124 MODULE 23 CONTRACTS

Revocation by offeror
(2)
(a) Generally, offeror may rev,oke offer at any time prior to acceptance by offeree
1] Revocation is effective w by offeree
EXAMPLE: X offers to sell his car to Y stating that the offer will remain open for ten days. How-
ever, on the fifth day Y receives a revocation of the offer from X. The offer would be terminated on
the fifth day even though X stated that it would remain open for ten days.
(b If fferee learns by ~eliable means that offeror has already sold subject of offer, it is re-
GlcytIJ1i voked
Gj. (c) Public ,offersmust be revoked by same methods and amount of publicity used in making
offers ' '
¥,~A~
EXAMPLE: Offer of reward for apprehension of arsonist in a newspaper makes headlines. It cannot be
revoked by a small notice in the back of the newspaper.
b}CeIl/,,)1J ~ (d) An option is an offer that is su
r' stated time •....•.. "'-- __ ...>t--- ____

1] Option is actually a separate contract to keep offer open

a] Also called an option contract
EXAMPLE: 0 offers to sell her car to P and states that she will keep the offer open for ten
days if P will pay her $50. P pays the $50 and six days later 0 attempts to revoke the offer. P
then accepts the offer by the seventh day. An agreement has beenformed because the offer was
an option and could not be revoked before the ten days. Note that there were actually two
contracts between 0 and P. The first one was the option to keep the offer open. The second
was the actual sale of the car.
EXAMPLE: Same example as above except that 0 asked P to promise to pay $50 within ten
days to keep the offer open. The result is the same because a promise to pay money is also
consideration.
~ Also, rejection does no erminate option
3] Incompentency or death of either buyer or selle does not terminate option contract
except when contract is for ersonal services (~.:J,-, - ~ .f'?;A~
4] te ifferences between 0 tion n firm offe by merchants concerning sale of
goods under UCC as discussed later 1
(3)('"""':C=-0-u-n-te-r-o"""ft"""e-r"""i0a rejection coupled with offeree making new offer
EXAMPLE: An offer is made to sell a car for $3,000 and a counteroffer is, "I'll give you $2,500."
(a) Mere inquiry or request for additional or different terms is ot counteroffer and doe@
terminate offer
(b) Normally offers, acceptances, rejections, and counteroffers are effective i(an individual is
involved; thus, counteroffers are not effective against mere electronic agents
EXAMPLE: An offer is made to sell a car for $3,000 and an inquiry is, "Will you sell for $2,500?"
(4) Lapse of time may terminate offer
(a) Offeror may specify period of time (e.g., one week)
(b) If no time is specified, after reasonable time
(5) Death or insanity of offeror terminates ordinary offers
(6) Illegality
(a) Offer terminates if after making offer and before it is accepted, it becomes illegal
EXAMPLE:' X offers to rent to Yan upstairsJloor for a cabaret. Before Yaccepts, the city
adopts afire
code making use of the premises illegal without substantial rebuilding.
(7) Bankruptcy or insolvency of either offeror or offeree terminates offer
(8) Impossibility
(a) Offer terminates if after making offer and before it is accepted, performance becomes im-
possible
EXAMPLE: X offers his car to' Y for $500, but before Yagrees to the purchase, X's car is destroyed by
fire.
(9) Destruction of subject matter