An offer in contract law can be terminated in three ways: the offeror revokes it, the offeree rejects it or responds with a counteroffer, or the offer ends automatically by operation of law. Each path has its own timing rules, and mistaking a live offer for a dead one (or the reverse) can bind you to a deal you thought was gone or cost you a deal you thought was still open.
Revocation by the Offeror
An offeror can generally pull an offer back at any time before acceptance. The catch is timing: a revocation only takes effect when the offeree actually receives it. Mail a revocation on Monday, and if the offeree does not get it until Wednesday, the offer stays alive until Wednesday. Any acceptance the offeree makes in that window creates a binding contract.
Revocation does not have to come straight from the offeror. If the offeree learns from a reliable source that the offeror has done something clearly inconsistent with the offer, the offer is treated as revoked. Offer your house to a friend, then sell it to someone else, and if your friend hears about the sale from a mutual acquaintance before trying to accept, the offer is dead.
Three situations block revocation.
Option Contracts
When the offeree pays the offeror something of value in exchange for a promise to keep the offer open for a set period, the offeror is locked in for that period. Pay a car dealer $200 to hold a $20,000 price for two weeks, and the dealer cannot revoke during those two weeks. The payment turns a revocable offer into a binding promise to wait.
Merchant Firm Offers
Under the Uniform Commercial Code, a merchant who puts an offer for goods in writing, signs it, and includes language promising to keep it open cannot revoke it during the stated period, even without payment from the offeree. If no period is stated, the offer stays open for a reasonable time. Either way, the irrevocable window caps at three months. After that, the offer becomes revocable again unless the offeree has paid for an extension. The rule applies only to merchants acting in their professional capacity, not to casual sellers.
Reliance
An offer can also become irrevocable when the offeree reasonably and substantially relies on it before accepting. This comes up most often in construction. A subcontractor submits a bid, the general contractor uses that number in a proposal to the property owner, and the general contractor wins the project based partly on that price. The subcontractor may not be able to revoke, because the general contractor relied on the bid in a serious, foreseeable way. Courts treat the offer as binding to the extent needed to prevent injustice.
Rejection and Counteroffers
The offeree can end an offer through outright rejection or through a counteroffer. Both wipe out the original, but people often make counteroffers without realizing what they have done.
A flat refusal ends the offer permanently. Once you say no, you cannot change your mind and accept later. If you want the same deal, the offeror has to make a new offer, and nothing requires them to.
A counteroffer does two things at once: it rejects the original offer and creates a new one with different terms. If someone offers to sell you a bicycle for $500 and you respond with “I’ll pay $400,” the $500 offer is dead. Your $400 response is now an offer the seller can accept or reject. If the seller says no, you cannot fall back on the original $500 price, because that offer no longer exists.
The line between a counteroffer and a mere inquiry matters. “Would you consider taking $400?” is a question about flexibility and keeps the original offer alive. “I’ll give you $400” proposes new terms and kills it. If you want to preserve your right to accept the original deal, frame your response as a question rather than a statement.
Termination by Operation of Law
Some events end an offer automatically. Neither party has to say or do anything.
Lapse of Time
An offer with a deadline dies the moment that deadline passes. An offer good until Friday at 5 p.m. cannot be accepted at 5:01. When no deadline is stated, the offer stays open for a reasonable period. What counts as reasonable depends on the nature of the deal, industry norms, and the method of communication. An offer to buy stock that moves by the minute has a much shorter reasonable life than an offer to buy farmland.
Death or Incapacity
If either party dies or becomes legally incapacitated before acceptance, the offer terminates automatically, even if the surviving party has no idea. Offer to sell your house, then die suddenly, and the buyer cannot accept, even if they learn about your death weeks later. One limit: this rule generally does not apply to option contracts, where the offeree has already paid to keep the offer open. There, the offeree’s rights survive the offeror’s death.
Destruction of the Subject Matter
When the specific thing being offered is destroyed before acceptance, the offer terminates. Offer a particular vintage car, and if it is totaled before the buyer accepts, there is nothing left to contract over. This applies to items that are unique or specifically identified. If the offer is for generic goods that could come from any source, the destruction of one batch does not necessarily kill the deal.
Supervening Illegality
If a new law or regulation makes the subject of the offer illegal after the offer is made but before acceptance, the offer terminates automatically. Offer to sell a particular substance, and if a new regulation bans its sale before the buyer accepts, the offer is void.
Timing Traps With Mailed Communications
When parties communicate by mail or other non-instant methods, timing rules diverge in ways that catch people off guard. Under the mailbox rule, an acceptance takes effect the moment it is properly sent. A revocation takes effect only when the offeree actually receives it.
The gap matters. If an offeror mails a revocation on Tuesday and the offeree drops an acceptance in the mail on Wednesday, a contract is formed. The acceptance became effective on dispatch; the revocation is not effective until it arrives, which could be Thursday or later. The offeror thinks the offer was pulled back in time. It was not.
The mailbox rule does not apply to rejections or counteroffers. If an offeree mails a rejection and then changes their mind and mails an acceptance, the outcome depends on which letter the offeror receives first. If the rejection arrives first, there is no contract, even though the acceptance was mailed before the rejection was received. When you change your mind after mailing a rejection, call or email the offeror directly rather than trust the mail to sort it out.