Revocation of Offer: What It Is and How It Works

Revocation of an offer refers to the act of withdrawing or canceling an offer before the other party has accepted it. Once an offer is revoked, it is no longer legally binding, and the person who made the offer is not obligated to proceed with the terms of that offer. However, the ability to revoke an offer is not unlimited, and it's subject to certain principles and conditions. Here's a breakdown of how the revocation of an offer works:

1. Before Acceptance:

   • An offer can generally be revoked at any time before the other party accepts it.
   • The revocation is effective only when it is communicated to the person to whom the offer was made. This means that the offeror must inform the offeree (the person receiving the offer) that the offer is being revoked.

2. Communication of Revocation:

   • Revocation must be communicated directly to the offeree or through a reliable third party. If the offeree is unaware of the revocation and accepts the offer, a valid contract may be formed.

3. Exceptions to Revocation:

   • If an offer includes an option contract (a separate agreement that gives the offeree the right to accept the offer within a specified time frame), the offeror cannot revoke the offer during that period.
   • The offeror cannot revoke an offer if the offeree has already taken substantial action in reliance on the offer (reliance that the offeror could reasonably expect to induce) before receiving notice of the revocation.

4. Method of Communication:

   • The method of communication for revocation should be similar to the method used for the offer. For example, if the offer was communicated via email or mail, the revocation should also be communicated through the same channel.

5. Revocation by Third Parties:

   • Generally, only the offeror or someone authorized by the offeror can communicate the revocation. Information from third parties (not authorized by the offeror) is usually not considered valid revocation.

6. Time Sensitivity:

   • The revocation must reach the offeree before or at the same time as the acceptance. If the offeree accepts the offer before receiving the revocation, a contract may be formed.

It's essential to note that contract laws can vary by jurisdiction, and specific circumstances may influence the applicability of these principles. Parties involved in contractual negotiations should seek legal advice to ensure they understand their rights and responsibilities, especially concerning the revocation of offers and the formation of contracts.