Dickinson v Dodds (1876) 2 Ch D 463

Dodds offered to sell property to Dickinson, promising to keep the offer open until Friday 9 AM, but sold to a third party (Allan) before Dickinson accepted. Dickinson, having learned of the sale to Allan from an intermediary, nevertheless attempted to accept and sued for specific performance. The Court of Appeal reversed the Vice-Chancellor’s decision, holding that no binding contract existed because the offer had been effectively revoked before acceptance — the promise to keep the offer open was unsupported by consideration and therefore not binding, and Dickinson’s knowledge of the sale to Allan constituted sufficient notice of withdrawal.

Facts

• On Wednesday, 10 June 1874, the defendant John Dodds signed and delivered to the plaintiff George Dickinson a memorandum offering to sell dwelling-houses and associated property at Croft for £800. A postscript, also signed by Dodds, stated: “This offer to be left over until Friday, 9 o’clock, A.M. J.D. (the twelfth), 12th June, 1874.”
• Dickinson alleged he determined to accept the offer on the morning of Thursday, 11 June, but did not immediately communicate his acceptance, believing he had until Friday 9 AM.
• On Thursday afternoon, a Mr. Berry informed Dickinson that Dodds had been offering or had agreed to sell the property to Thomas Allan, the second defendant.
• At approximately half-past seven on Thursday evening, Dickinson went to the house of Mrs. Burgess (Dodds’ mother-in-law, where Dodds was staying) and left a formal written acceptance of the offer. Mrs. Burgess forgot to deliver this document to Dodds.
• On Thursday, 11 June, Dodds had signed a formal contract to sell the property to Allan for £800 and received a £40 deposit from him.
• On Friday morning at about 7 AM, Berry (acting as Dickinson’s agent) found Dodds at Darlington railway station and handed him a duplicate acceptance. Dodds replied that “it was too late, as he had sold the property.” Minutes later, Dickinson himself found Dodds entering a railway carriage and handed him another duplicate, but Dodds declined to receive it, saying: “You are too late. I have sold the property.”
• Dickinson sued for specific performance of the alleged contract, seeking a declaration that Allan had no interest in the property.
• Vice-Chancellor Bacon at first instance granted specific performance, holding that the memorandum constituted a binding agreement and that Dickinson’s acceptance (left at Dodds’ residence on Thursday evening) was valid and timely. Both defendants appealed.

Issues

1. Was the memorandum of 10 June 1874 a binding agreement to sell, or merely an offer?
2. Was the promise to keep the offer open until Friday 9 AM legally binding, given the absence of consideration?
3. Could the offer be effectively revoked without direct, formal communication from Dodds to Dickinson — specifically, was indirect notice (through a third party, Berry) that Dodds had sold the property to Allan sufficient to constitute withdrawal of the offer?
4. Was there a valid acceptance by Dickinson capable of forming a binding contract?

Judgment

The Court of Appeal unanimously reversed the decision of Vice-Chancellor Bacon and dismissed the bill with costs.

James L.J.

James L.J. held that the document was nothing but an offer, despite its opening words “I hereby agree to sell”:

“The document, though beginning ‘I hereby agree to sell,’ was nothing but an offer, and was only intended to be an offer, for the Plaintiff himself tells us that he required time to consider whether he would enter into an agreement or not. Unless both parties had then agreed there was no concluded agreement then made; it was in effect and substance only an offer to sell.”

On the promise to keep the offer open, James L.J. held it was a mere nudum pactum (bare promise without consideration) and therefore not binding:

“There was no consideration given for the undertaking or promise, to whatever extent it may be considered binding, to keep the property unsold until 9 o’clock on Friday morning… But it is clear settled law, on one of the clearest principles of law, that this promise, being a mere nudum pactum, was not binding, and that at any moment before a complete acceptance by Dickinson of the offer, Dodds was as free as Dickinson himself.”

On revocation, James L.J. rejected the argument that only express, direct communication of withdrawal would suffice:

“It appears to me that there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retractation. It must, to constitute a contract, appear that the two minds were at one, at the same moment of time, that is, that there was an offer continuing up to the time of the acceptance. If there was not such a continuing offer, then the acceptance comes to nothing.”

