KembaraXtra - Legal Terms - Revocation of Offer

Revocation of an offer is the withdrawal of an offer by the offeror before it has been accepted by the offeree. Once effectively revoked, the offer can no longer be accepted. Revocation is an important principle of contract law because it determines the period during which an offer remains capable of acceptance. The offeror generally retains control over whether the offer remains open. However, certain exceptions apply.

For a revocation to be effective, it must be communicated to the offeree before acceptance occurs. Communication may come directly from the offeror or indirectly from another reliable source. Once the offeree becomes aware that the offer has been withdrawn, the offer immediately ceases to exist. An attempted acceptance after revocation has no legal effect. Communication is therefore essential.

As a general rule, an offer may be revoked at any time before acceptance. This principle was established in Routledge v Grant (1828), where the court held that a promise to keep an offer open is not binding unless supported by separate consideration. Consequently, even if the offeror promises to leave an offer open for a specified period, the offer may still be withdrawn before acceptance unless a legally enforceable option exists. The rule reflects the ordinary principles of contract formation.

One important exception arises where the offer is coupled with an option contract. An option is a separate agreement supported by consideration under which the offeror promises to keep the offer open for a specified period. During that period, the offer cannot be revoked. This provides certainty for the offeree while deciding whether to accept. Option contracts are common in commercial transactions involving land and shares.

Revocation of an offer differs from rejection and lapse of an offer. Rejection occurs when the offeree refuses the offer, while lapse occurs automatically because of time or other circumstances. Revocation, by contrast, is initiated by the offeror before acceptance. Understanding these distinctions is fundamental to determining whether a binding contract has been formed. Together, these rules govern the life cycle of contractual offers.