When Can an Offeror Not Rescind a Unilateral Contract Offer

Unilateral contracts are accepted by performance, not by a written promise. A key question for offerors and offerees is when an offeror may revoke a unilateral contract offer. The core rule is that the offeror generally can revoke at any time before the offeree completes performance. However, once performance has begun, many courts treat the offer as effectively non‑revocable, especially if revocation would defeat the purpose of the offer or mislead the offeree who has begun the required conduct. The precise outcome depends on jurisdiction and the wording of the offer.

Understanding Unilateral Contract Offers

A unilateral contract invites performance rather than a promise. The classical example is a reward for returning a lost item: the offer is accepted only by performing the requested act. A critical distinction is that acceptance occurs through action, not through a promise to perform. The contract forms when the offeree begins the performance in a manner consistent with the offer’s terms. Until that point, the offeror retains the ability to revoke.

General Rule: Revocation Before Performance

In the traditional framework, an offeror may revoke a unilateral contract offer at any time before the offeree completes the requested performance. This means that if the offeree has not yet begun or has begun but not completed, the offeror can revoke unless a protective rule applies. The risk for the offeree is that, absent performance, the offeror is free to revoke and the offeree will not be entitled to relief.

When Performance Has Begun: The Start-of-Performance Rule

Many courts recognize a crucial boundary: once the offeree begins the requested performance, the offeror loses the power to revoke in a way that would undermine the offeree’s progress. In practical terms, if an offeree begins the performance in reliance on the offer, illogically revoking could unjustly deprive the offeree of the chance to complete the contract.

Key points include:

• Partial performance often binds the offeror: After the offeree commences the acts specified by the offer, revocation becomes more limited or prohibited, depending on the jurisdiction and the contract terms.
• Substantial start versus mere preparation: Courts distinguish between mere preparation (which usually does not bind the offeror) and substantial performance that signals acceptance through action.
• Goods and service context: The rule is generally applied in both goods and services unilateral offers, though the exact standard for “begun” performance may vary.

Reliance, Estoppel, and Protective Exceptions

Even when performance has not fully begun, a court may prevent revocation if the offeree has relied on the offer in a way that would make revocation unfair. Estoppel can apply if the offeror knew the offeree would likely act in reliance on the offer and the offeree acted to their detriment.

• Reliance-based protections: If the offeree incurs significant costs or foregoes other opportunities to perform under the offer, some courts may enforce or preserve the offer despite attempts to revoke.
• Equitable considerations: Courts weigh whether revocation would result in unjust enrichment or the defeat of the offeror’s stated purpose.

Exceptions Where Revocation Might Still Be Possible

There are scenarios where revocation may still be allowed even after performance has commenced or in the absence of reliance protections:

• Ambiguity in the offer: If the offer language is ambiguous about the form, timing, or scope of performance, revocation might be permissible.
• Frustration or impossibility: If events arise that make performance impossible or radically different from the offer’s terms, revocation or modification may be appropriate.
• Mutual agreement: The offeror and offeree may consensually modify or revoke the proposed contract during performance.

Impact of Offer Terms and Formalities

The specific wording of the unilateral offer can shape revocability. If the offer states that it is irrevocable, or that performance constitutes acceptance with a binding obligation, the offeror is constrained accordingly. In some jurisdictions, a stated irrevocability clause or an option-like provision for unilateral contracts may create a binding commitment similar to an option contract.

Restatements and case law emphasize that clarity is crucial. When the offeror intends to preserve the right to revoke, it should clearly communicate the revocation terms before the offeree begins performance. Conversely, language that clearly indicates irrevocability or sets a fixed time frame can alter the risk allocation for both parties.

Practical Implications for Offerors

• Draft unilateral offers with precise language about revocation rights, start of performance, and any irrevocability clauses.
• Consider using explicit performance windows or timelines to reduce ambiguity about when performance starts.
• Monitor offeree actions after initiation of performance to assess whether reliance or estoppel protections might apply.

Practical Implications for Offerees

• Act promptly when a unilateral offer is received to begin performance if protection against revocation is desired.
• Keep documentation of steps taken in reliance on the offer to support potential estoppel or reliance claims.
• Evaluate whether partial performance might trigger a protective rule in your jurisdiction, and seek legal counsel if there is ambiguity.

Key Takeaways

• The general rule permits revocation of a unilateral contract offer before performance begins.
• Many jurisdictions bar revocation once the offeree has begun performance, to protect the offeree’s investment and the offer’s purpose.
• Reliance and estoppel can create additional protections for the offeree even if performance has begun.
• Clear offer terms governing revocation and irrevocability are essential to manage risk for both sides.