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

It was held that there was no existence of a valid binding contract between the parties for the purchase of the property. The defendant offered to sell his house for £1,000 to the plaintiff. If that offer had been accepted there would undoubtedly have been a valid binding contract. However, the plaintiff made an offer of his own to purchase the property for £950, and thereby rejected the original offer. Thus, the counter offer destroyed the original offer.

Thirdly, an offer may be terminated by a lapse of time. An offer which states that the offer is open to a specific period of time cannot be accepted after the date.

Fourth, an offer which is stated to come to an end if certain even occur cannot be accepted after that event has taken place. Canning v Farquhar (1885) 16 QBD 727- held: an offer to insure a person's life cannot be accepted after he has seriously injured himself.

Lastly an offer maybe terminated by the death of the offeror. Bradbury v. Morgan (1862) 1 H & C 249.

It is held that death always terminates an offer because the parties cannot enter into an agreement once one party is deceased. The law states on the death of the oferee, the offer comes to an end.

Discuss the contractual position between Jane and Louise in the following three separate situations. [750 words max]

(1) Louise signs a contract with LegIt & Co to move Jane's mobile home on Thursday to a new site. Louise posts a letter of acceptance to Jane on Wednesday, at 5.00pm. On the same evening Jan telephones Louise to say that she has changed her mind and will not be selling.

The significant feature here is that the offeror did not prescribe a mode of acceptance. Under Byrne & Co v Leon Van Tienhoven & Co Jane would be in a vulnerable position since it was held that withdrawal of an offer must be communicated to the offeree to be effective, in this case it was done by telephone after the acceptance had taken place. The rule is that the offeree must remain to the prescribed mode of acceptance, if not the acceptance is invalid Eliason v Henshaw. However offeror didn't therefore the offeree may choose a mode of acceptance Tinn v Hoffman.

The case in support of her position is Henthorn v Fraser. It was held that there was a contract because the acceptance was complete at the moment of its posting, even though the offer was not made by post. The acceptance is complete as soon as it is posted.

Louise's case is the source of the 'Postal rule' that where post is a reasonable way to accept an offer the acceptance is effective on posting The Household Fire v Grant. Thus Jane is in breach of contract. The situation could also be argued on a detrimental reliance part. It would be unfair if Jane was not in breach, since Louise did give sufficient consideration and went through the detriment of contracting with a third party at her own expense on the anticipation that the agreement between her and Jane would be carried out.

(2) On Thursday Louise e-mails Jane at work and formally accepts the offer of sale at £14.500 but adds: "I suppose there is no chance of moving it on the Saturday instead?" Jane only reads the e-mail after leaving a recorded message on Louise's answering machine in which she withdraws her offer.

First, this is not a counter-offer Hyde v Wrench but a request for further information. Louise didn't add a new term into the contract which constitutes termination to the original offer but was asking for an extended date for delivery. Therefore the agreement between both parties is still in existence.

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.

Is the recorded message of revocation affective upon receipt The Brimnes? If not, then the intention of the parties was that Jane's revocation would only be effective, when her recorded message was heard by Louise before acceptance had taken place. However, this is not the case here. Louise had already accepted the offer.

Had Jane used another means of communicating her withdrawal then she would have probably been successful Bryne v Van Tienhoven. Looking at the situation under The Brimnes case, Louise's acceptance was effective when sent; therefore a contract was created, preventing Jane from revoking the offer.

(3) On Wednesday Louise, is told by a member of the local tennis club that Jane's application to emigrate to New Zealand has been refused. Louise immediately sends a fax to Jane's place of work in which she accepts Jane's offer. It transpires that Jane had sent a text message to Louise's mobile phone, which read: "Sorry but the mobile home is no longer for sale".

The acceptance of an offer has been made where there is no original offer. When Jane made an offer, Louise didn't give a response which Jane could rely upon. Thus it can be argued that Jane is not bound to sell to Louise. In contrast Louise could be making an offer and it is up to Jane to accept or not. Thus a new contract is in existence. In Smith v Hughes the parties not being ad idem, there was no contract.

An offer can actually be withdrawn by the offeror at any time before it is accepted Louise didn't accept the offer at first. In Routledge v Grant defendant withdrew his offer and the plaintiff sought to accept it after. Jane had the right to repudiate; she revoked her offer before acceptance. It can too be argued that there was no actual offer. Louise had suspended the original offer at the tennis club, therefore it was up to Jane to accept or not. In both situations Louise does not have a right to enforce the contract. The rule of revocation can be opposed on an objective approach. Jane's withdrawal through text message was quick, efficient and did not take place after an acceptance. Entores is a sensible rule here, but does not hold much water in this case. Louise is at fault, since withdrawal of the offer may have been bought to her attention before she sent her fax, had she checked or kept her mobile phone on her Brinkibon v Stag Stahl & The Brimnes.

3. To what extent do you consider the rules as outlined in (1) above to produce contradictory and/or manifestly unfair results when applied to standard, day-to-day pre-contractual negotiations? Have these situations been exacerbated in any way by developments in communications technology?

The rule of revocation is consistent with classical theory, which demands an agreement. It therefore follows that's if an offer is made the only way to revoke it, is by a communication that creates a second consensus ad idem. One under which the parties know that they are no longer bound. However, in practice it is difficult to achieve such legitimise.

There are problems here. First, how can an offer from a unilateral contract that has been made to the world in general (Carlil) be revoked?

If one advertises an offer in return for an act, how can they possibly communicate their revocation to all the people who might have seen the offer in a magazine? The problem is complex and there is very little case material on this point. However, an American case Shuey v US 1875, which was concerned with the revocation of an offer of a reward. The courts held that communication to every individual reader was unnecessary. Thus, the offer could be revoked in the manner it was made. Hence an offer advertised in a newspaper must be revoked by a similarly in the same newspaper. But there are problems with this decision. What would the situation be if an offer was made in a monthly gazette and the offeror wished to revoke it? Would he have to wait until the next month's Gazette or could he revoke by placing an advertisement in a daily newspaper, or a magazine?

The second problem is, can an offer be revoked once the act has taken place? In Luxor v Cooper a property seller was allowed to revoke his promise to pay £10,000 commission to an estate agent, if he could introduce a purchaser who should buy the sellers property. He revoked. The courts consistently with the general rule held he was entitled to do so. The contractual terms were clear, commission was payable on completion of the sale. Though it is consistent with the general rule it may be limited to its own facts e.g. an estate agent agreement where commission is payable on sale. Had the courts decided otherwise the seller would have suffered a detriment by paying commission even though they had changed their minds about selling. On the contrary in certain types of contracts, once the offer has been acted upon it cannot be revoked. In Errington v Errington the courts decided that so long as the repayments were being made the fathers offer couldn't be revoked. The reasoning here is underpinned by reliance theory. The couple relied on the father's promise and acted to their detriment by starting to make the mortgage repayments. In Daulia v Four Millbank Nominees, it was said that there are cases where revocation of a unilateral offer will not be possible once the offeree has embarked upon it.

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.