On June 15, Peters orally offered to sell a used lawn mower to Mason for $125. Peters specified that Mason had until June 20 to accept the offer. On June 16, Peters received an offer to purchase the lawn mower for $150 from Bronson, Mason’s neighbor. Peters accepted Bronson’s offer. On June 17, Mason saw Bronson using the lawn mower and was told the mower had been sold to Bronson. Mason immediately wrote to Peters to accept the June 15 offer. Which of the following statements is correct?
a. Mason’s acceptance would be effective when received by Peters.
b. Mason’s acceptance would be effective when mailed.
c. Peters’ offer had been revoked and Mason’s acceptance was ineffective.
d. Peters was obligated to keep the June 15 offer open until June 20.
Answer:C
Generally an offeror may revoke an offer at any time prior to acceptance by the offeree. Revocation is effective when it is received by the offeree. Revocation also occurs if the offeree learns by a reliable means that the offeror has already sold the subject of the offer. In this situation, Peters’ offer was effectively revoked when Mason learned that the lawn mower had been sold to Bronson. Therefore, Mason’s acceptance was ineffective.
Answers (a) and (b) are incorrect because the offer had been revoked prior to Mason’s acceptance.
Answer (d) is incorrect because Peters was not obligated to keep the offer open. Note that if consideration had been paid by Mason to keep the offer open, an option contract would exist and the offer could not be revoked before the stated time.