When Does an Offer End? A Legal Guide to Termination of Offers in Contract Law
In business, real estate, and daily life, offers do not last forever. Understanding exactly when and how an offer terminates is critical to avoid misunderstandings, missed opportunities, or costly legal issues. Whether you are negotiating in California or elsewhere, knowing the rules for offer termination gives you greater control and certainty in your contract dealings.
What Is Offer Termination?
An “offer” is a proposal by one party to enter into a contract on specified terms. However, the law recognizes that offers cannot stay open indefinitely. Termination of an offer means it can no longer be accepted to form a binding contract.
How Can Offers Be Terminated?
Offers may end in several ways, all grounded in statutory or case law.
Revocation by the Offeror
The offeror (the person making the offer) can withdraw it at any time before it is accepted, unless the offer is irrevocable (such as under an option contract or when consideration is paid to keep the offer open). Cal. Civ. Code § 1586; Restatement (Second) of Contracts § 42
Lapse of Time
If the offer sets out a specific expiration date or time, it terminates automatically when that date or time passes. If no period is stated, it remains open for a “reasonable time” under the circumstances. Cal. Civ. Code § 1587(1); Restatement (Second) of Contracts § 41
Rejection or Counteroffer
Once the offeree (the potential accepting party) rejects the offer, or makes a counteroffer, the original offer is terminated and cannot later be accepted (unless the original offeror renews it). Cal. Civ. Code § 1585; Restatement (Second) of Contracts §§ 38–39
Death or Incapacity
If either the offeror or the offeree dies or loses legal capacity before acceptance, the offer is automatically terminated, except in some irrevocable agreements or by statute. Cal. Civ. Code § 1587(4); Restatement (Second) of Contracts § 48
Failure of Condition
If acceptance requires the performance or occurrence of a specific condition (e.g., “accept by delivering payment”), and the condition is not met, the offer expires. Cal. Civ. Code §§ 1434, 1586
Supervening Illegality
If the subject of the contract becomes illegal after the offer is made but before acceptance (due to changes in law or regulations), the offer is terminated.
Special Rules for Merchants and Sales of Goods—California’s UCC
Under the Uniform Commercial Code (UCC), adopted in California as Cal. Com. Code § 2205, a written “firm offer” by a merchant for the sale of goods is irrevocable for the stated period (or a reasonable time not exceeding three months), even if no consideration is given for the promise to keep it open.
Practical Problems and Misunderstandings
A common pitfall occurs when one party tries to accept an offer believing it is still open, not realizing it has lapsed by time, revocation, or a prior counteroffer. Email, text, and digital negotiations can create further confusion about the moment an offer ends.
Tip: Always clarify deadlines and conditions in writing during negotiations. If you intend to hold an offer open or keep it firm, specify this in the contract or use a formal option agreement.
Why It Matters
Missing or misunderstanding offer termination rules can lead to lost deals, failed investments, or expensive litigation. Courts will closely examine communication records to decide whether an offer expired, was revoked, or remained open.
Conclusion
Offers in contract law do not last forever—and understanding when they end is crucial for anyone negotiating agreements in California or elsewhere. Reference the law, set clear deadlines, and double-check communications to ensure that your interests are protected. For important deals or high-value negotiations, consulting an attorney ensures all terms are clear and enforceable.
Key Citations:
Cal. Civ. Code §§ 1434, 1585, 1586, 1587
Cal. Com. Code § 2205
Restatement (Second) of Contracts §§ 38–42, 48
