An offer lapses if it has been rejected by the offeree. The rejection may be express i.e., by words spoken or written, or implied. Implied rejection is one(a) where either the offeree makes a counter offer, or (b) where the offeree gives a conditional acceptance.
(i) A offered to sell his house to B for Rs. 90,000. B offered Rs.80,000 for which price A refused to sell. Subsequently B offered to purchase the house for Rs.90,000. A, declined to adhere to his original offer. B filled a suit to obtain specific performance of the alleged contract. Dismissing the suit, the court held that A was justified because no contract had come into existence, as B, by offering Rs. 80,000, has rejected the original offer. Subsequent willingness to pay Rs. 90,000 could be no acceptance of A’s offer as there was no offer to accept. The original offer had already come to an end on account of ‘counter offer’ ( Hyde vs. wrench).
(ii) A offered to sell his motorcar to B for Rs. 25,000. B said that the he accepted the offer if he was offeror. For example, C makes an offer to D by letter. Immediately on receiving the letter D writes a letter rejecting the offer. Before the rejection reaches C, D changes his mind and telephones his acceptance. There would be a contract C and D and the rejection shall not be effective.
There would be a contract between C and D and the rejection shall not be effective.