Contract Law

Dickinson v. Dodds

(1876) 2 Ch D 463

Facts

Dodds signed a document offering to sell certain property to Dickinson for £800.
The document stated that the offer would remain open until 9 a.m. on Friday.
Dickinson did not give any consideration for keeping the offer open.
Before Dickinson accepted, Dodds agreed to sell the property to another person, Allan.
Dickinson learned from a reliable third party that Dodds had already sold, or was in the process of selling, the property to Allan.
Despite this information, Dickinson attempted to accept Dodds’ original offer before the stated deadline.
Dickinson argued that Dodds was bound to keep the offer open until Friday because the written document expressly said so.
Dodds argued that the offer had been effectively revoked before acceptance.

Whether Dodds was legally bound to keep the offer open until the stated deadline.
Whether knowledge of revocation received through a reliable third party was sufficient to terminate the offer.

A mere promise to keep an offer open is not binding unless supported by consideration.
Until acceptance, the offeror may revoke the offer.
Revocation need not always be communicated personally by the offeror.
If the offeree learns from a reliable source that the offeror has acted inconsistently with the continued existence of the offer, the offer is treated as revoked.
There can be no valid acceptance once the offeree knows that the offeror no longer intends to contract.

The Court first considered the promise to keep the offer open until Friday.
That promise was unsupported by consideration.
Therefore, it was not a binding option contract.
Dodds remained free to revoke the offer at any time before Dickinson accepted it.
The next question was whether revocation had been effectively communicated.
Dodds had not personally told Dickinson that the offer was withdrawn.
However, Dickinson had learned from a reliable third party that Dodds had agreed to sell the property to Allan.
The Court treated this information as sufficient because Dodds’ conduct was completely inconsistent with keeping the original offer open.
Once Dickinson knew that the property had been sold to another person, he could no longer reasonably believe that Dodds was still willing to sell it to him.
The law does not require an empty formality where the offeree already has reliable knowledge of revocation.
Dickinson’s later attempt to accept could not revive the offer.
Acceptance requires a subsisting offer.
By the time Dickinson purported to accept, the offer had already ceased to exist.
The case also distinguishes an ordinary offer from an option.
A genuine option requires separate consideration to make the promise to keep the offer open enforceable.
Since Dickinson had paid nothing for the promise of time, Dodds was not bound by it.

The Court held that no binding contract was formed.
Dodds was entitled to revoke the offer before acceptance because the promise to keep it open was unsupported by consideration.
Dickinson’s reliable knowledge that the property had been sold to another person amounted to effective notice of revocation.
His later acceptance was therefore invalid.
Use this case for: an offer may be revoked before acceptance, and reliable third-party knowledge of revocation is sufficient.