Definition:
According to section 2(a) of Indian contract act, 1872, defines offer as “when one person signifies to another his willingness to do (or) to abstain from doing anything with a view to obtaining the assent of that other to, such act (or) abstinence, he his said to make a proposal”.
Revocation (or) lapses of offer: Section 16, of the Indian contract act, 1872 deals with various modes of revocation of offer. According to it, an offer is revoked/lapses (or) comes to an end under following circumstances.
- By communication of notice: An offeror may revoke his offer at any time before the acceptance by giving a simple notice of revocation, which can be either oral (or) written.
Example: HARRIS (VS) NIKERSON (1873).
Facts: An auctioneer in a newspaper that a sale of office furniture would be held. A broker came from a distant place to attend that auction, but all the furniture was withdrawn. The broker there upon sued auctioneer for his loss of time and expenses.
Judgment: A declaration of intention to do a thing did not create a binding contract with those who acted upon it. So, that the broker could not recover. - By lapse of reasonable time: An offer will revoke if it is not accepted with in the prescribed/reasonable time. If however, no time is prescribed it lapses by the expiry of a reasonable time.
Example: Ramsgate victoria Hotel Company (vs) Monteflore (1886)
Facts: On June 8th ‘M’ offered to take shares in ‘R’ Company. He received a letter of acceptance on November 23rd. he refused to take shares.
Judgment: ‘M’ was entitled to refuse his offer has lapsed as the reasonable period which it could be accepted and elapsed.
- By non-fulfillment of some conditions: When offeror has prescribed some conditions to be fulfilled and offeree/ acceptor fails to fulfill the conditions required to acceptance. In such a case offer will be revoked.
- By death (or) insanity of the offeror: The death of the offeror does not automatically revoke the offer. When the death (or) insanity of the offeror provided the offeree comes to know before its acceptance it will be revoked. Otherwise if he accepts an offer in ignorance of the death (or) insanity of the offeror, the acceptance is valid.
- By a counter offer: “counter offer” means when the offeree/acceptor offers to qualified acceptance of the offer subject to modifications and variations in the terms of original offer. Therefore counter offer amounts to rejection of the original offer.
Example: Hyde (vs) Wrench (1840)
Facts: ‘W’ offered to sell a farm to ‘H’ for L 1000 (pounds). ‘H’ offered L 950 (pounds) ‘W’ refused the offer. Subsequently, ‘H’ offered to purchase the farm for L 1000 (pounds).
Judgment: There was no contract as ‘H’ by offering L 950 (ponds) had rejected the original offer. Because the counter offer to a proposal amounts to its rejection.
- By change in law: An offer comes to an end if the law is changed so as to make the contract contemplated by the offer illegal (or) incapable of performance.
- An offer is not accepted according to the prescribed (or) usual mode: If the offer is not accepted according to the prescribed (or) usual mode, provides offeror gives notice to the offeree with in a reasonable time that the offer is not accepted according to the prescribed/usual mode. If the offeror keeps quite, he is deemed to have accepted the offer.
- By death (or) insanity of the offeree/acceptor.
- By destruction of the subject matter