An offer must be accepted before it lapses (i.e. comes to an end). An offer may come to end in any of the following ways:
1. By Revocation : An offer lapses if the offerer revokes the offer before its acceptance by the offeree. According to Section 5 of the Indian Contract Act, a proposal may be revoked at any time before the communication of acceptance is complete as against the proposer but not afterwards.
Example I : X of Agra offers b’ v a letter dated 1st January sent by post to sell his car to Y of Delhi for Rs 1,00,000. Y accepts the offer on 7th January at 1 p.m. by a letter sent by post. Here, X may revoke his offer at any time before 1 p.m. on 7th January but not afterwards.
Example II : At an auction sale, the highest bidder can revoke his offer to buy before the fall of the hammer.
2. By Lapse of time : An offer lapses if it is not accepted within the fixed time (if any prescribed in the offer) or within reasonable time (if no time is prescribed in the offer).
Example : An offer to buy shares of a company was made in June but the acceptance was communicated in November: It was held that offer to buy shares had lapsed because it was not accepted within a reasonable time. [Ramsgate Victoria Hotel Co. v. Montefiore]
3. By Death or Insanity of the offeror or offeree : An offer lapses by the death or insanity of the offerer if the fact of his death or insanity comes to the knowledge of the acceptor before he makes his acceptance. In other words, if the offer is accepted in ignorance of the death or insanity of the offerer, there will be a valid contract. It may be noted that in English law the death of the offerer terminates the offer even if acceptance is made in ignorance of the death.
An offer also comes to an end by the death or insanity of the offeree if the offeree dies or becomes insane before accepting the offer because an offer can be accepted only by the offeree and no, by any other person.
4. By Failure to Accept condition Precedent : An offer lapses if it is accepted without fulfilling the conditions of the offer.
Example : X offered to sell his car to Y .for F’s 1,00,000 subject to the condition that Y should pay an advance of Rs 20,000 before a certain date. Y accepted the offer but did not send an advance of Rs 20,000. In this case, the offer has lapsed because the advance was not paid.
5. By Counter Offer : An offer lapses if the counter offer is made because a counter offer amounts to rejection of the original offer. Counter means making a fresh offer instead of accepting the original offer.
Example : X offered to sell his car to Y for Rs 1,00,000. Y said that he would buy it for Rs 90,000. X refused to sell for Rs 90,000.
Subsequently, Y offered to buy the car for Rs 1,00,000, Here, Y’s offer to buy for Rs 90,000 is counter offer which terminates the original offer. Y’s second offer to buy for Rs 1,00,000 is a fresh offer and not an acceptance of the original offer. [Hyde v Wrench]
6. By not Accepting in the Prescribed Mode or usual Mode : An offer if it is not accepted in the specific manner (if any, prescribed in the offer) or in some usual and reasonable manner (if no manner has been prescribed in the offer),
Example : X offered to sell his car to Y for Rs 1,00,000 and wrote to Y “Send your acceptance by telegram.” Y sent acceptance by an ordinary letter X can reject such acceptance.
7. By Rejection of offer by offer an offer : tapes if it is rejected by the offeree. An offer is said to be rejected if the offeree expressly rejects it or accepts it subject to certain conditions. It may be noted that once an offer is rejected, it can not be revived subsequently.
8. By Subsequent illegality or Destruction of Subject Matter of the Offer : An offer lapses if it becomes illegal or the subject matter is destroyed its acceptance by offeree.
Example I : X of Delhi offered supply of 100 tons of sugar to Y at Mumbai on a certain date. Before this offer is accepted by Y, the Central Government issued an order prohibiting the inter-state movement of sugar: Here, X’s offer hay come to an end.
Example II : X ofDelhi offered to sell his car to Y of Agra for Rs 1,00,000. Before the offer is accepted by Y, the car is destroyed by fire. Here X’s offer has come to an end.
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