Termination of offer
Revocation
● Possible and effective anytime before acceptance (Payne v Cave)
● But the revocation of the offer is ineffective unless it has been communicated
to the offeree (must be communicated).
● It is common to keep an offer open for a specified period. The offerer has the
option to withdraw the offer before that specified time. That is, the offeror is
not bound to keep the offer open till the expiry of the specified period.
● Under English law an offer without valuable consideration can be voided, but
Roman Dutch law takes a different view. Accordingly, the offer should be kept
open until the end of the specified period, whether or not it has a valuable
return. Ceylon law follows the Roman Dutch legal attitude on principle as well
as moral values
-Weeramatry (140-142)
Byrne v Van Teinhoven (1880)
Facts
The defendants wrote a letter, on October 1, to the plaintiffs offering the sale of
1000 boxes of tin plates. The defendant was based in Cardiff and the plaintiff
was based in New York, and letters took around 10-11 days to be delivered.
The plaintiffs received this letter on October 11 and accepted it on the same day
by telegram, as well as by letter on October 15. However, on October 8, the
defendant sent a letter to the plaintiffs which withdrew their offer and this
arrived with the plaintiff on October 20. The plaintiffs claimed for damages for
the non-delivery of the tin plates.
Issue
The court was required to establish whether the withdrawal of the offer for the
sale of goods was acceptable. The court would have to consider whether the
contract had been agreed by the acceptance by the plaintiffs of the letter of
October 1, or whether the defendants had successfully withdrawn their offer by
issuing the withdrawal by letter on October 8.
Decision / Outcome
The court held that the withdrawal of the offer was ineffective as a contract had
been constructed between the parties on October 11 when the plaintiffs
accepted the offer in the letter dated October 1. On this basis, it was held that
an offer for the sale of goods cannot be withdrawn by simply posting a
secondary letter which does not arrive until after the first letter had been
responded to and accepted. The court gave judgment for the plaintiff and
awarded that the defendant paid their costs.
Laps of Time
● If the offer says it is open for acceptance until a particular day, a later
acceptance will be ineffective.
● If there is no specific date, the offer is open for a reasonable period
Ramsgate Victoria Hotel Co v Montefiore ( 1866)
Facts
The defendant, Mr Montefiore, wanted to purchase shares in the
complainant’s hotel. He put in his offer to the complainant and paid a
deposit to his bank account to buy them in June. This was for a certain
price. He did not hear anything until six months later, when the offer
was accepted and he received a letter of acceptance from the
complainant. By this time, the value of shares had dropped and the
defendant was no longer interested. Mr Montefiore had not withdrawn
his offer, but he did not go through with the sale.The complainant
brought an action for specific performance of the contract against the
defendant.
Issue
Whether there was a contract between the parties after the acceptance of
the original offer six months after it was made.
Decision
The court held that the Ramsgate Victoria Hotel’s action for specific
performance was unsuccessful. The offer that the defendant had made
back in June was no longer valid to form a contract. A reasonable period
of time had passed and the offer had lapsed. The court stated that what
would be classed as reasonable time for an offer to lapse would depend
on the subject matter. In this case, it was decided that six months was the
reasonable time before automatic expiration of the offer for shares. Yet,
for other property, this would be decided by the court in the individual
cases.
This Case is Authority For…
Where an offer does not specify that it is valid for a given amount of time, it will
expire once a reasonable period has passed.
Dickson v Dodds (1875)
Facts
The defendant, Mr Dodds, wrote to the complainant, Mr Dickinson, with an offer to
sell his house to him for £800. He promised that he would keep this offer open to him
until Friday. However, on the Thursday Mr Dodds accepted an offer from a third party
and sold his house to them. It was claimed that Mr Dickinson was going to accept this
offer, but had not said anything to Mr Dodds because he understood that he had until
Friday. Mr Dodds communicated that the offer had been withdrawn through a friend
to the complainant. After hearing this, Mr Dickinson went to find the defendant,
explaining his acceptance of the offer. The complainant brought an action for specific
performance and breach of contract against the defendant.
Issues
The issue in this case was whether the defendant’s promise to keep the offer open until
Friday morning was a binding contract between the parties and if he was allowed to
revoke this offer and sell to a third party.
Decision/Outcome
The court held that the statement made by Mr Dodds was nothing more than a
promise; there was no binding contract formed. He had communicated an offer for
buying his house to the complainant and this offer can be revoked any time before
there is acceptance. There was no deposit to change this situation. Thus, as there was
no obligation to keep the offer open, there could be no ‘meeting of the minds’ between
the parties. In addition, the court stated that a communication by a friend or other
party that an offer had been withdrawn was valid and would be treated as if it came
from the person themselves.
This Case is Authority For…
There is no need for the offeror to give the offeree any formal notice that the offer is
withdrawn. If the offeree becomes aware that the offeror has acted in a way which is
inconsistent with the offer still being open, it is withdrawn.
