Introduction
In the law of contract, the rules governing offer and acceptance provide the framework for determining when a legally binding agreement comes into existence. A unilateral offer is a distinct type of offer made to the world at large, or a specific group of people, where acceptance is communicated not by a promise, but by the performance of a specified act. The statement that such an offer cannot be withdrawn once the offeree has started performance reflects a significant judicial modification of the traditional rules of revocation. This essay will argue that the statement is a largely accurate summary of the modern legal position in England and Wales, a position developed by the courts to prevent potential injustice to the offeree.
The Traditional Position on Revocation
The general rule of contract law is that an offer can be revoked by the offeror at any time before it has been accepted (McKendrick, 2021). Acceptance must be a final and unqualified expression of assent to the terms of the offer. In the context of a unilateral contract, acceptance is deemed to occur upon the complete performance of the act stipulated by the offeror. This is illustrated by the famous case of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, where acceptance was the act of purchasing and using the smoke ball as directed.
Applying the traditional rule strictly would create a clear potential for unfairness. An offeror could, in theory, revoke their offer moments before the offeree completes the required act, even if the offeree has invested significant time, effort, and expense. For example, if an offeror promises £10,000 to anyone who walks from London to York, they could withdraw the offer as the offeree takes their final step into York. This outcome seems unjust and contrary to the expectations of the parties, which has led the judiciary to seek a more equitable solution.
The Development of the Implied Promise
The primary mechanism developed by the courts to prevent such injustice is the concept of an implied secondary promise or collateral contract. This principle holds that alongside the main unilateral offer, there is an implied promise by the offeror not to revoke the offer once the offeree has begun to perform the act of acceptance.
The leading authority for this approach is Errington v Errington and Woods [1952] 1 KB 290. In this case, a father bought a house for his son and daughter-in-law, promising that if they paid all the mortgage instalments, the house would be theirs. After the father’s death, his widow sought to evict the daughter-in-law. The Court of Appeal held that the father’s promise was a unilateral offer which could not be revoked once the couple had started paying the mortgage instalments, provided they continued to do so. Lord Denning stated that the promise "could not be revoked by him once the couple entered on performance of the act, but it would cease to bind him if they left it incomplete and unperformed".
This reasoning was supported in Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231, where Goff LJ confirmed that "once the offeree has embarked on performance it is too late for the offeror to revoke his offer". He rationalised this by stating there is a "necessary implication" from the circumstances that the offeror is obliged not to prevent the condition from being satisfied, and that this obligation arises as soon as the offeree starts performance.
Limitations and Practical Application
While the principle is now well-established, it is not without its limitations. Firstly, the protection only arises when the offeree has 'embarked on performance'. This is a question of fact and must be distinguished from acts which are merely preparatory to performance. For instance, buying walking boots for a walk to York would likely be considered preparation, whereas taking the first steps on the designated route would be the commencement of performance (Poole, 2021).
Secondly, the rule does not mean the offeror is immediately bound to the main contract. The offeror is only bound if the offeree completes the stipulated act. If the offeree ceases performance, the offeror’s obligation also ceases.
Finally, the normal rules regarding communication of revocation still apply, albeit adapted for unilateral offers. An offeror must take reasonable steps to bring the revocation to the attention of potential offerees. For an offer made to the public, this generally means communicating the revocation with the same prominence as the original offer. This was suggested in the American case of Shuey v United States (1875) 92 US 73, which is considered persuasive in English law.
Conclusion
In conclusion, the statement that a unilateral offer cannot be withdrawn after the offeree has begun performance is a broadly correct representation of the current law. The strict, traditional rule that an offer can be revoked any time before complete acceptance has been modified by the courts to promote fairness and protect the reasonable expectations of the offeree. Through cases like Errington and Daulia, the judiciary has established an implied obligation on the part of the offeror not to revoke the offer once performance has commenced. While this principle is subject to the offeree continuing and completing the act, it marks a significant and necessary departure from orthodox offer and acceptance rules to prevent manifest injustice in the context of unilateral contracts.
References
- McKendrick, E. (2021) Contract Law. 14th edn. Palgrave Macmillan.
- Poole, J. (2021) Textbook on Contract Law. 15th edn. Oxford University Press.
- Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
- Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231.
- Errington v Errington and Woods [1952] 1 KB 290.
- Shuey v United States (1875) 92 US 73.
