Citation: 2 Ch. D. 463 (1876).

PARTIES

John Dodds, seller (P) v. George Dickinson, buyer (D)… and another D is Thomas Allan, the other buyer

FACTS OF THE CASE

Negotiations between Dodd and Dickinson
A. P wrote contract to D, stating that he would sell him his property, but D had until Friday, 9:00AM on June 12, 1874 to either decide not to accept the offer at £800 or to intend not to purchase in general
B. Thursday, June 11, 1874 – D decided to accept the offer, but didn’t tell P right away b/c he thought he had until 9:00AM on Friday
C. D found out the P had been negotiating with Thomas Allan for the property
D. Thursday, June 11, 1874 at 7:30PM – D went to P’s residence and delivered notice of his acceptance (delivered it to his mother-in-law who’s house he lived at)
E. Mother-in-law forgot to give it to P, so he never got the notice
F. Friday, June 12 1874 at 7:00AM – D’s agent found P and delivered him a duplicate copy of the acceptance, explaining its purpose
G. Friday, June 12 1874 at a little past 7:00AM – D himself found P and delivered him another duplicate copy of the acceptance
H. P told D he was too late and that he had already sold the property
Negotiations between Dodd and Allan
I. Thursday, June 11 1874 – P signed formal contract for sale of property to Allan for £800 with a £40 deposit

PROCEDURAL BACKGROUND

A. Suit against P for specific performance, restraint against selling property to Allan, and restraint against Allan for accepting (if transfer already took place, then Allan should have to transfer the property)
B. Trial court found for P, that D should be mandated to give specific performance and transfer the property to P
C. D appealed
D. Appellate court

FORM OF RELIEF

Specific performance

ISSUE

If someone makes an offer for property sale and before they enter into a binding agreement, the seller agrees to sell to someone else, can he be held to uphold the first offer that was made?

HOLDING

No. An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect.

ARGUMENTS AND REASONING OF COURT

A. Trial court – within the time limit, P accepted and testified his acceptance to D, regardless of whether or not he actually received it
1) D could have revoked the offer, but he would have to notify P of such, and he did not
B. Appellate court – the document was an offer, not a binding contract
1) Would have needed an option contract to prevent D from selling to other bidders b/c offers unsupported by consideration are revocable at will, even when the offeror has state that it will be held open for a specific period
2) P somewhat acted as though he knew other bids could outweigh him, in that he went to his house on Thursday night when he heard about another buyer and he hired an agent to look for him at 7AM on Friday morning

OUTCOME

The contract was not binding.

[nextpage title=”Opinion”]

DICKINSON v. DODDS

Court of Appeal, Chancery Division
2 Ch. Div. 463 (1876)

On Wednesday, the 10th of June, 1874, the Defendant John Dodds signed and delivered to the Plaintiff, George Dickinson, a memorandum, of which the material part was as follows:

I hereby agree to sell to Mr. George Dickinson the whole of the dwelling-houses, garden ground, stabling, and outbuildings thereto belonging, situate at Croft, belonging to me, for the sum of £800. As witness my hand this tenth day of June, 1874.
(Signed) John Dodds.
P.S.-This offer to be left over until Friday, 9 o’clock, a.m. J.D. (the twelfth), 12th June, 1874.
(Signed) J. Dodds.

The bill alleged that Dodds understood and intended that the Plaintiff should have until Friday 9 A.M. within which to determine whether he would or would not purchase, and that he should absolutely have until that time the refusal of the property at the price of ˆÇ¬£800, and that the Plaintiff in fact determined to accept the offer on the morning of Thursday, the 11th of June, but did not at once signify his acceptance to Dodds, believing that he had the power to accept it until 9 A.M. on the Friday.

In the afternoon of the Thursday the Plaintiff was informed by a Mr. Berry that Dodds had been offering or agreeing to sell the property to Thomas Allan, the other Defendant. Thereupon the Plaintiff, at about half-past seven in the evening, went to the house of Mrs. Burgess, the mother-in-law of Dodds, where he was then staying, and left with her a formal acceptance in writing of the offer to sell the property. According to the evidence of Mrs. Burgess this document never in fact reached Dodds, she having forgotten to give it to him.

On the following (Friday) morning, at about seven o’clock, Berry, who was acting as agent for Dickinson, found Dodds at the Darlington railway station, and handed to him a duplicate of the acceptance by Dickinson, and explained to Dodds its purport. He replied that it was too late, as he had sold the property. A few minutes later Dickinson himself found Dodds entering a railway carriage, and handed him another duplicate of the notice of acceptance, but Dodds declined to receive it, saying, “You are too late. I have sold the property.”

It appeared that on the day before, Thursday, the 11th of June, Dodds had signed a formal contract for the sale of the property to the Defendant Allan for ˆÇ¬£800, and had received from him a deposit of ˆÇ¬£40.

The bill in this suit prayed that the Defendant Dodds might be decreed specifically to perform the contract of the 10th of June, 1874; that he might be restrained from conveying the property to Allan; that Allan might be restrained from taking any such conveyance; that, if any such conveyance had been or should be made, Allan might be declared a trustee of the property for, and might be directed to convey the property to, the Plaintiff; and for damages.

The cause came on for hearing before Vice Chancellor Bacon on the 29th of January, 1876 [who decreed specific performance for the plaintiff. From this decision the defendants appeal].

James, L.J., after referring to the document of the 10th of June, 1874, continued:

The document, though beginning, “I hereby agree to sell,” was nothing but an offer, and was only intended to be an offer, for the Plaintiff himself tells us that he required time to consider whether he would enter into an agreement or not. Unless both parties had then agreed there was no concluded agreement then made; it was in effect and substance only an offer to sell. The plaintiff 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. 12th June 1874. “That shows it was only an offer. There was no consideration given for the undertaking or promise, to whatever extent it may be considered binding, to keep the property unsold until 9 o’clock on Friday morning; but apparently Dickinson was of opinion, and probably Dodds was of the same opinion, that he (Dodds) was bound by that promise, and could not in any way withdraw from it, or retract it, until 9 o’clock on Friday morning, and this probably explains a good deal of what afterwards took place. But it is clear settled law, on one of the clearest principles of law, that this promise, being a mere nudum pactum, was not binding, and that at any moment 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 assert that freedom was by actually and distinctly saying to Dickinson, “Now I withdraw my offer.” It appears to me that there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retractation. It must, to constitute a contract, appear that the two minds were at one, at the same moment of time, that is, that there was an offer continuing up to the time of the acceptance. If there was not such a continuing offer, then the acceptance comes to nothing. Of course it may well be that the one man is bound in some way or other to let the other man know that his mind with regard to the offer has been changed; but in this case, beyond all question, the Plaintiff knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words, “I withdraw the offer.” This is evidence from the Plaintiff’s own statements in the bill.

The Plaintiff says in effect that, having heard and knowing that Dodds was no longer minded to sell to him, and that he was selling or had sold to some one else, thinking that he could not in point of law withdraw his offer, meaning to fix him to it, and endeavoring 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 quite clear that before there was any attempt at acceptance by the Plaintiff, he was perfectly well aware that Dodds had changed his mind, and that he had in fact agreed to sell the property to Allan. It is impossible, therefore, to say that there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement. I am of opinion, therefore, that the Plaintiff has failed to prove that there was any binding contranct between Dodds and himself.

 

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