Dickinson v Dodds 01 Apr 1876 2 ChD 463, CA

Dodds offered to sell property to Dickinson, with the offer open until Friday. Before accepting, Dickinson learned from a third party that Dodds had sold to another. The court held this indirect communication was a valid revocation of the original offer.

Facts

On Wednesday, 10th June 1874, the Defendant, John Dodds, signed and delivered to the Plaintiff, George Dickinson, a memorandum offering to sell a property for £800. The offer included a postscript stating: “This offer to be left over until Friday, 9 o’clock, a.m. J.D. (the 12th of June).” On Thursday afternoon, the Plaintiff was informed by a third party, a Mr. Berry, that Dodds had been offering or had agreed to sell the property to another individual, Thomas Allan. On Thursday evening, Dickinson attempted to accept the offer by leaving a written acceptance at the house where Dodds was staying. On Friday morning, before the 9 a.m. deadline, Dickinson’s agent and Dickinson himself found Dodds and handed him a duplicate of the acceptance. Dodds stated that he had already sold the property to Allan the day before. Dickinson brought an action for specific performance.

Issues

The case presented two primary legal issues for the Court of Appeal to determine:

1. Was the Defendant’s promise to keep the offer open until Friday morning legally binding?
2. Can an offer be revoked through indirect communication from a third party, or must the revocation be communicated directly by the offeror?

Judgment

The Court of Appeal, reversing the decision of Vice-Chancellor Bacon, held that a binding contract had not been formed. The judgments of the Lords Justice established key principles of offer and revocation.

James L.J.

Lord Justice James held that the promise to keep the offer open was a nudum pactum (a bare promise) and not a binding contract because it was not supported by consideration. The document was merely an offer that could be withdrawn at any time before acceptance. Crucially, he determined that acceptance was impossible once the offeree knew the offeror’s mind had changed, regardless of the source of that information. He reasoned that there was no ‘meeting of minds’ (consensus ad idem) at the point of alleged acceptance.

In this case, beyond all question, the Plaintiff knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words, ‘I withdraw the offer.’ This is evident from the Plaintiff’s own statements. He was told by Berry that the property had been sold by Dodds to Allan. They were negotiating together, and he determined to see whether he could not find Dodds and receive an acceptance before Dodds had completed his bargain with Allan.

On this basis, since Dickinson knew Dodds no longer intended to sell to him, he could not create a binding contract by purporting to accept the offer.

Mellish L.J.

Lord Justice Mellish concurred, emphasising that for a contract to be formed, there must be a ‘continuing offer’ at the moment of acceptance. He questioned how it could be possible for an offeree to accept an offer when he knows the person who made it has since sold the property to someone else. He directly addressed the postscript promising to keep the offer open:

He was not in point of law bound to hold the offer over until nine o’clock on Friday morning. He was not so bound either in law or in equity. …unless both parties had agreed that the promise was to be binding, there was no consideration for the promise…

He concluded that the moment Dickinson heard from a reliable source that Dodds had sold the property, the offer was effectively withdrawn.

Implications

The decision in Dickinson v Dodds is a foundational authority in the English law of contract. Its primary significance lies in establishing two critical rules regarding the revocation of an offer:

1. An option requires consideration: A promise to keep an offer open for a specified period is not binding unless the offeree has given consideration for that promise. Without consideration, it is a mere ‘nudum pactum’ and the offeror is free to revoke the offer before the period expires.
2. Indirect revocation is effective: An offer is validly revoked if the offeree learns, from the offeror or a reliable third party, that the offeror’s conduct is inconsistent with the offer continuing (e.g., selling the subject matter to someone else). Direct, formal communication of revocation is not required.

The case reinforces the principle of consensus ad idem, highlighting that a contract requires a meeting of minds at the time of formation. An offeree cannot knowingly accept an offer they understand to have been withdrawn.

Verdict: The appeal was allowed, and the Plaintiff’s bill for specific performance was dismissed with costs.

Source: Dickinson v Dodds 01 Apr 1876 2 ChD 463, CA