Short answer. An offer becomes ineffective on the death, civil interdiction, insanity or insolvency of either party — the one who made it or the one who received it — provided that event happens before the acceptance is conveyed. Once acceptance has been conveyed, a contract exists and these events no longer undo it.
What the law says
An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed.
Civil Code, Article 1323 — When an Offer Becomes Ineffective. Read the full provision →
Everything turns on one moment
The article is short, but the whole question is packed into the last three words: before acceptance is conveyed. An offer is not yet a contract; it is a proposal waiting for an answer. Until the acceptance reaches the offeror, the proposal depends on both people still being legally capable of contracting. If the seller dies on Monday and the buyer's acceptance is sent on Tuesday, there is no contract — the buyer is accepting something that no longer exists. Reverse the dates and there is a contract, which the estate must honour like any other obligation of the deceased.
The four disabling events
Death ends the offer because the offeror's personality is gone. Insanity removes the capacity to consent, and consent is what an offer is waiting for. Civil interdiction is a penalty under the Revised Penal Code that strips a convict, during his sentence, of the right to manage and to dispose of his property between living persons — so he cannot bind himself in a sale. Insolvency reflects that a person whose assets are being marshalled for creditors is no longer free to commit them. Note that the article covers either party. Buyers often assume only the offeror's condition matters; it is not so.
Proving when acceptance was conveyed
Because the rule is a race against a date, evidence of timing decides real cases. Keep the offer and the acceptance in writing, keep the transmittal — courier receipt, email header, registered mail card — and avoid accepting by telephone with nothing to show for it. Where an offer sets a period, respond well inside it rather than on the last day. In transactions involving elderly or seriously ill parties, or a party whose business is in financial distress, this is not a theoretical concern: families discover the problem only when they try to enforce a deal that never legally formed.
What the article does not cover
Article 1323 lists events that end an offer by operation of law. It does not deal with the separate ways an offer can lapse — the period fixed in the offer expiring, a withdrawal communicated before acceptance, or a counter-offer, which in law rejects the original and substitutes a new proposal. It also says nothing about an option supported by a consideration distinct from the price, which is a contract in its own right and is governed differently. And it does not settle what happens to money already handed over as earnest money or a deposit; recovering that is a separate claim. If a deal collapsed for one of these reasons, have counsel look at the documents and the dates before writing anything off.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Belinda Alexander vs. Spouses Jorge and Hilaria Escalona and Reygan Escalona, G.R. No. 256141, July 19, 2022 — read the decision on LawPhil →
- Spouses Romeo Anastacio, Sr. and Norma T. Anastacio vs. Heirs of the Late Spouses, G.R. No. 224572, August 27, 2020 — read the decision on LawPhil →