Study guide
2.2 Termination & Irrevocability of Offers
California First-Year Law Students' Examination Baby Bar
Track your progress as you read
Finished sections get a check mark.
1 Introduction & FYLSE Examination Guide
1.1 FYLSE Exam Structure, Passing Standard & Administration 1.2 Study Method, Pacing & MBE-Style Technique
2 Contracts: Mutual Assent, Capacity & Contract Formation
2.1 The Offer & Objective Theory of Assent 2.2 Termination & Irrevocability of Offers 2.3 Acceptance & the Mailbox Rule 2.4 Mirror Image Rule & UCC 2-207 Battle of the Forms 2.5 Mistake in Contract Formation 2.6 Fraud, Duress, Undue Influence & Illegality 2.7 Capacity to Contract
3 Contracts: Consideration, Estoppel & Implied Obligations
3.1 Consideration & the Bargained-For Exchange 3.2 Past & Moral Consideration, Pre-Existing Duty & Modification 3.3 Promissory Estoppel & Detrimental Reliance 3.4 Implied-in-Fact Contracts & Quasi-Contract 3.5 Implied Covenant of Good Faith, Fair Dealing & Indefinite Terms
4 Contracts: Third-Party Beneficiaries, Assignment & Delegation
4.1 Third-Party Beneficiary Contracts 4.2 Assignment of Rights 4.3 Delegation of Duties
5 Contracts: Statute of Frauds, Parol Evidence & Interpretation
5.1 Statute of Frauds: Contracts Within the Statute 5.2 Satisfying the Statute: Writing, Signature & Exceptions 5.3 The Parol Evidence Rule 5.4 Contract Interpretation & Canons of Construction
6 Contracts: Performance, Conditions, UCC Warranties & Breach
6.1 Conditions: Express, Constructive & Excuse 6.2 Substantial Performance vs. Perfect Tender 6.3 Cure, Rejection, Revocation & Installment Contracts 6.4 UCC Article 2 Warranties & Risk of Loss 6.5 Anticipatory Repudiation & Insecurity
7 Contracts: Remedies, Discharge & Changed Circumstances
7.1 Expectation Damages & Their Limitations 7.2 Reliance, Restitution & Liquidated Damages 7.3 Specific Performance & Injunctive Relief 7.4 UCC Article 2 Buyer's and Seller's Remedies 7.5 Impossibility, Impracticability & Frustration of Purpose 7.6 Discharge by Agreement: Rescission, Novation & Accord and Satisfaction
8 Criminal Law: Principles of Criminal Liability & Mens Rea
8.1 Actus Reus, Voluntary Acts & Omissions 8.2 Criminal Causation & Intervening Causes 8.3 Common Law & Model Penal Code Mens Rea 8.4 Mistake of Fact, Mistake of Law & Concurrence
9 Criminal Law: Inchoate Offenses & Accomplice Liability
9.1 Criminal Attempt & Impossibility 9.2 Solicitation & the Merger Doctrine 9.3 Conspiracy & Merger Doctrine 9.4 Accomplice Liability: Actus Reus & Mens Rea 9.5 Scope of Accomplice Liability, Withdrawal & Parties to Crime
10 Criminal Law: Homicide & Crimes Against the Person
10.1 Common Law Murder & Malice Aforethought 10.2 Degrees of Murder, Premeditation & Deliberation 10.3 The Felony Murder Rule & Its Limitations 10.4 Voluntary & Involuntary Manslaughter 10.5 Non-Homicide Crimes Against the Person
11 Criminal Law: Property Crimes, Theft & Habitation
11.1 Common Law Larceny 11.2 Embezzlement & False Pretenses 11.3 Robbery & Extortion 11.4 Receiving Stolen Property 11.5 Burglary 11.6 Arson
12 Criminal Law: Defenses: Capacity, Justification & Excuse
12.1 Insanity: The Four Legal Tests 12.2 Intoxication, Diminished Capacity & Infancy 12.3 Self-Defense & Defense of Others 12.4 Defense of Property, Habitation & Law Enforcement Privileges 12.5 Duress & Necessity 12.6 Entrapment & Mistake as an Excuse
13 Torts: Intentional Torts to Persons & Property
13.1 Intent, Motive & Incapacity in Intentional Torts 13.2 Transferred Intent 13.3 Battery & Assault 13.4 False Imprisonment 13.5 Trespass to Land 13.6 Trespass to Chattels & Conversion
14 Torts: Privileges & Defenses to Intentional Torts
14.1 Consent: Express, Implied & Capacity 14.2 Exceeding & Vitiating Consent 14.3 Self-Defense & Defense of Others (Tort) 14.4 Defense of Property & Recapture of Chattels 14.5 Public & Private Necessity 14.6 The Shopkeeper's Privilege
15 Torts: Negligence — Duty of Care & Breach
15.1 Duty of Care & the Foreseeable Plaintiff 15.2 Affirmative Duties to Act & Special Relationships 15.3 Standard of Care: The Reasonable Person & Children 15.4 Professional Negligence, Informed Consent & Negligence Per Se 15.5 Land Possessor Liability & Premises Duties 15.6 Breach of Duty & Res Ipsa Loquitur
16 Torts: Causation, Defenses, Multiple Tortfeasors, Wrongful Death & Damages
