review: A unilateral contract is accepted by performance
As a reminder, a unilateral contract is where an offeree accepts through performance. A common example that professors like to use is: A says to B, “If you walk across the Brooklyn Bridge, I’ll pay you $100.” To get paid, B must cross the bridge. Promising to cross the bridge is not enough.
But when can a party revoke a unilateral offer? That is, at what point can the offeror tell the other party it’s too late, and the offer is no longer in effect?
The traditional and modern rules for revoking an offer in a unilateral contract
Looking at our example above with the Brooklyn bridge, our traditional rule is that A can revoke this offer until B completes performance. So if B starts walking across the bridge, A can say, “I take back my offer!” Now B does not get paid even if she crosses the bridge, because A revoked the offer.
The modern rule is different – – unilateral contracts cannot be revoked once performance begins. That is, if B starts performing, A cannot revoke the offer. In the above example, if B is crossing the bridge, A cannot revoke the offer. Below is an older video which discusses terminating offers. Around the 3:50 mark the video discusses revoking unilateral contracts.