Contract may be terminated by Lapse and Revocation

Question

Explain how contract may be terminated by Lapse and Revocation?

Answer 1

Lapse: An offer lapses if:

1.  The offeree fails to accept the offer within the time period specified in the offer;

2.  There is no set period for acceptance, and the offeree fails to accept within a reasonable time—the court will look at the subject matter, volatility of the market, and industry practices; or

3.  Either party dies or becomes incapable (unless the contract states that it is intended to bind heirs and estates).

Revocation: It is withdrawal of an offer prior to acceptance by the offeree. Revocation must be communicated in a way that a reasonable person would understand it to be revoked. It is effective when the revocation is actually received by the offeree.