16.1 Cause in Fact & Multiple Actors 16.2 Proximate Cause & Intervening Forces 16.3 Contributory, Comparative Negligence & Assumption of Risk 16.4 Joint and Several Liability, Contribution & Indemnity 16.5 Vicarious Liability & Non-Delegable Duties 16.6 Wrongful Death & Survival Actions 16.7 Statute of Limitations & Claim Accrual 16.8 Tort Damages: Compensatory, Nominal, Punitive & Mitigation
17 Torts: Strict Liability & Products Liability
17.1 Strict Liability for Animals 17.2 Abnormally Dangerous Activities & Scope of Risk 17.3 Strict Products Liability & Defect Categories 17.4 Products Liability Under Negligence, Warranty & Misrepresentation 17.5 Defenses to Products Liability
18 Torts: Emotional Distress, Defamation, Privacy & Economic Torts
18.1 Intentional Infliction of Emotional Distress 18.2 Negligent Infliction of Emotional Distress 18.3 Common Law Defamation: Elements, Libel & Slander 18.4 Constitutional Limits, Privileges & Defenses to Defamation 18.5 Invasion of Privacy 18.6 Nuisance & Economic Torts
2.2 Termination & Irrevocability of Offers
Key Takeaways Explain This Topic AI
The power of acceptance terminates by revocation, rejection, counteroffer, lapse of time, or death or incapacity of either party before acceptance.
Revocation is effective on receipt, not dispatch, and indirect revocation works when the offeree learns from a reliable source of conduct inconsistent with the offer.
An option contract makes an offer irrevocable for the stated period because consideration was paid for the promise to hold it open.
UCC section 2-205 makes a merchant's signed written assurance irrevocable without consideration for the stated time, capped at three months.
Beginning performance on a unilateral offer creates an option under Restatement (Second) section 45, but mere preparation to perform does not.
Last updated: September 2026
- Termination & Irrevocability of Offers
- I. Termination of the Power of Acceptance
Once an offer is communicated, the offeree's power of acceptance remains alive until terminated. An offer terminates through any of the following seven methods: ┌────────────────────────────────────────┐
- │ Methods of Terminating an Offer │
- └───────────────────┬────────────────────┘
- │
- ┌────────────────┬─────────────┴──────┬────────────────┬──────────────┐
- ▼ ▼ ▼ ▼ ▼
- Revocation Rejection Counteroffer Lapse of Time Operation of Law
- (Direct/Indirect) (Words/Conduct) (New Offer vs Inquiry) (Stated/Reason) (Death/Destruct/Illegal)
- 1. Revocation by the Offeror
An offeror may revoke an offer at any time prior to acceptance. Revocation is effective only upon receipt by the offeree (or when it comes into the offeree's possession).
Direct Revocation : Affirmative communication from offeror to offeree terminating the offer.
Indirect Revocation ( Dickinson v. Dodds ) : The offer is terminated if the offeree receives reliable information from a third party that the offeror has taken definite action inconsistent with an intention to enter into the proposed contract (e.g., learning from a reliable broker that the property was sold to another).
2. Rejection by the Offeree
An express refusal or manifestation of intent not to accept the offer terminates the power of acceptance. A rejection is effective strictly upon receipt by the offeror.
3. Counteroffer vs. Mere Inquiry
Counteroffer : A response to an offer that proposes a substitute bargain differing from that proposed by the original offer. A counteroffer operates as an immediate rejection of the original offer and terminates the power of acceptance, while creating a new offer.
Mere Inquiry / Request for Clarification : An inquiry regarding whether alternative terms might be acceptable does not reject or terminate the offer (e.g., "Would you consider $4,500?" vs. "I will pay $4,500, not $5,000"). An offeree can preserve the original offer while negotiating by explicitly stating: "I reserve the right to accept your original offer, but would you take $4,500?"
4. Lapse of Time
An offer lapses if not accepted within the time specified in the offer. If no deadline is stated, the offer lapses after a reasonable time under the circumstances. Face-to-face or telephone conversations are presumed to lapse at the end of the conversation unless a contrary intent is indicated.
