Circumstances in which an offer may lapse.

  • Insanity: the unsoundness of mind of the offeror or offeree terminates an offer. The offer lapses when the fact of insanity if communicated to the other party.
  • Failure of a condition subject to which the offer was made: a conditional offer lapses if the condition upon which it is based fails to materialize.
  • Death: the death of the offeror or offeree before acceptance terminates the offer. The offer lapses when death of the one is made known to the other. (Morgan V. Manser).
  • Stipulated time: where the offeror specifies the duration the offer is to remain open for acceptance, if not accepted or revoked earlier, such offer lapses on the expiration of the duration.
  • Reasonable time: if no duration is prescribed the offer lapses on expiration of reasonable time. What is reasonable time is question of fact and varies from case to case. For example.

In Ramsgate Victoria Hotel Ltd. V. Montefiore, the defendant made an offer to buy 40 shares of the plaintiff company. In June 1864. However, the shares were not allotted to him until Nov. 23 1864 by which time the defendant has given up. He refused to take the shares and was sued. It was held that he was not bound to take up the shares as his offer has lapsed. It had not been accepted within a reasonable time.

A similar holding was made in Virji Khimiji V. Chutterbuck where the defendant offered to buy a quantity of timber from the plaintiff and required it urgently. The plaintiff did not reply but delivered the timber 4½ months later. The defendant refused to take delivery and was sued. It was held that he was not bound to take delivery as his offer had lapsed for non acceptance within a reasonable time.

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