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13-Offer and Acceptance

The document discusses a case where one company granted another company an option to buy a barge within 90 days without consideration. The company with the option attempted to exercise it within the period but the other company withdrew the offer, arguing it was not supported by consideration. The court ruled that without distinct consideration supporting the promise to sell, the option could still be withdrawn even after acceptance.

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34 views

13-Offer and Acceptance

The document discusses a case where one company granted another company an option to buy a barge within 90 days without consideration. The company with the option attempted to exercise it within the period but the other company withdrew the offer, arguing it was not supported by consideration. The court ruled that without distinct consideration supporting the promise to sell, the option could still be withdrawn even after acceptance.

Uploaded by

Ron Ace
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Title: Southwestern Sugar and Molasses Co., vs. Atlantic Gulf and Pacific Co.

G.R. No. L-7382 | June 29, 1955


Topic: Contracts; Offer and Acceptance; Rule on Withdrawal of Offer

Doctrine / Case Law:


When the offeror gives to the offeree a certain period to accept, "the offer may be
withdrawn at any time before acceptance" except when the option is founded upon consideration,
this general rule must be interpreted as modified by the provision of article 1479 which applies to
"a promise to buy and sell" specifically. This rule requires that a promise to sell to be valid must
be supported by a consideration distinct from the price, which means that the option can still be
withdrawn, even if accepted, if the same is not supported by any consideration.

FACTS:

On March 24, 1953, Atlantic Gulf granted an option to Southwestern Company to buy its
barge to be exercised within a period of ninety (90) days. On May 11, 1953, Southwestern
Company wrote to Atlantic Gulf advising the latter that it wanted to exercise the option at their
earliest convenience and requested that it be notified as soon as the barge is available. Atlantic
Gulf replied stating that their understanding was that the “offer of option” is to be a cash
transaction and to be effected “at the time the lighter is available”, and on June 25, 1953,
reiterating of the unavailability of the barge, it advised the Southwestern Company that since
there is still further work and the stipulation still applies, the barge could not be turned over to
Company.
The Southwestern Company instituted an action compelling the Atlantic Gulf to sell the
barge in line with the option, depositing with the court a check covering the sum of p30,000. But
later on was withdrawn with the approval of the court. On June 29, 1953, Atlantic Gulf withdrew
its “offer of option with due notices to Southwestern Company with the defense that such option
was merely a favor and that it is null and void since it is not supported by any consideration.

After due trial, lower court rendered judgment granting Southwestern Company for specific
performance. Southwestern Company contends that the option became binding upon Atlantic
Gulf when the former gave notice to their acceptance to the offer within the period given for the
option pursuant to Article 1324 of the Civil Code.

ISSUE:

Whether or not the “offer of option” not supported by consideration, and the offeree give notice
of acceptance and the offeror accept the offer, the offer can no longer be withdrawn and in any
event such withdrawal is ineffective.

RULING:

No, It is true that under article 1324 of the new Civil Code, the general rule regarding offer
and acceptance is that, when the offeror gives to the offeree a certain period to accept, "the offer
may be withdrawn at any time before acceptance" except when the option is founded upon
consideration, but this general rule must be interpreted as modified by the provision of article
1479 which applies to "a promise to buy and sell" specifically. This rule requires that a promise
to sell to be valid must be supported by a consideration distinct from the price, which means that
option can still be withdrawn, even if accepted, if the same is not supported by any
consideration.

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