Revocation is the manifestation of the intent not to enter into the contract proposed by an offer. A “manifestation” of intent can be oral or written or, as discussed shortly, even indirectly. Unless an offer is specifically made irrevocable, it can be revoked at anytime prior to acceptance.
Revocation is effective when received. This, of course, leads to endless argument about what it means to have “received” something. Legal texts dealing with the law of contracts define “received” as “when a writing comes into the possession of the person addressed, or of some person authorized by him to receive it for him, or when it is deposited in some place which he has authorized as the place for this or similar communications to be deposited for him.”
As you can see from the definition, “receipt” does not require that the writing come into the possession of the person to whom the revocation is addressed. Possession by the addressee is but one of three ways to have receipt. Typically, buyers and sellers deal through agents. So the question is whether agents are “authorized” to accept revocations. The answer is very simple: If they are authorized to receive offers and acceptances, they are authorized to receive revocations unless the principal specifically limits their authority.
If agents are authorized to receive revocations, revocations are effective when agents receive them. This is true whatever the means by which the revocation is communicated. Agents should, however, keep in mind that things done verbally can end up being worth about as much as the paper they are [not] written on. These two factors suggest that the best way to handle a revocation for a client is to call the other agent and tell them your client revokes and to check their fax machine because your clients’ written confirmation of the revocation should be printing out as we speak.
When you can’t reach the other agent, the third part of the definition of “receipt” (“when it is deposited in some place which he has authorized as the place for this or similar communications to be deposited for him”) comes into play. Notice that the third part of the definition of “receipt” includes deposit where “similar communications” are deposited. What is similar to a revocation? How about communications (offer, counter offer, acceptance, etc.) regarding formation of the contract? Basically, a revocation can be “deposited” any place the recipient has authorized the deposit of other communications regarding the formation of the contract. Typically, that is their real estate agent’s office.
How does one “deposit” something at a real estate office? Handing it to a person and getting a receipt is a best case scenario (easy to prove and very certain). Sending it to a person during business hours by a means of communication commonly used for that purpose is another way but can raise “I never got it” issues. Sending it to a fax machine after hours raises even more issues. Slipping something under the front door after hours is at the far end of the “deposit” spectrum (hard to prove and very uncertain).
A good way to think revocation is to analogize it to the deposit of money in a bank. When you go to the bank during banking hours and hand the money to a teller and get a receipt, you are very sure the money has been “deposited.” If you drop it in an ATM and get a receipt, that’s pretty good. Dropping it in a night deposit box designated for that purpose works but you won’t have a receipt. Shoving money under the front door after hours might work if it is discovered by an honest person but you wouldn’t want to bet on it. In short, revoking is pretty easy but you need to think about proof.
The ease (assuming adequate proof) with which an offer can be revoked is probably made most clear by the common law doctrine of indirect revocation. The doctrine originated in the 1876 English common law case of Dickerson v. Dodds. Dodds made an offer to sell his property to Dickerson. Before Dickerson could accept, Dodds made an offer to sell the property to Allan. Allan accepted. When Dickerson learned Allan had accepted, he quickly “accepted” the offer he had and sued Dodds. The court held the offer to Dickerson was indirectly revoked when Dickerson received reliable information that Allan had accepted.
The result in Dickerson v. Dodds upsets real estate agents and lawyers alike. How, they wonder, could the court find that the offer to Dickerson was revoked? If you think about it, however, you will see that the holding is a logical consequence of the idea that contracts are voluntary private agreements. Dickerson knew when he attempted to accept that the property was already sold to Allan. He, therefore, knew that Dodds did not want to sell to him. That is, he knew prior to his acceptance that Dodds had revoked his offer to sell by selling to someone else.
The result in Dodds should not give agents comfort. Creating multiple offers for the same property at the same time is so dangerous it calls into serious question the agent’s diligence. That a court might later, depending on the circumstances (remember Dickerson v. Dodds only worked for Dodds because Dickerson knew of Allan’s acceptance before he tried to accept), rule for one or the other of the offerees is irrelevant. A diligent real estate agent representing a seller will not depend on the vagaries of common law to protect their client.
Had Dodds been represented by a competent real estate licensee, two things would have happened. First, the agent would have made every effort to revoke using the best means available under the circumstances and understanding that revocation is valid only upon “receipt.” Click here for a detailed discussion of revocation. Second, the agent would have made the second offer contingent on revocation of the first. Revocation, as you can see from the discussion thus far, is simply too fact specific to take a chance with. If you do your best to revoke and then make the second offer contingent on the revocation of the first offer, you will never be responsible for your seller ending up with two deals.
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