Dickinson v Dodds (1876) 2 Ch D 463 (CA)

Facts

• Mr. Dodds offered to sell his house to Mr. Dickinson, promising to keep the offer open until Friday.
• Before Friday arrived, Mr. Dodds sold the house to a third party, Mr. Allan.
• Mr. Dickinson learned of this sale and thus of the offer's withdrawal through a mutual acquaintance, Mr. Berry, before he attempted to accept the offer.
• Mr. Dickinson argued that he had not received explicit, direct notification of revocation from Mr. Dodds and sought to accept the offer.
• The case was appealed to the Court of Appeal to determine whether a valid contract had been formed between Mr. Dickinson and Mr. Dodds.

Issues

1. Whether an offeror may revoke an offer before acceptance, even if a time for acceptance has been specified.
2. Whether communication of revocation through a third party is sufficient to effectively withdraw the offer.
3. Whether the offeror is bound to keep an offer open for a specified period in the absence of consideration.

Decision

• The Court of Appeal held that Mr. Dodds had effectively revoked his offer before Mr. Dickinson's attempt to accept it.
• It was determined that the key issue was whether at the time of purported acceptance, an offer still existed, with knowledge of revocation by any reliable means being sufficient.
• The court found that third party communication, as long as it reliably informed the offeree of revocation, was adequate.
• The promise to keep the offer open was not enforceable, as it was unsupported by consideration.
• The purported acceptance after the offeree’s awareness of the sale was ineffective, and no contract had been formed.

Legal Principles

• An offer can be revoked at any time before acceptance unless supported by consideration to keep it open (option contract).
• Revocation of an offer need not be communicated by the offeror directly; reliable third party notice is sufficient.
• At the point of acceptance, there must be a presently existing offer and a meeting of minds (consensus ad idem).
• A unilateral promise to keep an offer open does not create a binding contractual obligation without consideration.

Conclusion

The Court of Appeal clarified that an offer is revoked if the offeree receives reliable notice of its withdrawal before acceptance, even via a third party, and that a promise to keep an offer open is not binding without consideration, emphasizing the necessity for mutual assent and consideration in contract formation.