A settlement offer can be rescinded at any time before the other side accepts it. After acceptance, the offer becomes a binding contract, and pulling it back is no longer a matter of changing your mind — it requires proving one of a few narrow legal grounds for voiding the agreement. The line between an open offer and a done deal is sharper than most people expect.
Revoking Before the Other Side Accepts
The baseline rule is simple: whoever made the offer can withdraw it any time before acceptance.1Legal Information Institute. Revocation New evidence turns up, a lawyer reassesses the case, an insurer changes position — any of that can prompt a decision to pull an offer off the table. This applies to settlement offers just as it does to any other contract proposal.
The catch is that the revocation has to actually reach the other party. Deciding internally to withdraw does nothing if the offeree never hears about it. The message doesn’t need to use formal language. Courts have found that an email expressing “second thoughts” and suggesting the deal is “not sure it’s still on the table” is enough to kill the offer, so long as the other side receives it before accepting.2CALI. Revocation of Offers
Speed matters. Every hour the offer sits open is an hour the other party can accept it and lock you in.
When Revocation and Acceptance Cross Paths
Timing collisions cause real trouble. Say you mail a letter revoking your settlement offer on Monday, but the other side mails an acceptance on Tuesday, before your revocation letter arrives. Under the mailbox rule, an acceptance takes effect the moment it is properly dispatched. A revocation takes effect only when the other side actually receives it. So if the acceptance is sent before the revocation arrives, you have a binding agreement even though you already tried to pull the offer back.
The practical lesson is that a phone call or email that reaches the other side immediately is far safer than a letter that takes days to arrive.
Offers You Cannot Freely Revoke
Not every settlement offer is open to withdrawal on the offeror’s whim. A few mechanisms lock an offer in for a set period.
Option Contracts
If the offeree pays something of value — even a small amount — in exchange for a promise to keep the offer open, that creates an option contract. The offeror is then locked in for the agreed period. Even without payment, some courts will enforce an option where the offeree relied on the offer to their detriment, under promissory estoppel.3Legal Information Institute. Option Contract
Federal Rule 68 Offers of Judgment
In federal lawsuits, a defendant can serve a formal offer of judgment under Federal Rule of Civil Procedure 68. The plaintiff has 14 days to accept, and rejecting the offer carries a cost-shifting risk if the plaintiff later wins less than the offered amount at trial.4Legal Information Institute. Rule 68 – Offer of Judgment The First Circuit has held that a Rule 68 offer must genuinely stay open for the full 14 days, meaning the defendant cannot revoke it during that window. Even an outright rejection by the plaintiff does not end the offer; the plaintiff can still change course and accept within the 14 days.
Age Discrimination Settlements
Federal law flips the usual direction for one category of settlements. When an employer settles an age discrimination claim with an employee who is 40 or older, the Older Workers Benefit Protection Act gives the employee at least 7 days after signing to revoke their acceptance. The agreement is not enforceable until that window expires. The employee must also get at least 21 days to review the agreement before signing, or 45 days if the waiver is part of a group layoff or exit incentive program.5Office of the Law Revision Counsel. 29 USC 626 – Recordkeeping, Investigation, and Enforcement A settlement that skips any of these steps is not a valid waiver, whatever the document says.
Ways an Offer Ends Without You Acting
Sometimes you don’t need to revoke because the offer has already died.
Rejection
If the offeree says no, the offer is gone. They cannot circle back later and try to accept it. Any later attempt to accept is really a new offer running the other direction.
Counteroffers
A counteroffer works as both a rejection of the original offer and a new proposal. If you offer $50,000 and the other side responds with $75,000, your $50,000 is off the table. The other party cannot later say “we’ll take the $50,000 after all.”6Legal Information Institute. Counteroffer This catches people off guard more than almost any other contract rule. What feels like negotiating is legally a chain of offers and rejections, and each counteroffer resets the board.
Lapse of Time
If a settlement offer includes a deadline, the offer expires when that date passes. If no deadline is stated, the offer stays open for a “reasonable” period, which courts evaluate case by case. A settlement offer made two weeks before trial has a much shorter reasonable life than one made early in a case with no trial on the calendar.
When Acceptance Locks the Deal
A settlement offer becomes a binding contract the moment it is properly accepted. Acceptance means agreeing to the exact terms of the offer without changes. Under the mirror image rule, any attempt to alter a term is treated as a counteroffer rather than an acceptance.7Legal Information Institute. Mirror Image Rule
A verbal acceptance can technically create a binding agreement, but proving what was said becomes a headache if either side disputes the terms later. That is why nearly all settlement agreements are reduced to a written release signed by both parties. Once a signed release is exchanged, the offer is no longer revocable.
Your Lawyer Cannot Settle Without Your Say
A point that surprises many clients: your attorney acts as your agent but does not have the authority to accept or reject a settlement on your behalf without your consent. The decision belongs to you. Your legal claim is a personal asset, and no one can bind you to a settlement you never agreed to. If a lawyer accepts an offer without authorization, the client can generally disavow the agreement, though untangling the situation often requires a court hearing and evidence that the client never consented.
Undoing a Settlement After It’s Signed
Once both sides sign, rescission is no longer available as a matter of right. What remains is the much harder task of voiding a binding contract. Courts strongly favor enforcing settlements because finality is the point. A few narrow grounds can still justify setting one aside.
Fraud or Misrepresentation
If one party lied about or concealed a material fact to induce the other side to sign, the agreement is voidable. A classic example: a defendant in a personal injury case hides evidence of fault to push the plaintiff into accepting a lowball number. Courts have also set aside settlements where an attorney failed to disclose a major event during litigation, such as the death of the client whose claim was being settled.8Federal Bar Association. Ethics in Settlement – The Effect of Material Misrepresentation The party seeking to void the agreement has to show the misrepresentation was material and that they justifiably relied on it.
Duress or Coercion
A settlement signed under improper pressure is voidable. Duress means unlawful conduct or threats destroyed the signing party’s ability to exercise free will. The bar is high. Feeling economic pressure or wanting to avoid trial does not qualify. The threat has to be something improper, such as threatening criminal prosecution to coerce a civil settlement, or withholding funds a person desperately needs to force unfavorable terms. Clear evidence of the coercion is required.
Mutual Mistake
When both parties were fundamentally wrong about a key fact at signing, the agreement may be voidable. Mutual mistake is not a disagreement about the value of a claim or buyer’s remorse. It is a shared factual error at the core of the deal. Unilateral mistakes, where only one side was wrong, are much harder to use as a basis for voiding an agreement.