Common use of Revocability Clause in Contracts

Revocability. The general rule, both in common law and under the UCC, is that the offeror may revoke his or her offer at any time before acceptance, even if the offer states that it will remain open for a specified period of time. ▇▇▇▇ offers ▇▇▇▇▇▇ his car for $5,000 and promises to keep the offer open for ten days. Two days later, ▇▇▇▇ calls ▇▇▇▇▇▇ to revoke the offer. The offer is terminated, and Arlene’s acceptance thereafter, though within the ten days, is ineffective. But if ▇▇▇▇ had sent his revocation4 (the taking back of an offer before it is accepted) by mail, and if ▇▇▇▇▇▇, before she received it, had telephoned her acceptance, there would be a contract, since revocation is effective only when the offeree actually receives it. There is an exception to this rule for offers made to the public through newspaper or like advertisements. The offeror may revoke a public offering by notifying the public by the same means used to communicate the offer. If no better means of notification is reasonably available, the offer is terminated even if a particular offeree had no actual notice. Revocation may be communicated indirectly. If ▇▇▇▇▇▇ had learned from a friend that ▇▇▇▇ had sold his car to someone else during the ten-day period, she would have had sufficient notice. Any attempt to accept Neil’s offer would have been futile. Not every type of offer is revocable. One type of offer that cannot be revoked is the option contract5 (the promisor explicitly agrees for consideration to limit his right to revoke). ▇▇▇▇▇▇ tells ▇▇▇▇ that she cannot make up her mind in ten days but that she will pay him $25 to hold the offer open for thirty days. ▇▇▇▇ agrees. ▇▇▇▇▇▇ has an option to buy the car for $5,000; if ▇▇▇▇ should sell it to someone else during the thirty days, he will have breached the contract with ▇▇▇▇▇▇. Note that the transactions involving ▇▇▇▇ and ▇▇▇▇▇▇ consist of two different contracts. One is the promise of a thirty-day option for the promise of $25. It is this contract that makes the option binding and is independent of the original offer to sell the car for $5,000. The offer can be accepted and made part of an independent contract during the option period.

Revocability. The general rule, both in common law and under the UCC, is that the offeror may revoke his or her offer at any time before acceptance, even if the offer states that it will remain open for a specified period of time. ▇▇▇▇ offers ▇▇▇▇▇▇ his car for $5,000 and promises to keep the offer open for ten days. Two days later, ▇▇▇▇ calls ▇▇▇▇▇▇ to revoke the offer. The offer is terminated, and Arlene▇▇▇▇▇▇’s acceptance thereafter, though within the ten days, is ineffective. But if ▇▇▇▇ had sent his revocation4 (the taking back of an offer before it is accepted) by mail, and if ▇▇▇▇▇▇, before she received it, had telephoned her acceptance, there would be a contract, since revocation is effective only when the offeree actually receives it. There is an exception to this rule for offers made to the public through newspaper or like advertisements. The offeror may revoke a public offering by notifying the public by the same means used to communicate the offer. If no better means of notification is reasonably available, the offer is terminated even if a particular offeree had no actual notice. Revocation may be communicated indirectly. If ▇▇▇▇▇▇ had learned from a friend that ▇▇▇▇ had sold his car to someone else during the ten-day period, she would have had sufficient notice. Any attempt to accept Neil▇▇▇▇’s offer would have been futile. Not every type of offer is revocable. One type of offer that cannot be revoked is the option contract5 (the promisor explicitly agrees for consideration to limit his right to revoke). ▇▇▇▇▇▇ tells ▇▇▇▇ that she cannot make up her mind in ten days but that she will pay him $25 to hold the offer open for thirty days. ▇▇▇▇ agrees. ▇▇▇▇▇▇ has an option to buy the car for $5,000; if ▇▇▇▇ should sell it to someone else during the thirty days, he will have breached the contract with ▇▇▇▇▇▇. Note that the transactions involving ▇▇▇▇ and ▇▇▇▇▇▇ consist of two different contracts. One is the promise of a thirty-day option for the promise of $25. It is this contract that makes the option binding and is independent of the original offer to sell the car for $5,000. The offer can be accepted and made part of an independent contract during the option period.