Bob, a merchant, makes an offer to Linda, another merchant, to buy 1,000 of her widgets in a signed letter containing all necessary terms of the offer. The letter states that Bob will keep the offer open for three weeks from the day the offeree receives it. One week later, Bob writes another letter to Linda attempting to revoke his offer. Linda writes a letter to Bob accepting Bob's original offer before she receives his revocation. Which of the following statements is true of this situation?
A) Linda's acceptance is effective and a contract is created.
B) Bob's revocation is effective and no contract is created.
C) Promissory estoppel prevents the formation of a contract in this situation.
D) The offer cannot be revoked since it is an option offer.

Question

Quizplus · Accepted Answer

Difficult problems of timing can result when an offeror is trying to revoke and an offeree is attempting to accept. The general rule is that a revocation is not effective until it is actually received by the offeree. So, if the offeree accepts before he or she has received a mailed revocation, a contract results. This rule recognizes the possibility that offerees who are unaware of a revocation may act in reliance on their belief that the offer is still open. In this scenario, Linda's acceptance is effective and a contract is created.

Bob, a Merchant, Makes an Offer to Linda, Another Merchant