E. Revocation of the Offer
| Author | John D. McCamus |
| Profession | Professor of Law. Osgoode Hall Law School, York University |
| Pages | 82-90 |
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Until an offer has been accepted, it is open to the offeror to withdraw or revoke the offer, thereby precluding subsequent acceptance of the offer by the offeree. As we shall see,170this remains true in the case where the offeror has promised to keep the offer open for acceptance for a specified period of time. At common law, so-called firm offers do not bind the offeror unless they meet the more general requirements of the common law relating to the enforceability of undertakings.171As we have seen,172the acceptance must be made within a time deadline stipulated in the offer or, in the absence of a deadline, within a reasonable time. Otherwise, the offer will lapse before acceptance. Here we consider, however, the circumstances under which an offer can be terminated by the offeror’s decision to withdraw or revoke the offer. In particular, two issues will be considered. First, the requirements for communication of a revocation of an offer will be addressed. Second, the possible solutions to the problem posed by the possibility that the
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offeree might engage in acts of detrimental reliance prior to revocation of the offer will be considered.
Revocation of an offer by the offeror will only be effective if the intention to revocate is communicated by the offeror to the offeree. The point appears to have been considered for the first time in Byrne v. Van Tienhoven,173a case in which a mailed acceptance and a mailed revocation crossed in the mails. An offer to sell mailed on October 1st was received on October 11th by the buyers who immediately accepted the offer by telegram on the 11th. On the 8th of October, the sellers mailed a revocation of the offer that was received on October 20th. The buyers then sought to enforce the agreement and the sellers defended on the basis that the offer had been revoked on October 8th and accordingly, after that date, there was no longer any possibility of a consensus ad idem. It was necessary to determine, therefore, whether an uncommunicated revocation could be effective. Although Lindley J. indicated that it was his understanding that civilian doctrine supported such a view, he concluded that "an uncommunicated revocation is for all practical purpose and in point of law no revocation at all."174
This approach might be defended on the ground that if an uncommunicated revocation were considered effective, the offeree might unwittingly continue to suffer loss in the form of detrimental reliance on the offer after the offer has been silently revoked. Although a requirement that the revocation be communicated is far from being a complete solution to the problem posed by the possibility of detrimental reliance on offers, there is persuasive force in the argument that the offeror should be required to communicate the revocation in order to prevent further loss on the part of the offeree from this point forward.
In the Byrne case, the mailing of the revocation on October 8 preceded the mailing of the acceptance on October 11. Accordingly, it was also necessary in Byrne to consider whether the notice of revocation is effective when mailed or only upon receipt by the offeree. As we have seen,175the postal acceptance rule holds that where communication of an acceptance by mail is appropriate, the acceptance is effective upon posting. As the postal acceptance rule was well established by the time of the Byrne case, the court considered whether a similar
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principle should apply to the posting of a revocation of an offer. The court concluded that it should not apply and that revocation should be effective only upon receipt on the unconvincing ground that the agency rationale, which was said to underlie the postal acceptance rule, was inapplicable to revocation. As noted in the above discussion of the postal acceptance rule,176one of the early justifications for that rule was that by expressly or implicitly assenting to the sending of an acceptance by mail, the offeror had, in effect, designated the postal authorities as an agent for the purpose of receiving the acceptance on the offeror’s behalf. In Byrne, Lindley J. held that this principle was inapplicable to the withdrawal of an offer inasmuch as he could not find any "evidence of any authority in fact given by the plaintiffs to the defendants to notify a withdrawal of their offer by merely posting a letter."177If, as has been suggested above, however, the agency rationale offers an unconvincing explanation for the postal acceptance rule, its distinction in Byrne from the facts of revocation does not offer a convincing basis for the rule requiring communication of a revocation. Again, a more convincing justification may be found in the desirability of preventing unwitting detrimental reliance on the existence of the offer by an offeree who has not been made aware of the offeror’s decision to revoke the offer.178Although it is accepted that an uncommunicated revocation is of no effect, it is also accepted that the revocation may be effective if the offeree learns indirectly that the offeror is no longer willing to stand by the offer. In Dickinson v. Dodds,179 the defendant, Dodds, had given a firm offer to sell Dickinson a residential property at a particular price, the offer to be held open until the following Friday, June 12th, at 9 a.m. As we have noted, a mere promise to hold the offer open for a period of time was not binding on Dodds and, accordingly, Dodds was free to withdraw the offer. On Thursday the 11th, Dickinson’s agent advised him first, that he understood that Dodds was negotiating to sell the property to a third party and then, that the property had in fact been sold. Nonetheless, prior to 9 a.m. on Friday...
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