Introduction
In the law of contract, the formation of a binding agreement requires a clear offer and a corresponding acceptance. The rules governing revocation, which is the withdrawal of an offer, are straightforward in the context of bilateral contracts, where promises are exchanged between two parties. However, the position regarding unilateral contracts, where one party makes a promise in return for an act, is more complex. The statement that a unilateral offer cannot be withdrawn after the offeree has begun performance is a generally accurate representation of the approach adopted by the courts in England and Wales. This essay will discuss this proposition, arguing that while the law does protect an offeree who has commenced performance, it does so not by altering the rules of acceptance, but by implying a secondary promise from the offeror not to revoke the primary offer.
The Problem of Revocation in Unilateral Contracts
A unilateral offer, famously illustrated in Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, is an offer made to the world at large, which is accepted through the full performance of a stipulated act. The general rule of revocation is that an offer can be withdrawn at any time before it has been accepted (Payne v Cave (1789) 3 Term Rep 148). If this rule were applied strictly to unilateral contracts, it could lead to significant injustice. For example, if an offeror promises £1,000 to anyone who walks from London to Manchester, they could theoretically revoke the offer when the offeree is just a mile from their destination. At that point, the offeree has not fully performed the act, and thus has not, in the strictest sense, accepted the offer. This would leave the offeree without remedy despite their considerable effort and reliance on the offer. The courts have therefore developed a principle to prevent such an unconscionable outcome.
The Implied Obligation Not to Revoke
The modern position in English law is primarily derived from the Court of Appeal's decision in Errington v Errington and Woods [1952] 1 KB 290. In this case, a father purchased a house for his son and daughter-in-law, telling them that the house would be theirs if they paid off the mortgage. The couple began making the payments. After the father’s death, his personal representative sought to revoke the offer and claim possession of the house. The court held that the offer could not be revoked. Lord Denning stated that the father’s promise was a unilateral contract which could not be revoked once the couple had embarked on performance, provided they did not leave it "incomplete and unperformed".
This approach does not suggest that acceptance occurs at the start of performance. Rather, as explained by Lord Justice Goff in Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231, there is an implied obligation on the part of the offeror not to prevent the condition of acceptance from being satisfied. This implied obligation arises as soon as the offeree enters on performance of the act. Therefore, two offers are effectively in play: the main offer to pay on completion of the act, and a collateral or implied offer not to revoke once performance has begun. By starting performance, the offeree accepts this secondary implied offer, binding the offeror to keep the main offer open (McKendrick, 2021).
Limitations and Conclusion
The principle established in Errington is not absolute. The protection afforded to the offeree is conditional upon them continuing to perform the act. If the offeree ceases performance, the offeror’s obligation to keep the offer open would also cease. Furthermore, for a revocation to be effective, it must be communicated to the offeree. In the case of offers to the public, this may require the revocation to be published with the same prominence as the original offer, a principle supported by the American case of Shuey v United States (1875) 92 US 73, which is considered persuasive in this jurisdiction.
In conclusion, the statement that a unilateral offer cannot be withdrawn after performance has begun is broadly correct. The law protects the offeree from the harshness of the traditional revocation rule by implying a promise by the offeror to keep the offer open. This solution, while a judicial creation to ensure fairness, demonstrates the law's flexibility in adapting classical contract principles to avoid manifest injustice. It confirms that once an offeree has started to act in reliance on a unilateral promise, the offeror cannot simply change their mind without legal consequence.
References
- McKendrick, E. (2021) Contract Law: Text, Cases, and Materials. 9th 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
- Payne v Cave (1789) 3 Term Rep 148
- Shuey v United States (1875) 92 US 73
