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Dickinson v/s Dodds (1876, 2 Ch D 463): Case Analysis

Facts of the case:
  • The defendant, John Dodds, on Wednesday, the 10th June, 1874, conveyed to the offended party, George Dickinson, a memorandum, whereby he consented to offer his house to him for an amount of£800. This offer was expressed to be left open until Friday, 12th June, before 9 o'clock a.m.
  • On Thursday morning, June 11, 1874 George chose to accept the offer, yet didn't disclose to Dodds immediately because he thought that he had time until 9:00AM on Friday.
  • But, in the afternoon of 11th June,1874 George, the plaintiff was informed by a person named Mr. Berry(agent of Mr. Dickinson) that Dodds had agreed to sale his property to another person called Thomas Allan.
  • After the incident of afternoon, on the evening of 11th June, George left a formal acceptance to buy the house in writing with the mother-in-law of Dodds.
  • Mother-in-law forgot to give it to Dodds and thus, he never got the notice about the acceptance from George side.
  • Mr.Berry found Dodds on Friday morning of 12th June at a railway station. After meeting Dodds he handed him a duplicate copy of the acceptance by the George, but he was informed by Dodds that he was too late to accept the offer. Mr. Dickinson after few minutes himself found Dodds, but he was again notified that it is too late, because he had already sold the property to Mr. Thomas Allan on 11th June, for £800, and has also received a deposit of £40 from him.
  • Thus, after all this scene Mr. George(the plaintiff) bought an action of specific performance against Mr.John Dodds.

Issues Raised:
  1. Whether Mr. John Dodds promise to keep the offer open until the 9:00 a.m. of 12th June was a binding contract?
  2. Was the letter just an offer or something more?
  3. Whether Mr. John Dodds was allowed to revoke the offer and sell the house to a third party?

Ratio:
  • The written opinions (from Mellish and James) agree that the letter was just an offer and that's it. It is clear in law that an offer doesn't add up to an agreement.
  • At the point when an offer has been made, the offeror is as allowed to revoke or accept it as the offeree is to accept or dismiss it. Despite the fact that it was said that the offer was to stay open until Friday, this was not binding on Dodds.
  • There should be a "meeting of the minds" at the time the contract is formed, and this clearly couldn't happen here (as Dodds had already agreed to sale the property to the third party), so there could be no contract.
  • An offeror is allowed to withdraw their proposal anytime until the offeree has accepted it, so as long as the offeree has not given any sort of consideration.
  • An offeree should know about revocation, however explicit communication isn't needed.
  • There is no rule that says that there should be an express withdrawal of the offer.
  • The promise was not binding; whenever before a complete acceptance by George, Dodds was allowed to do anything he desired.
  • When there is an open offer that has not yet been accepted by the offeree, there is no binding contract, and the offeror can make similar proposal to different parties.
  • For example, when a person who has made an offer dies before the acceptance of that offer, it is not possible that it can be accepted afterwards. So when once the person to whom the offer has been made knows that the property has been sold to another person, it is too late for him to accept the offer.

Judgement:
J.James and J. Mellish held that:
The document, however starting with, "I hereby agree to sell", was only an offer, and was simply proposed to be an offer, for the Plaintiff himself reveals to us that he needed time to consider if he would go into an agreement or not. Unless if the both parties had then agreed there was no concluded agreement then made; it was in effect and substance simply a proposal to sell.

The plaintiff party being minded not to complete the bargain at that time adds this memorandum:
This offer is to be left over until Friday, 9 o'clock a.m. of 12th June 1874." That shows it was just an offer. There was no consideration given for the guarantee or promise, to whatever degree it may be considered binding, to keep the property unsold until 9 o'clock on Friday morning; however evidently Dickinson was of opinion, and most likely Dodds was of the same opinion, that he (Dodds) was limited by that promise, and couldn't in any way withdraw from it, or retract it, until 9 o'clock on Friday morning, and this presumably clarifies a good deal of what afterwards took place.

Yet, it is clear settled law, on one of the most clear standards of law, that this promise, being a mere nudum pactum, was not binding, and that at any point to before a complete acceptance by Dickinson of the offer, Dodds was as free as Dickinson himself. Well, that being the state of things, it is said that the only mode in which Dodds could declare the freedom was by actually and distinctly saying to Dickinson, "Now I withdraw my offer."

