Issue: The issue is whether the buyer’s knowledge of the seller’s intent to sell the building to a friend constitutes a valid revocation of the seller’s offer to the buyer.

Rule: An offeror can revoke an offer by communicating information inconsistent with the continuation of the offer. This includes when the offeree hears information from a reliable third person that the offeror acted in a manner inconsistent with the terms of the offer. There are

limitations to the offeror’s power to revoke: (1) An option contract, which is a promise to hold an offer open for a period of time and must either be supported by consideration, or be in writing to be enforceable. (2) A U.C.C. firm offer made by a merchant to anyone. Under the U.C.C. firm offer rule, a signed written offer made by a merchant to a merchant or non-merchant will be irrevocable for the time stated, or if no time is stated, for a reasonable time not more than three months. (3) When an offeror knows or should know that the offeree would rely on the offer, and the offeree does rely to her detriment on the offer, the offer is irrevocable for a reasonable period of time (detrimental reliance/promissory estoppel); and (4) partial performance of a unilateral contract. Here, there are several rules – on the MBE, the rule is that an offer becomes irrevocable at the start of performance, though the contract is not formed until performance is complete.

Analysis: This question deals with an indirect revocation. Here, the buyer learned about the seller’s contract with the friend from a tenant in the building being offered up for sale. The tenant is a reliable source because they live in the building that is being sold and nothing in the facts indicates that they are untrustworthy or have a reason to lie. The seller’s actions indicate an intent to not enter into the proposed contract with the buyer, and therefore act as in indirect revocation of the offer to the buyer. None of the limitations on revocability of an offer are applicable here and thus the offer is revoked.

(B) is correct because the seller’s intent to not go through with the proposed contract with the

buyer was made evident to the buyer upon hearing from the tenant that the seller was instead

contracting with the friend.

(A) is incorrect because there is no requirement that the source of the information concerning

an indirect revocation come from an agent of the offeror. Rather, all that is necessary is for the

offeree to acquire the information from a reliable source.

(C) is incorrect because an offer is not a contract in and of itself, but rather an invitation to

enter into a contract which the offeree must first accept in order to be binding.

(D) is incorrect because the power of acceptance was not timely exercised by the buyer here