Nullifying a Contract Before it Forms: Revocation of an Offer

San Diego business contracts must have an offer and an acceptance to come into existence. However, there are some circumstances in which a contract can be nullified before it actually forms. This is the legal concept of revocation of an offer, which must occur before acceptance. A good corporate attorney can help explain your legal options if you need to revoke an offer or if an offer has been revoked.

San Diego Corporate Law: Revocation of an Offer

Revocation of an offer before acceptance is more common than one might think. Residential real estate sales contracts are a good example with which many are familiar. If you have bought or sold a house or condo or townhome, at some point you signed a contract. As the seller, you signed under or near a line that said “offer” and often there is a date by which the potential buyer must “accept.” Usually, the offer stays open for two to five days. There is a line for the buyer to sign under or near where the contract says “accept.” If the seller withdraws the offer prior to the buyer signing, then no contract has been formed.

Another common example is with respect to employment opportunities. One day, you are offered a job, and you say, “I will let you know tomorrow.” However, during the night, your hoped-for future employer emails to say, “Sorry, but we have hired someone else. Offer withdrawn. Good luck.” You no longer have the opportunity to accept the job.

If you are involved in a dispute over whether an offer has been withdrawn, you must prove one of three possibilities:

• The offer was not actually withdrawn or
• The revocation of offer was never communicated to you or
• That you accepted before the offer was withdrawn

San Diego Corporate Law: California Legal Principles

The California Civil Code has several provisions applicable to revocation before acceptance. See Cal. Civil Code, §§ 1585-1587. Section 1585 directly covers the issue stating: “A proposal may be revoked at any time before its acceptance is communicated to the proposer, but not afterwards.” Section 1586 states that an acceptance must be “absolute and unqualified” and that “a qualified acceptance is a new proposal.” Taking a residential real estate contract as an example, if you “accept” the offer, but add that you want a $5,000 repair credit, such a “qualified acceptance” is not an acceptance. The offer made by the seller can be withdrawn and no contract will be formed.

San Diego Corporate Law: Reasonable Delay Between Offer and Acceptance

The trickiest legal problems with respect to revocation before acceptance occurs where the offer does not come with an “acceptance date.” Section 1587(b) of the Civil Code states that revocation of offer can occur “… by the lapse of the time prescribed in the proposal for its acceptance, or if no time is prescribed, the lapse of a reasonable time without communication of the acceptance.” What constitutes a “reasonable time” is generally a fact question that depends on the unique circumstances of your case. See generally Sabo v. Fasano, 154 Cal. App. 3d 502 (Cal. App. 2nd Dist. 1984).

Call San Diego Corporate Law Today

For more information, call experienced business attorney Michael Leonard, Esq., of San Diego Corporate Law. Solid, well-drafted contracts are essential to protect you and your business. Call Mr. Leonard at (858) 483-9200 or contact him via email.  Mr. Leonard’s law practice is focused on business, transactional, and corporate matters. Mr. Leonard proudly provides legal services to business owners in San Diego and the surrounding communities.

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