INTRODUCTION.
In the realm of Contract Law, understandings the concept of an offer and its termination is fundamental. An offer represents a clear proposal made by one party (the offeror) to another (the offeree), indicating a willingness to enter into a contract on specific terms. However, offers are not perpetual; they can be terminated through various means, rendering them incapable of acceptance.
This article delves into the termination of offers, exploring the different modes through which an offer can be brought to an end, supported by pertinent case law. This knowledge is crucial for law students, legal practitioners, and anyone interested in the legal intricacies of contract formation and dissolution.
What Constitutes Termination of an Offer?
Termination of an offer in law refers to the cessation of an offer’s validity, making it no longer open for acceptance. Once an offer is terminated, it cannot form the basis of a binding contract. The termination can occur through several mechanisms, each with its legal implications.
Modes of Terminating an Offer
1. Revocation by the Offeror
Revocation involves the withdrawal of an offer by the offeror before it is accepted by the offeree. For a revocation to be effective:
It must occur before acceptance.
It must be communicated to the offeree.
Case Law: Dickinson v Dodds (1876) 2 Ch D 463
In this case, Dodds offered to sell property to Dickinson, promising to keep the offer open until a specific time. However, before that time elapsed, Dodds sold the property to a third party. Dickinson, upon learning of the sale, attempted to accept the original offer. The court held that the offer had been effectively revoked, emphasizing that an offer can be withdrawn at any time before acceptance, provided the revocation is communicated, even indirectly.
Case Law: Routledge v Grant (1828) 4 Bing 653
Here, Grant offered to purchase a property and promised to keep the offer open for six weeks. He revoked the offer before the six-week period ended. The court upheld the revocation, stating that unless there is consideration to keep the offer open (i.e., an option contract), the offeror can revoke the offer at any time before acceptance.
2. LAPSE OF TIME.
An offer may lapse and become void due to the passage of time:
Specified Time: If the offer specifies a time frame for acceptance, it automatically lapses after that period.
Reasonable Time: If no time is specified, the offer remains open for a reasonable time, which depends on the nature of the contract and market conditions.
Case Law: Ramsgate Victoria Hotel Co v Montefiore (1866) LR 1 Ex 109
Montefiore applied for shares in the Ramsgate Victoria Hotel Company and paid a deposit. The company did not respond until five months later, by which time Montefiore had lost interest. The court held that the offer had lapsed due to the unreasonable delay in acceptance.
Case Law: Quenerduaine v Cole (1883) 32 WR 185
An offer sent by telegram was responded to by post after a delay. The court deemed the acceptance ineffective due to the unreasonable lapse of time, highlighting the importance of prompt communication in time-sensitive offers.
3. Rejection by the Offeree
An offer is terminated if the offeree rejects it. Rejection can be:
Express: A clear refusal of the offer.
Implied: Through a counter-offer, which proposes different terms.
Illustration: If A offers to sell a car to B for ₦500,000, and B responds with an offer to buy it for ₦450,000, B has made a counter-offer, effectively rejecting the original offer.
Case Law: Hyde v Wrench (1840) 3 Beav 334
Here Wrench offered to sell his farm to Hyde for £1,000. Hyde responded with a counter-offer of £950, which Wrench declined. Hyde then attempted to accept the original £1,000 offer. The court held that the original offer was no longer valid, having been rejected by the counter-offer.
4. Death of the Offeror or Offeree
The death of either party can terminate an offer:
Offeror’s Death: If the offeror dies before acceptance, and the offeree is unaware, the offer may still be valid, depending on the nature of the contract.
Offeree’s Death: If the offeree dies, the offer cannot be accepted.
Case Law: Bradbury v Morgan (1862) 1 H & C 249
Fact is as followsLeigh guaranteed his brother’s debts to Bradbury. After Leigh’s death, Bradbury, unaware of the death, continued to supply goods. The court held that the guarantee was still enforceable, as Bradbury was unaware of Leigh’s death, and the contract did not require personal performance.
5. Failure of a Condition Precedent.
If an offer is subject to a condition precedent, and that condition fails, the offer is terminated.
Illustration: A offers to sell a house to B, provided B secures financing within 30 days. If B fails to obtain financing within that period, the offer lapses.
6. Supervening Illegality.
If the subject matter of the offer becomes illegal after the offer is made but before acceptance, the offer is terminated.
Illustration: A offers to sell a chemical to B. Before B accepts, the government bans the sale of that chemical. The offer is terminated due to supervening illegality.
7. Destruction of Subject Matter.
If the subject matter of the offer is destroyed before acceptance, the offer is terminated.
Illustration: A offers to sell a specific painting to B. Before B accepts, the painting is destroyed in a fire. The offer is terminated due to the destruction of the subject matter.
CONCLUSION.
Understanding the various modes of terminating an offer is crucial in Contract Law. Whether through revocation, lapse of time, rejection, death, failure of a condition, supervening illegality, or destruction of the subject matter, each mode has specific legal implications. Familiarity with these concepts and the relevant case law ensures a comprehensive grasp of how contracts are formed and dissolved.
Further Reading and Resources
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