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Lapse: either based on a term set by the offeror, or a “reasonable time” (1392 CCQ)
Revocation: CCQ 1390-1393
Basic assumption of both Quebec Civil Law and most Common Law jurisdictions:
Offer can be revoked until Acceptance becomes effective (see e.g. Art. 1390 CCQ)
WHEN is acceptance effective?
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Parties are in the presence of each other : When the offeror hears the offeree’s acceptance.
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Parties are not present, but the method of communication is instantaneous: When the offeror hears the offeree’s acceptance.
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Parties are not present: Mailbox Rule
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1.1.1Mailbox Rule
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If the offeror attempts to revoke an offer after the offeree has dispatched a message of acceptance, the prevailing rule is that the acceptance is effective on mailing.
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“It is often suggested that the choice of a rule is quite arbitrary, but there are sound arguments in favour of the common law rule, and the rule springs, from a rational attempt to to balance the interests and expectations of the parties.”
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Mailbox Rule serves to protect the offeree who might rely on the contract after having sent the acceptance
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German Law: Offer is not only open for a reasonable amount of time, but, during that timespan, irrevocable!
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French Law: matter of contention, whether dispatch or reception
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Quebec Law: reception - Art. 1390 CCQ! You can revoke a contract until its accpeted (protects mostly the offeror). Quebec has no Mailbox Rule.
Revocation of Unilateral Contracts
Dichotomy between offers which invite acceptance through
Can the offer be revoked after the offeree has started to perform, but has not completed performance yet?
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Wormser’s classical example: Brooklyn Bridge Hypothetical (I promise to pay you $100 if you walk across a bridge). Formalist legal science says I can revoke until you finish walking across the bridge, as both of us can back out of the contract until the bridge is crossed.
CML – Shatford v. B.C. Wine Growers Ltd., [1927] 2 D.L.R. (B.C.S.C.): CB 182 |
Jurisdiction
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BC
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Facts
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On April 21, 1926, defendants wrote letter of offer to sell loganberries to plaintiff. April 22 – letter was mailed. April 23/24 – letter was received. April 30 – offer accepted, contract signed, posted in the evening.
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Issues
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Did the plaintiff accept the offer within a “reasonable amount of time”?
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Holding
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No BCWC.
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Reasoning
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Murphy J:
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A proposal sent by mail ordinarily calls for an acceptance, if not by return of post (i.e., immediately), at least during business hours on the day on which the offer is received (in this case, April 23/24) – Dunlop v. Higgins
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In all cases, the offer must be accepted within a reasonable time
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Given the nature of the commodity in question – perishable goods – the plaintiff did not accept the offer within a reasonable time of the offer – there is therefore no contract
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Ratio
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When an offer has lapsed before acceptance has taken place, there is no legally binding contract. A lapse can happen either because a term attached to the offer has expired, or because a “reasonable time” has elapsed. “Moment of Responsibility” – when the offer and the acceptance both exist at the same time, both parties are bound.
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Comments
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The judgment moves from a clear ration (same-day acceptance) to murkiness (reasonable time) to even more murkiness (context must be considered)
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Rules on When Acceptance Occurs (From the Entores Case)
Parties are in presence of one another (oral communication)
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-accepts verbally, offeror must hear it
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Parties are not present have 2-way instantaneous communication
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-party needs to hear the acceptance, if the phone goes dead, then there is no contract
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Parties mails offer and acceptance
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CML - “Mail Box” rule – acceptance occurs the moment the offeree has put acceptance in the mail, the offeror cannot revoke the offer once acceptance has been dispatched
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Bilateral Contracts
A legal agreement or contract where both parties involved agree to give each other something. For example, in a property purchase agreement the buyer pays money to the seller and the seller then transfers the property to the buyer.
-Bilateral contracts require both offeror and offeree to be obligated to each other
Unilateral Contracts
A one-sided agreement whereby you promise to do (or refrain from doing) something in return for a performance (not a promise)
-Unilateral is only enforced upon the offeror to act once offeree’s performance has been completed
-problem of a legal vacuum until performance has been completed
Brooklyn Bridge Scenario
-A offers B $100 if he walks across the bridge, the contract is formed at the end of the bridge (acceptance). -however either A or B can back out at any point (A can evoke the offer) and B can stop walking
-B becomes more vulnerable the more he performs, at which point A can revoke at the very last minute
-B’s legal recourse is to sue for unjustified enrichment
Errington Case shows how classically the gift should have been revocable at any point until the last penny was paid on the mortgage – but courts are reluctant to see someone deeply disadvantaged by the revocation of an offer for a unilateral undertaking
Waddams, Law of Contracts CB 183 -
“Mailbox rule,” contract is formed when and where the acceptance is mailed by the offeree
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Acceptance must be communicated in the same means of communication, or one the same speed, as the medium invited by the offeror
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“Agency” theory of post office is rejected
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Wormser, “The True Conception of Unilateral Contracts” CB 193 -
In common law generally, contract formed when performance (when performance = acceptance) completed.
