Case Facts
In this case, on Wednesday 10 June 1874, Dodds signed and delivered to Dickinson a memorandum agreeing to sell certain dwelling-houses and property at Croft for £800. The memorandum included a postscript, also signed by Dodds, which read: "This offer to be left over until Friday, 9 o'clock, A.M. J.D. (the twelfth), 12th June, 1874."
On the morning of Thursday 11 June, Dickinson decided to accept the offer. However, he did not immediately communicate his acceptance to Dodds, believing he had until 9 AM on the Friday to do so. That same afternoon, Dickinson was informed by a Mr Berry that Dodds had been offering or agreeing to sell the property to a third party, Thomas Allan. In fact, on Thursday 11 June, Dodds had signed a formal contract for the sale of the property to Allan for £800 and had received a £40 deposit from him.
On the Thursday evening at approximately half-past seven, Dickinson left a formal written acceptance at the house of Mrs Burgess, Dodds's mother-in-law. Mrs Burgess, however, forgot to pass the document to Dodds, and it never reached him. On Friday morning at around 7 AM, Berry — now acting as Dickinson's agent — found Dodds at Darlington railway station and handed him a duplicate of the written acceptance. Dodds replied that it was too late, as he had already sold the property. Shortly afterwards, Dickinson himself found Dodds entering a railway carriage and handed him another duplicate of the acceptance. Dodds refused to receive it, stating: "You are too late. I have sold the property."
Dickinson brought proceedings seeking specific performance of the contract, an injunction restraining Dodds from conveying the property to Allan, and a declaration that Allan held the property on trust for Dickinson in the event that a conveyance had already taken place. Allan was joined as a defendant. Vice-Chancellor Bacon, at first instance, decided in favour of Dickinson. The Court of Appeal reversed that decision.
Held
The Court of Appeal held that the document signed by Dodds amounted to no more than an offer which could be withdrawn at any time before acceptance. The postscript promising to keep the offer open until Friday 9 AM was nudum pactum — it was unsupported by any consideration and therefore created no binding obligation on Dodds to keep the offer open.
The court further held that, by the time Dickinson attempted to communicate his acceptance, he already had actual knowledge — through Berry — that Dodds had acted inconsistently with the continuance of the offer by agreeing to sell the property to Allan. In those circumstances, no contract had come into existence between Dodds and Dickinson. Accordingly, the appeal was allowed and the claim for specific performance was dismissed.
Ratio Decidendi
The binding principle established by this case is that an offer to sell property may be withdrawn before acceptance without any formal notice to the offeree. It is sufficient that the offeree has actual knowledge that the offeror has done some act inconsistent with the continuance of the offer. Where an offeree is aware, through a reliable third party, that the offeror has agreed to sell the property to another person, that knowledge is equivalent to direct notice of revocation; the offeror is not required to communicate the withdrawal personally or formally.
The court further held that the promise to keep an offer open, without any consideration to support it, is a mere nudum pactum and imposes no legal obligation on the offeror. An offeror who makes such a promise may nonetheless revoke the offer freely before the stated time expires.
This principle is closely connected to the earlier authority of Routledge v Grant (1828), which was cited in argument and which had established that, until acceptance takes place, either party is free to retract. The present case confirms and extends that principle by addressing the mode in which revocation may come to the offeree's attention.
Obiter Dicta
The court made two further observations, expressed as semble, which are properly classified as obiter.
First, it was suggested that the sale of property to a third person would of itself amount to a withdrawal of the offer, even if the person to whom the offer was first made had no knowledge of the sale whatsoever. This observation, if correct, would represent a significant departure from the general requirement of communicated revocation, and it has attracted academic debate.
Second, the court observed that the acceptance of an offer to sell constitutes a contract only from the time of acceptance. A contract does not relate back to the time at which the offer was originally made. These observations were not strictly necessary to the decision and accordingly carry persuasive rather than binding authority.