CASE LAW COMICS: Dickinson v. Dodds (1876)

FACTS:

In Dickinson v. Dodds (1876), the defendant John Dodds offered to sell a property for £800 and added that the offer was open till Friday 9:00 am 12th June. However, before the plaintiff could accept the offer, Dodds sold the property to another party, Thomas Allan, and had received a deposit of £40 from him. On 11th June, a third person, Mr Berry informed the plaintiff that the property had already been sold. Despite this knowledge that the property can’t be sold to him anymore, Dickinson attempted to accept the offer on 12th June. Dodds naturally refused, because the offer was no longer valid.

LEGAL ISSUE:

1. Whether the defendant’s promise to keep the offer open until Friday morning was a binding contract and if he was allowed to revoke this offer and sell to a third party?

2. Does communication of revocation through a third party constitute a valid withdrawal of the offer?

COURT’S JUDGMENT ON ISSUES:

Addressing the first issue, JAMES, L.J., held that the promise made by Dodds to keep the offer open until Friday was a mere offer and not a binding contract. He further stated that the promise was a mere nudum pactum, a bare agreement that is not legally enforceable due to absence of consideration. Therefore, Dodds was free to revoke the offer at any moment before the acceptance.

MELLISH, L.J., was of the same opinion. He mentioned that the postscript itself refers to the agreement as an offer; “This offer to be left open until Friday, 9 o’clock A.M.” Therefore it was not binding.

BAGGALLAY, J.A. simply agreed with the judgments by the other two judges. Addressing the second issue, the court noted that; “an offer to sell property may be withdrawn before acceptance without any formal notice to the person to whom the offer is made. It is sufficient if that person has actual knowledge that the person who made the offer has done some act inconsistent with the continuance of the offer, such as selling the property to a third person. In this case, the sale of the property to a third person would itself amount to a withdrawal of the offer, even although the person to whom the offer was first made had no knowledge of the sale.” James L.J. further stated that it is evident from the Plaintiff’s statements in the bill that he was aware of the agreement between Dodds and Allan and still attempted to accept the offer. This clearly demonstrated that even at the time of acceptance, there was no consensus ad idem (meeting of minds), which is essential for making an agreement. Mellish L.J. also noted that there was no meeting of minds because Dickinson had been informed by Berry that the property had been sold to Allan before he sent his acceptance. He also stated the impossibility of a binding contract existing between the two parties when the offer had already been accepted by a third party, comparing it to a circumstance when a man makes an offer but dies before its acceptance Dickinson v Dodds (1876) 2 Ch D 463 (CA). Therefore, the court held that the offer was revocable at any time before acceptance and since Dickinson knew that Dodds had sold the property to Allan, it amounted to revocation. Furthermore, the bench also noted that the communication of revocation need not come directly from the offeror; communication through a third party is also sufficient.

APPLICABILITY TO INDIAN LAW:

In English law, revocation is valid even if the offeree has been informed about it by a third party. However, as suggested by Pollock and Mulla, this rule will not apply in India because Section 6 of Indian Contract Act, 1872, explicitly mentions that the communication of revocation must be made by the offeror to the offeree and not by any third party. Sections 4 and 5 further require that the revocation reach the offeree before the communication of acceptance becomes complete against the proposer. Therefore, for the communication of revocation to be effective, the communication must reach the offeree before he sends his acceptance.

CONCLUSION:

In conclusion, the landmark case Dickinson v. Dodds has clarified many principles in contract law. It established that an offer can be revoked any time before acceptance by offeree, if there is no consideration the contract is not binding, and the revocation of an offer is valid even if the information about it is given to the offeree by a third party and not the offeror itself. That being said, this wouldn’t apply the same way in India, where the law says the revocation has to come directly from the offeror. So even though the outcome made sense under English law, the result could’ve been different under Indian law.