Contracts – Contracts Formation: Termination



Step (2): Was the offer terminated or was it accepted?


  • An offer can be terminated before it is accepted.
  • An offer can be terminated by expiration, by revocation or by rejection.
  • An offer is terminated if it expired based on the stated length of the offer.
  • An offer can also expire after a reasonable amount of time passes.
  • An offer is terminated if it is revoked directly or indirectly (through conduct) before it is accepted.
  • While offers are generally revocable, an offer can be irrevocable in the following 4 situations:
(1) an option (a paid for promise to keep an offer open) is irrevocable, (options are revocable if signed but not paid for);
(2) a firm offer (under UCC Art. 2, a merchant who promises in signed writing to keep an offer open) is irrevocable for 3 months or for a reasonable time;
(3) foreseeable reliance on the offer makes it irrevocable;
(4) in a unilateral K, offer is irrevocable once performance starts.
  • An offer is terminated if it is rejected.
  • The following 4 situations are considered rejections:
(1) counter-offers are rejections;
(2) conditional acceptances are rejections;
(3) death of a party before acceptance is a rejection for revocable offers but not for irrevocable offers;
ube-k-battle of the forms
(4) for acceptance that varies the offer (aka Battle of the Forms):
-under common law the mirror image rule applies – any change to the offer is a rejection,
-under UCC Art. 2 – adding a term is not a rejection but new terms only become part of the K if both parties are merchants, the term is not material and the offeror does not reject within a reasonable time.