Revocation of a Unilateral Offer
Revocation of a Unilateral Offer
General Principle
An offer for a unilateral contract cannot be withdrawn if performance has been started or completed by the offeree.
Daulia v Four Millbank Nominees [1978] 2 All ER 557
Facts: Daulia (complainant) wanted to buy a series of different properties from Millbank Nominees (defendant). Inquiries were made and draft contracts were prepared. Millbank agreed that if Daulia co-produced the draft contract and a bankers' draft by a specific time, they would enter into a full contract with her. Daulia obtained the bankers' draft and submitted it to Millbank Nominee's offices before the deadline. However, Millbank ultimately refused to proceed with the deal. Ratio: Brightman J rejected Daulia's claim for damages, as the collateral contract did not fall into line with S40 of the Law of Property Act 1925. However, Goff LJ said obiter that “while the offeror of a unilateral contract is entitled to require full performance of his condition and short of that is not bound, there must be an implied obligation on his part not to prevent the condition becoming satisfied, and that obligation arises as soon as the offeree starts to perform.” Application: Until the offeree starts to perform, the offeror can revoke the entire offer. However, once the offeree has started to carry out the obligations of the agreement, it becomes too late for the offeror to go back on his offer.
General Principle
The terms of a contract may allow an offerer to revoke his promise even after it has been partially accepted by performance.
Luxor v Cooper [1941] 1 All ER 33, HL
Facts: Cooper made an agreement with an estate agent, Luxor, that £10,000 would be paid to them if Luxor was able to find a buyer that would pay £175,000 the land. The agreement between Luxor and Cooper was a standard agreement that could be expected from any seller and estate agent: that Cooper would pay the commission once the house was sold and Cooper would not pay if a buyer was not found. Luxor found a buyer but Cooper actually sold the land (two cinemas) to someone else. Luxor pursued Cooper for the fee stating that they had fulfilled the contract. Ratio: The House of Lords held in favour of Cooper on the grounds that there was no reason to assume a responsibility by not revoking their offer. Lord Wright said obiter: “it is well recognized that there may be cases where obviously some term must be implied if the intention of the parties is not to be defeated, some term of which it can be predicated that ‘it goes without saying’…some term not expressed but necessary to give to the transaction such business efficacy as the parties must have intended.” Application: It is more likely that the courts would agree with an argument for an implied term (see relevant section) if that term were reasonable. They will not imply terms into a contract just because it would be reasonable to do so. This is an important principle to remember when applying it to practical scenarios. A party that has carelessly made a very unfavourable contract will argue that some kind of implied term, which, if it were to exist, would make the contract fair. That, it must be understood, is not a good enough reason to imply a term.
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