An offer lapses by revocation

An offer lapses by revocation. An offer is revoked when it is retracted back by the communication of notice of revocation by the offerer to the other party [sec. 6(1). For example, at an auction sale, A makes the highest bid. But he withdraws the bid before the fall of the hammer. There cannot be a concluded contract because the offer has been revoked before acceptance;

Further, an offer, agreed to be kept open for a definite period, may be revoked even before the expiry of that period, unless there is some consideration for so keeping it open. The effect of facing a time for acceptance is merely to fix a tie beyond which the offer cannot be accepted. Where no time limit is set, the offer open for a definite period, unsupported by consideration, is regarded as a ‘bare pact,’ and hence not offer open, supported by consideration, is called an ‘option’ an ‘option’ is in effect a separate contract making the promisor liable for breach if he revokes the offer before the expiry o f agreed time.

Example: M. offers to sell his house to N for Rs. 1,40,000. N says to M that if he agree the offer open for 10 days he (N) will pay him Rs. 1,000, M agrees. M cannot revoke the offer before the expiry of 10 days, as N has obtained an option to purchase the house within 10 days. If M revokes the offer before the expiry of 10 days. He can be sued for breach of option contract.

Revocation of an offer must be communicated or made known to the offeree, otherwise the revocation does not prevent acceptance. Revocation of a ‘general offer’ must be made through the same channel by which the original offer was made. Again, revocation must always be express and must be communicated by the offerer himself or his duly authorized agent to the other party.

Revocation of standing offer or tender. Where a person offers to another to supply specific goods, up to a stated quality or in any quality which may be required, at a certain rate, during a fixed period, he makes a standing offer. A standing offer is in the nature of an open or continuing offer. An acceptance of such an offer merely amounts to an intimation that the offer will be accepted from time to time by placing order for specified, quantities. Each successive order given, while the offer remains in force, is an acceptance of the standing offer as to the quantity ordered, and creates a separate contract. In view of this legal position, the offeror is free to revoke the standing offer with regard to further supply, at any time, by giving a notice to the offeree, except where consideration is given for it.