to buy the stock, Park thereupon brought this action for damages. It was held that Park’s reply on 1886 was expired. An offer would not remain open infinitely. Considering the nature of the offer, the court held that two years was too long for acceptance and hence the decision is that the offer was not accepted during the period and the offer was terminated due to lapse of time. 7. Death If offeree dies or becomes mentally incompetent before the acceptance become effective, the offer would treat as terminate.
It was shown in Townsend vs. Wallace(Volume 43 Ohio State Reports). Townsend had proposed to sell some stock of share to Wallace. Wallace accepted the offer. Before the acceptance was delivered to the Townsend, Wallace died. It was held that the contract was never made because Wallace died before the acceptance made. And the offer was then been terminated. On the other hand, if offeror dies, the offer is still effective if offeree did not know that offeror is died. The contract still can be performed by offeror’s representatives. This principle was shown in Fong v. Cili (1968). Fong owned land.
Cilli and another person signed a contract of sale in respect of the land. Before the second purchaser signed the contract, Fong died. Despite received notification of Fong’s death, the second purchaser still signed the contract and an attempt was made to make Fong’s estate liable for the promise made prior to his death. It was held that the second purchaser knew Fong was died before the acceptance, so the offer is already terminated. Conclusion There are seven ways to terminate an offer, they are 1. Acceptance 2. Rejection 3. Counter offer 4. Conditional offer 5. Revocation 6. Lapse of time 7. Death