In contract law, a unilateral offer is one made to the world at large, or to a specific group, where acceptance is communicated by performance of a stipulated act. The question of whether such an offer can be revoked once the offeree has started to perform the act is a point of legal difficulty. While the statement in the question reflects the general position adopted by the courts to prevent unfairness, it is an oversimplification. The legal position is more nuanced, as the offeror is not always prevented from revoking the offer.
The primary difficulty with unilateral contracts is that acceptance is only complete once the stipulated act is fully performed. This creates a potential injustice where the offeror could revoke the offer when the offeree has almost completed the act, leaving the offeree with no contractual rights (Poole, 2021). The courts have generally sought to prevent this. It has been held that once an offeree has started performance, it is too late for the offeror to revoke the offer. See Errington v Errington & Woods [1952] 1 KB 290. In that case, a father promised his son and daughter-in-law that they could have the house if they paid the mortgage instalments. After the father’s death, his widow sought to revoke this promise. The Court of Appeal held that the promise could not be revoked once the couple had begun performance by paying the instalments, provided they did not leave the performance ‘incomplete and unperformed’.
A legal basis for this position was later explained as an implied collateral contract. It is suggested that in a unilateral contract situation, there are two offers. The first is the express offer to pay on completion of the act, and the second is an implied offer not to revoke the express offer once the offeree has begun performance. See Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231. Goff LJ stated that ‘the true view of a unilateral contract must in general be that the offeror is entitled to require full performance of the condition which he has imposed… subject to one important qualification, which is that there must be an implied obligation on the part of the offeror not to prevent the condition becoming satisfied, which obligation it seems to me must arise as soon as the offeree starts to perform’.
However, this implied obligation is not absolute, and it follows that the statement in the question is not entirely accurate. The House of Lords in Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 established that an offeror may be able to revoke a unilateral offer even after performance has begun. In Luxor, an owner promised to pay an estate agent a commission if the agent found a buyer for two cinemas. The agent found a willing buyer, but the owner refused to proceed with the sale and did not pay the commission. The House of Lords held that there was no basis to imply a term preventing the owner from revoking his offer. The court reasoned that it was not necessary to imply such a term to give the arrangement business efficacy, particularly where the agent undertook little risk and the reward was substantial. It would be inappropriate to imply a term that would prevent the owner from changing their mind about selling the property.
The decision in Luxor shows that revocation of a unilateral offer after performance has started is possible in certain circumstances. The key question is whether it is appropriate for a court to imply a term preventing revocation. The courts have since emphasised that cases like Luxor, where revocation is permitted, will be rare. See Schweppe v Harper [2008] EWCA Civ 442. Nevertheless, the possibility remains.
In conclusion, the statement that a unilateral offer cannot be withdrawn after performance has begun represents the usual position in English law, established to avoid unjust outcomes as seen in Errington v Errington. This is typically achieved by implying a term that the offeror will not revoke the offer once performance has commenced. However, the rule is not absolute. The case of Luxor v Cooper demonstrates that such a term will not be implied where it is not commercially necessary or appropriate, meaning revocation remains possible in some, albeit rare, situations. Therefore, the statement is a correct general summary but fails to account for important exceptions.
References
- Poole, J. (2021) Textbook on Contract Law. 15th edn. Oxford University Press.
- Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231
- Errington v Errington & Woods [1952] 1 KB 290
- Luxor (Eastbourne) Ltd v Cooper [1941] AC 108
- Schweppe v Harper [2008] EWCA Civ 442
