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Outline the basic rule of the law of contract regarding the effective revocation of an offer.

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Introduction

Outline the basic rule of the law of contract regarding the effective revocation of an offer. [750 words max] In the Law of Contract, there have been five fundamental performances by which an offer can be terminated. Firstly, an offer can be withdrawn. Thus, an offer can be withdrawn by the offeror at anytime before acceptance has taken place. To withdraw an offer, the offeror must bring notice of the withdrawal to the attention of the offeree. This is the general rule for revocation. But, there is however no actual requirement that the offeror himself must be the one to put forward his withdrawal to the attention of the offeree. In Dickinson v. Dodds (1876) 2 Ch D 463, the defendant offered to sell a house to the plaintiff for �800. The offer being left open until Friday. On Thursday the defendant sold the house to a third party. The plaintiff was informed of the situation by someone else. Nevertheless the plaintiff on Friday, decided to send the defendant a letter of acceptance. The plaintiff sued the defendant for breach of contract. The court held no contract had been made between the two parties, because the offer had been withdrawn before it was accepted. Hence the lapse of time for the acceptance to take place (offer was open until Friday) and the revocation which took place on the Thursday before acceptance had taken place and the plaintiff was also informed by the third party of the withdrawal. ...read more.

Middle

The implication here, is the revocation effective when recorded or when it has been listened to by offeree? Article 11 (2) of the Draft Directive on Electronic Commerce say's that communication takes place once the recipient of e-mails 'are able to access them'. Entores Limited v Miles suggested that. if the offeror does not hear the acceptance it is not effective. Hence it could be argued that since Louise was not aware of the withdrawal, her acceptance was binding. In The Brimnes the question was whether the plaintiff's withdrawal through telex was effective when it was received during office hours or when it was read the following morning. It was held that telex was effective on receipt. Thus, Jane's revocation is valid. However the question is whether if, the e-mail implied that acceptance would have been read sometime during the day, then a contract would have come into force, though subject to Jane's timing of withdrawal. Furthermore, if the recorded message had suggested that it had been listened to on the same day then it would seem that Jane's revocation would have already become effective. The dilemma is complex. Under Brinkibon Ltd v Staghag Stahl it was held that messages may not reach or be intended to reach, the designated recipient immediately: message may be sent at night with the intention that they will be read at a later time. Therefore there is no general rule to cover such cases, but they must be resolved by looking at the intention of the parties. ...read more.

Conclusion

But what happens when a third party communicates a revocation without any knowledge from the offeror (Dodds)? The case raises a number of issues. Does the third party have to be reliable? How does the offeree judge this reliability? There is a persuasive judgement of Mellish LJ that the selling of the property to someone else would constitute revocation. But isn't this inconsistent with the general rule which demands communication Can an offer be kept open such as in Dodds? In Routledge v Grant the offeror's offer was open for six weeks but was still allowed to revoke well before this period had expired. The suggestion is the only way to ensure an offer is open is to pay for the privileges. In Mountford v Scott the purchaser paid �1 to keep open the offer to buy the property for �10000 for six months. The seller was not allowed to revoke. An offer may state that it is open for a certain time and after the passing of which the acceptance will be ineffective. If no limits are mentioned the offer terminates after a reasonable time. But was reasonable? In Ramsgate Victoria Hotel v Montefiore an offer to buy shares was held ton have terminated after five months. However, there is uncertainty here. What is a reasonable period of time? What is a reasonable period will vary with the subject matter, e.g. shares are likely to fluctuate in price and therefore offers of these types are likely to remain open for a short time. Although there is uncertainty there is unlikely to be any problems unless there is reliance by one of the parties or a third party and this is not very probable. ...read more.

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