It appears to me that there is neither guideline nor authority for the proposition that there should be an express and actual withdrawal of the offer, or what is known as a retractation. It must, to establish a contract, appear that two minds were at one, at the very same moment of time, that will be, that there was an offer continuing up to the hour of the acceptance. If there was not such a continuing offer, then the acceptance comes to nothing.

The Plaintiff says in effect that, having heard and realizing that Dodds was not longer minded to sell the property to him, and that he was selling or had offered to another person, believing that he couldn't in purpose of law withdraw his offer, which means to fix him to it, and attempting 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.

I got an agent to watch for him at 7 o'clock the next morning, and I went to the train just before 9 o'clock, in order that I might catch him and give him my notice of acceptance just before 9 o'clock, and when that occurred he told my agent, and he told me, you are too late, and he then threw back the paper."

It is to my mind very certain that before there was any attempt at acceptance by the Plaintiff, he was completely very much aware that Dodds had changed his mind, and that he had indeed consented to sell the property to Allan. It is impossible, to state that there was ever that

presence of same mind between the two parties which is essential in point of law to the creation of a contract. I am of opinion, therefore, that the Plaintiff has failed to prove that there was any binding contract among Dodds and himself.

Relevant laws:
  1. Standing, Open or Continuing Offer:
    An offer which is allowed to remain open for acceptance over a period of time is known as a standing, open or a continuing offer. An offer may be revoked or withdrawn before the order has been placed. Even the offer is originally made open till a particular time, it may be revoked earlier than that, because the offeror is not bound to keep the offer subsisting and may be revoke it any time before its acceptance.
     
  2. Revocation of offer by notice:
    An offer ripens into contract after it is accepted. Before it has been accepted it creates no obligation and, therefore, it may be revoked at any time before it is accepted. A proposal can be revoked by the communication of notice of revocation by the proposer to the other party.
     
  3. Revocation of offer by Lapse of time:
    A proposal is revoked by the lapse of time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without the communication of the acceptance.

    Sometimes the parties may expressly fix the time up to which the offer will remain open. Such an offer lapses automatically if it remains unaccepted till the stipulated time and the same cannot be accepted further thereafter.
     
  4. Revocation of offer by Death or Insanity of the offeror:
    An offer is revoked by the death or insanity of the proposer, if the fact of his death or insanity comes to knowledge of the acceptor before acceptance. In India, if the fact of death or insanity has not come to knowledge of the offeree while he accepts the offer, it is valid acceptance giving rise to a contractual obligation. In England, after the offeree knows about the offeror’s death, the offer lapses and cannot be accepted.

A Short Analysis:
The case here follows the concept that a promise to keep a specific offer is open until a specific time period, it may be a promise, unless if it is made binding by consideration and acceptance. Offer, acceptance and consideration are fundamental for forming a binding contract. The letter, in the following case, according to the written opinions of J. Mellish and J. James, was only an offer and nothing else. When there is an open offer, that isn't yet accepted by the offeree, there is no binding contract between the offeror and the offeree, and accordingly the offeror can make a similar proposal to other parties. Thus, Dickinson's argument that the offer can only be revoked through an expressed communication to the offeree was rejected by the court. An offer doesn't add up to an agreement and can be repudiated anytime. Despite the fact that the offer was to stay open till 9 a.m. on Friday, it was not binding, for the acceptance wasn’t communicated. In the present situation here, the "meeting of minds" which is an absolute necessity for a contract to be framed couldn't happen, for the reason that Dodds had consented to sale the property to a third party. A specific consideration would have supported the agreement to keep the specific property unsold for the time span associated with the contract, as an agreement separate from the proposal to sell the property. Without such, Dodds was free to break the offer, which was simply a promise and not a contract. The third party bought the property before the plaintiff could, for there was no acceptance communicated by Dodds.

Thus, it was held that the statement that was made by Mr Dodds, the defendant, was simply a promise, and not a binding contract between the parties. The proposal for purchasing the house could be repudiated anytime before the acceptance, and without an explicit communication for the same. Having no meeting of minds, there was no commitment to keep the offer open.

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