James LJ explained that the reason for this is that a contract requires an objective
meeting of minds. Normally, by making an offer, the offeree objectively holds himself
out as continuing to make the offer until it is accepted. However, if the claimant learns
of information which is inconsistent with a continuing offer, there is no longer
objectively a meeting of minds.
Other
This case confirms that the offeror can withdraw their offer at any time, even if they
have stated that the offer will remain open for a particular period of time.
James LJ explained that the reason for this is that the offeree does not usually provide
consideration for the promise to leave the offer open for a particular length of time.
The offeror is therefore not contractually bound to leave the offer open.
If the offeree did provide consideration for the promise to keep the offer open, it is
likely that the offeror could still validly withdraw the offer. However, he would be in
breach of contract for doing so, and would have to paydamages
Failure of a condition subject to which the offer was made
● An offer can be conditional and not absolute.
● Conditions can be expressed or implied.
Financings Ltd v Stimson (1962)
Fact
The case regarded a hire purchase transaction, in which the dealer was an agent
of the finance company. The hirer paid a deposit of £70 to a dealer and agreed
to purchase a motor car from the plaintiff, a finance company, for £414. The
agreement held that it would become binding once the finance company had
signed the document, which signalled acceptance. The company did not sign
the contract until March 25, 1961. The hirer had taken the car away on March
18 and returned the car on March 20, stating he did not wish to continue with
the purchase, offering to lose his deposit in order to exit the agreement. Both
the dealer and hirer thought that the finance company had signed the document
and had therefore accepted the agreement. On the night of March 24, the
dealer’s shop was broken into and the motor vehicle was stolen. The finance
company sought to recover the price of the motor car from the hirer.
Issue
The key issue for the court was whether the dealer had the authority to
complete the contract with the hirer and importantly, whether a contract had
been constructed.
Decision / Outcome
The court found that the dealer had the authority to receive acceptance and
revocation from the purchaser. On this basis, when the hirer returned the car
and revoked his offer, there was no longer a contract for the motor car. Further
to this, the hirer was owed the car in the same condition as when the offer was
made and when the finance company signed the agreement and accepted the
contract on March 25, the car was not in the same condition and therefore there
was no contract.
Case is Authority For…
Where an offer is conditional on a particular fact, then it cannot be accepted unless
that fact holds.
Other
Lord Denning noted that the factual circumstances determine whether parties are in an
agency relationship. Stating that the contract is not one of agency does not preclude
the courts from holding that it is.
Pearson LJ dissented on the first ground. He did not think that it was apparent from
the facts that the dealer had ostensible authority to receive a revocation on the
claimant’s behalf. He agreed that the offer was conditional, however.
Death
● In order for an offer to be valid, both the offeror and the offeree must be alive.
If an offer is issued to a specific person, it should also be received by that
person. That is, if he was dead, the offer should be ended.
● It can be a valid acceptance if the offeror does not know that the offerer is dead
at the time of acceptance. But what is mentioned in offer should be able to be
fulfilled by the legal representatives in such a case.
“…..In the case of the death of the offeror, it seems that, if the offeree does not know
that the offeror had died, an acceptance will be valid if the nature of contract is such
that it can be performed by the offeror’s personal representatives. See Bradbury v
Morgan. However, if the offeree is given notice of the offeror’s death, the estate will
not be bound. There is no direct English authority on the converse situation, where the
offeree dies. Probably the offer comes to an end, by operation of law, on the death of
the offeree. A Canadian Case Re Irvine points that way..”
-Davis on Contract, 10th Edition P. 25
Bradbury v Morgan (1862)
Facts
Leigh requested that Bradbury provide credit to his brother to the value of £100. Leigh
guaranteed the account owned by his brother to this effect. Accordingly, Bradbury
credited Leigh’s brother’s account and continued selling goods to Leigh in their usual
manner. Unfortunately, Leigh died and Bradbury continued to supply his brother with
goods on the credit which had been previously agreed. Bradbury had no knowledge or
notice of the death of Leigh. Morgan, who was an executor on behalf of Leigh, did not
pay Bradbury for the goods and refused to do so on the basis that the debts were
contracted after Leigh’s death and as a result, Leigh was not liable for the payment.
Bradbury brought an action for the payment that was due for the goods.
Issue
In this case, the court had to decide whether the agreement between the parties was a
contract or simply a request which could be concluded upon the death of Leigh. If it
was deemed that this was a contract, then the court would have to understand whether
Morgan, as an executor of Leigh, was still liable to pay for the goods that were being
received.
Decision/Outcome
The court found in favour of Bradbury. The court held that if the situation was dealing
with an implied contract which had arisen out of a request, then it would be stopped
by the death of a party. However, in this circumstance, there was no notice provided of
the death of Leigh, and therefore there was no attempt to end the contract.
This Case is Authority For…
Unless there is anexpressorimplied termprovidingthat the contract terminates on
the death of one party, contracts remain valid if one party dies.
Re Irvine (1928)
