Revocation or Termination of Offer

According to Section 6, an offer may come to an end in any of the following ways:

1. Notice of Revocation:

The offeror can revoke his offer at any time by sending a notice of revocation to the offeree, before its acceptance. The offeror can reject the offer before its acceptance even though the period for which the offer was kept open has not yet expired.

Example:

A, the offeror at an auction sale makes the highest bid. But he has the right to withdraw (revoke) the bid (offer) is revoked before acceptance.

2. Lapse of Time:

When the offer states that, the it is open until a particular date the offer terminates on that date if it is not accepted by that time. If the offer does not specify the time, it will terminate after the lapse of a reasonable time. What is reasonable time depends upon the circumstances of each case.

Example:

An application for allotment of shares was made on 8^th June. The application was informed on the 23^rd November that shares have been allotted to him. He refused to accept them. It was held that his offer had lapsed by reason of the delay of the company in notifying their acceptance, and that he was not bound to accept the shares.

3. Failure to Fulfill Condition:

An offer stands revoked if the offeree fails to fulfill the conditions given therein. If an offer contains some conditions and the offeree has taken responsibility to fulfill such conditions and if the offeree fails to fulfill such conditions the offer terminates.

Example:

A offer to sell his scooter to B for Rs.48,000 if B gets admission in medical college. If B fails to get admission the offer will stand revoked as he fails to fulfill the conditions.

4. Revocation of Offer by Offeree:

If the offeree rejects the offer and communicates the rejection to the offeror, the offer shall terminate even though the period for which the offer was kept open may not have yet expired. The rejection may be by words spoken or written or implied.

Example:

A offered to B to sell his bicycle to him at Rs.1000 only telling t hat the offer was open for a period of 10 days. Here B being the offeree only after 3 days rejected the offer. It shall terminate although the period for which offer was kept open had not yet expired.

5. Counter Offer by the Offeree:

An offer may be revoked by the offeree by making the counter offer. An offer comes to an end when the offeree makes a counter offer.

Example:

A offers to sell his house to B for Rs.1 Lac B offers Rs.80,000. A refuses. Finally, B offers Rs.1 lac but A refuses to sell. There is no contract because B by offering Rs.80,000 has already rejected the offer.

6. Death or Insanity of the offeror or Offeree:

If the offeror dies or becomes insane before the acceptance the offer lapses provided that the fact of his death or insanity comes to the knowledge of the acceptor before acceptance. If the person to whom a proposal is made dies before the acceptance of the proposal the proposal will come to an end. But if he dies after proposal is accepted then his legal representative, will be responsible for the contract.

Example:

X had written t o the D requesting them to give credit to Y and guaranteeing payment up to Rs.100. D gave credit to Y.X then died and D in ignorance of this fact of death continued the credit to Y. D sued X’s executors on the guarantee. It was held that the defendants were liable.

7. Subsequent Illegality:

An offer lapses if it becomes illegal after it is made and before it is accepted. An offer may also terminate, when it becomes illegal due to change in law, before its acceptance by the offeree.

Example:

An offer is made to sell 10 bags of rice for Rs.2000 and before it is accepted a law prohibiting the sale of rice by private individuals is enacted the offer comes to an end as sale would be illegal on the promulgation of the new law.

8. Destruction of Subject Matter:

An offer lapses if the thing which is the subject matter of the offer destroys before its acceptance by the other party.

Example:

A offer to sell his horse to B the horse dies before the acceptance of offer by B the offer terminates.