He found that Dickinson knew full well that Dodds had changed his mind before any attempt at acceptance:

“…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.'”

James L.J. characterised Dickinson’s conduct as an attempt to bind Dodds despite knowing the offer had been withdrawn:

“…having heard and knowing that Dodds was no longer minded to sell to him, and that he was selling or had sold to some one else, thinking that he could not in point of law withdraw his offer, meaning to fix him to it, and endeavouring to bind him, ‘I went to the house where he was lodging, and saw his mother-in-law, and left with her an acceptance of the offer, knowing all the while that he had entirely changed his mind.'”

He concluded: “It is impossible, therefore, to say there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement.”

Mellish L.J.

Mellish L.J. concurred, emphasising that even though the document was worded as an agreement, until acceptance by both parties it remained only an offer in law:

“I apprehend that, until acceptance, so that both parties are bound, even though an instrument is so worded as to express that both parties agree, it is in point of law only an offer, and, until both parties are bound, neither party is bound.”

He confirmed that Dodds was not bound to hold the offer open until Friday morning, either in law or in equity, and that the contract with Allan was therefore “as good and binding a contract as ever was made.”

On the critical question of indirect revocation, Mellish L.J. reasoned by analogy:

“If a man makes an offer to sell a particular horse in his stable, and says, ‘I will give you until the day after to-morrow to accept the offer,’ and the next day goes and sells the horse to somebody else, and receives the purchase-money from him, can the person to whom the offer was originally made then come and say, ‘I accept,’ so as to make a binding contract, and so as to be entitled to recover damages for the non-delivery of the horse?”

He further analogised revocation to death of the offeror: “It is admitted law that, if a man who makes an offer dies, the offer cannot be accepted after he is dead, and parting with the property has very much the same effect as the death of the owner, for it makes the performance of the offer impossible.”

He concluded: “…when once the person to whom the offer was made knows that the property has been sold to some one else, it is too late for him to accept the offer.”

Baggallay J.A.

Baggallay J.A. stated simply: “I entirely concur in the judgments which have been pronounced.”

Costs

Dickinson was ordered to pay the costs of both appeals, the court noting that Allan had a separate interest to protect and was entitled to his own costs.

Implications

• Practical significance for contract formation. The case underscores the vulnerability of offerees who receive promises to hold offers open without providing consideration. Parties wishing to secure a binding right to accept within a specified period must enter into a separate option contract supported by independent consideration.
• A promise to keep an offer open is not binding without consideration. The postscript stating the offer would be “left over” until Friday 9 AM was a nudum pactum. An offeror remains free to revoke at any time before acceptance unless the offeree has provided consideration for an option contract. This remains a foundational principle in English contract law distinguishing gratuitous promises to hold offers open from enforceable option agreements. 
• Indirect communication of revocation is effective. The case established that revocation of an offer need not come directly from the offeror. It is sufficient if the offeree receives reliable information from any source that the offeror has done an act inconsistent with the continuation of the offer (e.g., selling to a third party). This principle has been consistently followed in subsequent case law. 
• No formal notice of withdrawal is required. The court rejected the proposition that revocation demands express words of withdrawal communicated directly by the offeror. What matters is whether the offeree has actual knowledge that the offeror’s intention has changed.
• The “meeting of minds” requirement at the moment of acceptance. The judgments emphasise that for a contract to be formed, there must be a consensus ad idem – both parties must be of the same mind at the time of acceptance. Where the offeree knows the offeror has changed his mind, no such consensus can exist, and purported acceptance is ineffective.
• Sale to a third party may itself constitute revocation. The court suggested (semble) that the sale of property to a third party would of itself amount to withdrawal of the offer, potentially even without the original offeree’s knowledge of the sale — though this obiter proposition was not strictly necessary to the decision and remains a point of academic discussion.
• Acceptance does not relate back to the date of the offer. The Court of Appeal rejected Vice-Chancellor Bacon’s view that acceptance relates back to the time the offer was made. A contract comes into existence only at the moment of acceptance, not retrospectively.

Source: Dickinson v Dodds (1876) 2 Ch D 463