A revocation is the calling back of the offer by the offerer. With the exception of an option contract and a firm offer, an offer may be revoked anytime before it has been accepted. The offerer has this right, despite what might appear to be a emphasis moral obligation to continue the offer. An offer may be revoked by communication, automatic revocation, passage of time, death or insanity of the offerer, destruction of the subject matter, or the subsequent illegality of the contract.
An offer may be revoked by the offerer communicating that intention to the offeree before the offer has been accepted. Revocation is ineffective if the acceptance has already been communicated, as by mailing the acceptance in response to a mailed offer. Direct communication of revocation is not required if the offeree knows about the offer's withdrawal by other means.
When the terms of an offer include a definite time limit for acceptance, the offer is automatically revoked at the expiration of the time stated.
An option contract is an agreement that binds an offerer to hold open an offer for a predetermined or reasonable length of time. In return for this agreement to hold the offer open, the offerer receives money or something else of value from the offeree. Parties to an option contract often agree that the consideration may be credited toward any indebtedness incurred by the offeree in the event that the offer is accepted. Should the offeree fail to take up the option, however, the offerer is under no legal obligation to return the consideration.
Option contracts remove the possibility of revocation through death or insanity of the offerer. The offeree who holds an option contract may demand acceptance by giving written notice of acceptance to the executor or administrator of the deceased offerer's estate or to the offerer's legally appointed guardian.
A special rule has emerged in international law. This rule holds that no consideration is necessary when a merchant agrees in writing to hold an offer open. This is called a firm offer.
Exercise 1. Comprehension questions:
1. What is an offer?
2. What is to be done in order to remove any doubt about contractual intentions of the offer?
3. What information should the offer include?
4. What is a cost-plus contract?
5. What does a current market price contract suppose?
6. What are the ways to transmit the offerer's proposal?
7. What is a public offer?