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Brooklyn Bridge Hypothetical: offers 100$ to cross the bridge. He is not asking for a promise to cross, but that he crosses. Can revoke offer anytime before arrives at the other end.
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CLASSIC ACCOUNT: CONCEPTUAL JURISPRUDENCE: SYMMETRY: performance is voluntary. The offeror isn’t bound until he crosses, but the offeree hasn’t made a promise—he can back out, too. There is symmetry. Should just always apply these rulesHARD CASES MUST NOT MAKE BAD LAW!
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Sham argument: there is great disparity since one is just standing there and the other is actually performing.
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Gives a garage building example. If A changes his mind while B is building, thinks it is still fair because B could have stopped building at any time. Thinks that B should just get the value of the enrichment to A’s land”quasi contract”
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Complains about a California S.C. case in which once commenced building a railway, suddenly called it a bilateral contract.
CML – Errington v. Errington and Woods, [1952] 1 K.B. 290 (C.A.): CB 197 |
Jurisdiction
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UK
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Facts
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Father bought house for son and daughter-in-law to live in – put down £250 as a down payment (gift) and borrowed £500 from a building society. House was in father’s name but he promised them the deed if they paid down the loan in weekly installments. He passed away before the house was paid and his successor wishes to repossess the house, claiming that the contract was unilateral and that performance has not been completed, so the offer may still be revoked.
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Issues
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(1) Does the young couple have a contractual right to continue paying installments, and upon completion of payments, take title of the house? (2) Are they bound by the agreement?
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Holding
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(1) Yes; (2) No. Errington (daughter-in-law)
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Reasoning
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Denning:
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Within a unilateral contract, there is an implied promise not to revoke once performance has commenced.
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The father’s offer was a unilateral contract (promise to give house in exchange for payment of loan). Once the couple began performing, it was an irrevocable offer. As long as the couple continue to pay installments, the contract remains binding on the offeror (and his estate), and the promisor’s obligation must be fulfilled upon completion of performance.
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There is no bilateral contract here – the couple never bound themselves to pay these installments.
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Ratio
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As soon as detrimental reliance has been established with regards to a unilateral contract, the offeror can no longer revoke the offer.
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Comments
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Under Wormser’s reasoning, the couple would get their money back, but no house. Now, in CML, after B makes his first step, A may not revoke. CML offers can be accepted by either a promise or an act.
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In CVL, B starting to walk is an act of acceptance (a manifestation of will) and both parties are bound. CVL sees the act as a promise, which makes the contract bilateral. Unilaterals are not normal in CVL, except for rewards (which really cannot be seen as bilateral, even if the “offer” was never received, there is an obligation by the promisor to pay the reward).
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CVL Approach to Unilateral Contracts
Does not rely on this dichotomy, would see contract as a bilateral promise – i.e. agreement to cross the bridge (the contract is formed through conduct – or a manifestation of will
Once someone begins to build a wall, he has the obligation to finish – thus both parties are protected
CML - Dawson v. Helicopter Exploration, [1955] S.C.R. 808, [1955] 5 D.L.R. 404 |
Jurisdiction
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Canada
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Facts
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Dawson (appellant/plaintiff) had mining claims in northern BC which had lapsed. Helicopter (respondent/defendant) offered Dawson a 10% interest in the claims in return for his help in finding them. Dawson expressed his willingness to help, and then was called to fight in the Korean War, but maintained that he would take steps to secure a temporary release to help Helicopter locate the mining claims. Helicopter wrote back and said that they would not be going in that year. Helicopter sent an exploration party which located the claims and made arrangements to develop them, without the aid of the appellant.
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Issues
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Do the respondents owe the appellant 10% interest?
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Holding
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Yes Dawson.
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Reasoning
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Helicopter argues that this was a unilateral contract, the offer thus remaining revocable until the action called for by Dawson was completed.
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However, unilateral contracts depend on the complete passiveness of the offeror, and in this case, the offeror was needed to secure a pilot for the helicopter to go on the exploration.
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Because of the activity demanded on the part of the offeror, this cannot stand up as a unilateral contract and must therefore be read as a bilateral contract.
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This follows the general tendency of courts to treat offers as calling for bilateral rather than unilateral contracts because where they can fairly be so construed (reference to Williston).
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In promising Dawson that the company would cooperate in his performance, there was an implied promise that the company would not prevent his performance.
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Ratio
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When the offeree’s performance depends on activity by the offeror, a “unilateral contract” will be read as a bilateral, because there is an implied promise to cooperate.
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Comments
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Unilateral contracts will be read as bilateral if this is remotely possible.
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