Communication of Offer to the Offeree.

The offer must be communicated to the offetee. Otherwise the of­feree cannot accept even though knowledge of the offer has been indirectly acquired. Internal management communications of an enterprise that are not intended for outsiders or employees do not constitute offers and can not be accepted by them. Sometimes, particularly in the case of unilateral contracts, the offeree performs the act called for by the offerer without knowing of the offer's existence. Thus, without knowing that a reward is offered for the arrest of a particular criminal, a person may arrest the criminal. In most states, if that person learns thereafter that a reward has been offered for the arrest, the reward cannot be recovered.

Not only must the offer be communicated, but it must be communi­cated by the offerer or at the offerer's direction.

B, TERMINATION OF OFFER

An offer gives the offeree power to bind the offerer by contract. This power does not last forever, and the law specifies that under certain circum­stances the power ends or is terminated.

Once the offer is terminated, the offeree cannot revive it. If an attempt is made to accept the offer after it has been terminated, this attempt is meaningless, unless the original offeror is willing to regard the "late accep­tance" as a new offer which the original offeror then accepts.

Offers may be terminated in any one of the following ways: (1) revo­cation of the offer by the offeror, (2) counteroffer by offeree, (3) rejection of offer by offeree, (4) lapse of time, (5) death or disability of either party, and (6) subsequent illegality.

Revocation of the Offer by the Offeror.

Ordinarily the offeror can revoke the offer before it is accepted. If this is done, the offeree cannot create a contract by accepting the revoked offer. Thus, the bidder at an auction sale may withdraw (revoke) a bid (offer) before it is accepted. The auctioneer cannot thereafter accept that bid.

An ordinary offer may be revoked at any time before it is accepted, even though the offeror had expressly promised that the offer would be good for a stated period and that period had not yet expired, or even though the offeror had expressly promised to the offeree that the offer would not be revoked before a specified later date.

(a) What Constitutes a Revocation. No particular form of words is required to constitute a revocation. Any words indicating the offerer's termi­nation of the offer is sufficient. A notice sent to the offeree that the prop­erty which is the subject of the offer has been sold to a third person is a revocation of the offer. An order for goods by a customer, which is an offer to purchase at certain prices, is revoked by a notice to the seller of the cancel­lation of the order, provided such notice is communicated before the order is accepted.

(b) Communication of Revocation. A revocation of an offer is ordi­narily effective only when it is made known to the offeree. Until it is commu­nicated to the offeree, directly or indirectly, the offeree has reason to believe that there is still an offer which may be accepted; and the offeree may rely on this belief.

Except in a few states, a letter or telegram revoking an offer made to a particular offeree is not effective until received by the offeree. It is not a revocation at the time it is written by the offerer nor even when it is mailed or dispatched. A written revocation is effective, however, when it is delivered to the offeree's agent, or to the offeree's residence or place of business under such circumstances that the offeree may be reasonably expected to be aware of its receipt.

It is ordinarily held that there is a sufficient "communication" of the revocation when the offeree learns indirectly of the offerer's revocation. This is particularly true in a land sale, when the seller-offeror, after making an offer to sell the land to the offeree, sells the land to a third person, and the offeree indirectly learns of such sale and necessarily realizes that the seller cannot perform the original offer and therefore must be deemed to have re­voked it.

If the offeree accepts an offer before it is effectively revoked, a valid contract is created. Thus, there may be a contract when the offeree mails or telegraphs an acceptance without knowing that a letter of revocation has already been mailed.

When an offer is made to the public it may usually be revoked in the same manner in which it was made. For example, an offer of a reward that is made to the general public by an advertisement in a newspaper may be revoked in the same manner. A member of the public cannot recover the amount of the reward by thereafter performing the act for which the reward was originally offered. This exception is made to the rule requiring com­munication of revocation because it would be impossible for the offeror to communicate the fact that the offer was revoked to every member of the general public who knows of the offer. The public revocation of the public offer is effective even though it is not seen by the person attempting to accept the original offer.

(c) Option Contracts. An option contract is a binding promise to keep an offer open for a stated period of time or until a specified date. This requires that the promisor receive consideration, that is, something, such as a sum of money, as the price for the promise to keep the offer open. In other words, the option is a contract to refrain from revoking an offer.

(d) Firm Offers. As another exception to the rule that an offer can be revoked at any time before acceptance, statutes in some states provide that an offeror cannot revoke an offer prior to its expiration when the offeror makes a firm offer, that is, an offer which states that it is to be irrevocable, or irrevocable for a stated period of time. Under the Uniform Commercial Code, this doctrine of firm offers applies to a merchant's signed, written offer to buy or sell goods, but with a maximum of three months on its duration.

FACTS:

Gordon, a contractor, requested bids on structural steel from various suppliers. Coronis submitted an offer by letter. He later withdrew the offer. Gordon sued Coronis for breach of contract on the ground that he could not revoke his offer.

DECISION:

Judgment for Coronis. The mere mak­ing of an offer without an express declaration therein which "gives assurance that it will be held open" does not constitute a firm offer

but is merely an ordinary offer which can be revoked at any time. [Coronis Associates v Gordon Construction Co. 90 NJ Super 69, 216 A2d 246 (1966)]

(e) Detrimental Reliance. There is growing authority that when the offerer foresees that the offeree will rely on the offer's remaining open, the offerer is obligated to keep the offer open for a reasonable time. Thus, it has been held that a subcontractor cannot revoke a bid made to the general contractor after the general contractor had used the subcontractor's bid in computing the general bid given to the owner and the contractor's general bid was then accepted by the owner.