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Lapse of Offer

An offer should be accepted before it lapses (i.e. comes to an end). An offer may come to an end in any of the following ways stated in Section 6 of the Indian Contract Act:
  • By revocation of offer: The offeror has a right to revoke or withdraw his offer any time before communication of acceptance is made by the offeree. If a notice of withdrawal is given by the offeror to the offeree before it is accepted then the offeree cannot accept the offer thereafter.
  • By rejection of offer by the offeree: An offer would lapse if it is rejected by the offeree. After the rejection, it can neither be accepted nor be revived but a fresh offer can always be made. The rejection of offer may be either expressed or implied.
  • By expiry of time: If the acceptance to the offer is not given within the stipulated time or, where no time is stipulated, within a reasonable time, the offer lapses with the expiry of stipulated or reasonable time as the case may be.

M applied for shares on 8th June. But allotment was made on 22nd November. M refused to take up the shares. The company sued M. It was held by the court that M was entitled to refuse, as there was undue delay on the part of the company in accepting the offer. The offer lapsed by the undue delay in acceptance on part of the company as the time taken for acceptance relating to such contract was unreasonable.

  • By change in law: Sometimes, there is a change in law which makes the offer illegal or incapable of performance. In such a case, the offer comes to an end.

Amit undertook an order from Sumit to transport goods from one state to another state. In the meanwhile government issued a circular to confiscate certain trucks which included truck of Amit. The contract cannot be concluded because of the confiscation of truck by government. Therefore Amit cannot be held liable for non performance.

  • By the death or insanity of the offeror: Sometimes the offeror dies or turns insane. In such cases; the offer comes to an end if the fact of his death or insanity comes to the knowledge of the acceptor before he makes his acceptance. If the offer is accepted in ignorance of the fact of the death or insanity of the offeror, the acceptance is valid. This will result in a valid contract and legal representatives of the deceased offeror shall be bound by the contract-(but not in case of contracts of personal nature).
  • By not accepting the offer, according to prescribed or usual mode: Sometimes, some mode of acceptance is prescribed in the offer. In such cases, the offeror can revoke the offer if it is not accepted according to the prescribed mode. The offer should be accepted by the offeree in a mode prescribed by the offeror. If the offeree fails to do so then the offeror has a right to reject such acceptance but in case the offeror fails to reject the acceptance which is not provided in prescribed mode then it is deemed that he has accepted the same. sec 7(2).

M offered to sell his car to B. The offer was made by a letter and M requested B to send his reply by telegram. B posted a letter of acceptance instead of sending his reply through telegram. M can reject B’s acceptance but if M fails to communicate his rejection to B then it is deemed that M has affirmed the acceptance.

  • By failure to accept condition precedent by offeree: Sometimes, the offeror requires that some condition must be fulfilled before the acceptance of the offer. In such cases, the offer lapses, if it is accepted without fulfilling the condition.

Amar offered to sell his cycle to Akbar for ₹ 400 subject to the condition that Akbar should pay an advance of ₹ 100 before a certain date. Akbar accepted the offer but did not send the advance of ₹ 100. In this case, the offer stands lapsed as the advance is not paid.

  • By counter offer: Sometimes, a counter offer is made by the offeree. In such a case, the original offer automatically comes to an end as the counter offer amounts to rejection of the original offer.

Amith made an offer to Sumith to sell his car for ₹ 60,000. Instead of accepting the offer, Sumith made an offer to buy the car for ₹ 50,000. Here, Sumith’s offer to buy the car for ₹ 50,000 is a counter offer and terminates the original offer made by Amith.

  • By subsequent impossibility: Prior to acceptance of the offer, if the work to be done becomes illegal, physically impossible or the subject matter is destroyed the offer comes to an end. It is also called supervening imposibility.

A offers to sell his car to B for ₹ 30,000, but before the offer is accepted by B, A’s car is completely damaged, the offer lapses by the destruction of the subject-matter of the offer.

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