We know an offer can be revoked by the proposer communicating the revocation before the transmission of the acceptance by the acceptor. Is there any other way to revoke the offer instead of the communication of revocation. If yes what are the other ways or methods to revoke an offer? Let’s understand the ways how an offer can be revoked. (Modes of revocation of offer – CA Foundation Business Law)
Modes of revocation of offer
Sometimes the offer is not revoked by communication but due to other reasons. For example, if a proposer makes an offer, he cannot wait for the acceptance till indefinite time. His offer will get revoke after a certain or reasonable time. Hence we can say, there are other reasons also due to which an offer will be revoked. Let’s know more about them.
1. By notice of revocation
The offer can be revoked by giving notice to the offeree. But this must be done before the offeree accepts and transmits the acceptance.
2. By lapse of time
This will include two situations.
First when the offer specifies a time limit to accept the offer. In this case, the offer will get lapse automatically after the expiry of the time limit. For Example, Ram makes an offer to Shyam requesting his acceptance within 7 days. Here if Shyam does not give his acceptance within 7 days the offer will get lapse.
Second, when the offer does not specifies any time limit. In this situation, the offer must be accepted within a reasonable time. The offer will get lapse after a reasonable time. The word reasonable time has not been defined under the Act. Hence will depend on case to case basis.
3. By non-fulfillment of the condition precedent to acceptance
Sometimes the offeror puts some condition which the offeree needs to comply before accepting the offer. If the offeree fails to comply with any such condition the offer gets revoked. For example, Ram sent an offer to Shyam to buy his car. But he added a condition to the offer that before this Shyam need to buy his cycle. If Shyam fails to buy Ram’s cycle, the offer will be revoked.
4. By death or insanity
In case of death or insanity of the offeror, the offer gets revoked. This is because the offer cannot be used to make a contract in the future due to the incapability or death of the offeror.
5. By counter offer
When the acceptor gives an acceptance by adding some condition or modifying the condition of the original offer, this is called a counter offer. The counter offer automatically revoke the original offer.
For Example, Ram made an offer to Shyam to buy his old bike. Shyam accepted the offer but with a condition that Ram needs to buy his old cycle also. Here Shyam accepted the offer with an additional condition. This will rise to counter offer and now the original offer will get automatically revoked.
6. By the non-acceptance of the offer according to the prescribed or usual mode
The offeree is required to give his acceptance in the mode prescribed by the offeror in the offer. In case if no such mode is prescribed than the offeree needs to give his acceptance in the usual mode or any suitable mode. If the offeree fails to do the same the offer gets lapse. Now the offeror has the right to accept or reject the acceptance as he likes.
7. By subsequent illegality
If the offer becomes invalid subsequently, the offer gets revoked automatically. For example, Ram has a business of Liquor in the State of Bihar. Ram gives an offer to Shyam to sell his product on a retail basis. Subsequently, the Government bans the sale of liquor. Now the sale of liquor became illegal, the offer given by Ram to Shyam gets revoke.
Hence we have seen that there are various methods or cases which will result in revocation of the offer.
Modes of revocation of offer – CA Foundation Business Law
CA Foundation Paper-2 Business Law- The Indian Contract Act 1872-Unit-1 Nature of Contract