5. Operation of Law
An offer terminates automatically without notice upon:
Death or Incapacity of either the offeror or the offeree prior to acceptance (even if the offeree has no knowledge of the death). Note: Death does not terminate an existing option contract or an already formed contract.
Destruction of the Subject Matter essential to the performance of the proposed contract.
Supervening Illegality rendering the proposed transaction unlawful prior to acceptance.
II. Irrevocable Offers (The Four Exceptions)
At common law, the offeror is "master of the offer" and may freely revoke at will before acceptance—even if the offeror expressly promises to keep the offer open. However, four critical doctrines render an offer legally irrevocable:
1. Option Contracts Supported by Consideration
A distinct contract in which the offeror agrees to hold an offer open for a specified duration in exchange for separate consideration.
Requirement : Must be supported by independent consideration (even nominal consideration, such as $10 or $1, satisfies the majority rule).
Critical Exam Rule : Rejection or counteroffer by the offeree during the option period does not terminate the option! The offeree retains the absolute legal right to accept the original offer until the option period expires, unless the offeror detrimentally relied on the offeree's rejection.
2. UCC § 2-205 Merchant's Firm Offer Rule
Under UCC Article 2, an offer to buy or sell goods can be irrevocable without consideration if four strict statutory elements are satisfied:
Merchant Offeror : The offeror must be a merchant (a person who deals in goods of the kind or otherwise holds themselves out as having knowledge or skill peculiar to the practices or goods involved);
- Signed Writing : The offer must be in a writing signed (or authenticated) by the merchant offeror;
- Assurance of Openness : The writing must give explicit assurance that the offer will be held open; AND
Three-Month Statutory Cap : The offer is irrevocable for the time stated, or if no time is stated, for a reasonable time, but in no event may such period of irrevocability exceed three months (90 days) without separate consideration.
Warning
The Three-Month Trap on the FYLSE: If a merchant's signed writing promises to hold an offer open for six months without consideration, the offer is not void. Rather, it is legally irrevocable for the first three months. After three months, the offer does not automatically expire; instead, it simply becomes a standard revocable offer that the merchant can revoke at any time prior to acceptance.
Form Supplied by Offeree: If the firm offer clause is contained on a form supplied by the offeree , UCC § 2-205 requires that the clause be separately signed or initialed by the offeror to prevent unfair surprise.
3. Detrimental Reliance / Promissory Estoppel (Restatement § 87(2))
An offer becomes irrevocable as an option contract if:
The offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance; and
The offer actually induces such action or forbearance; and
Injustice can be avoided only by enforcement of the offer.
Classic Exam Paradigm ( Drennan v. Star Paving Co. ): A general contractor relies on a subcontractor's bid to compute a prime construction bid submitted to a project owner. Once the general contractor submits the prime bid, the subcontractor's bid is held irrevocable for a reasonable time after the prime contract is awarded.
4. Part Performance of a Unilateral Contract (Restatement § 45)
A unilateral contract is an offer that can be accepted only by full performance of the requested act, rather than by a return promise.
Restatement (Second) of Contracts § 45 : Once the offeree begins performance (tenders or begins the requested act), an option contract is created by operation of law. The offeror is precluded from revoking the offer for the time stated or a reasonable time.
Rights and Duties : The offeree is not bound to finish the performance and incurs no breach liability if they abandon the task. However, the offeror's duty to pay remains conditional upon the offeree's full completion of the requested performance.
Mere Preparation vs. Part Performance : Acts of mere preparation (e.g., purchasing paint or checking flight schedules) do not trigger Restatement § 45 protection. However, preparation may trigger reliance relief under Restatement § 87(2) promissory estoppel if substantial and foreseeable.
III. Doctrinal Comparison: Common Law vs. UCC Formation Rules
Formation Element Common Law (Services, Real Estate) UCC Article 2 (Sale of Goods)
Essential Terms Parties, Subject Matter, Price, Quantity, Time (QTIPS) Quantity only; UCC gap-fillers supply price, delivery, and time
Revocability of Open Offer Freely revocable at will before acceptance unless supported by consideration Revocable unless option contract or UCC § 2-205 Firm Offer applies
Firm Offer Without Consideration Never recognized; bare promises to hold open are nudum pactum Recognized under § 2-205: Merchant, signed writing, assurance, max 3 months
Effect of Counteroffer on Option Counteroffer terminates ordinary offer; does NOT terminate paid option Same rule applies to options and firm offers during irrevocable term
Unilateral Contract Part Performance Restatement § 45 creates irrevocable option upon beginning of performance UCC § 2-206 permits acceptance by shipment or prompt promise to ship