Quick Summary
Mr. Dodds and Mr. Dickinson signed an agreement stating that Mr. Dickinson had a specific period to accept Mr. Dodds’s offer of £800 for the property. However, Dickinson sold the property to a third party before the agreed-upon time. As a result, the plaintiff sued the defendant for breach of contract and to enforce the performance of the agreement.
The lower court ruled in favor of Dickinson, ordering Dodds to perform the contract.
Dodds and the third party appealed. The court of appeals held that the agreement was not binding because a promise to keep an offer open is not binding until it is accepted. Dodds statement was merely a promise and did not create a binding contract.
Facts of the Case
On June 10th, 1874, Mr. Dodds (Defendant) signed a memorandum of agreement with Mr. Dickinson (Plaintiff) to sell a property for the sum of £800. According to the agreement, the offer was open until Friday, 9 o’clock, June 12th, 1874.
However, on June 11th, Mr. Dodds accepted an offer from a third party and sold the property to them. Mr. Dickinson had decided to accept this offer but had not yet informed Mr. Dodds of his decision because he knew he had until Friday to decide. Dodds expressed that it was too late and that he had already sold the land to a third party (Allen).
Plaintiff sued the defendant for breach of contract and to force the defendant to perform the contract. After hearing both sides’ arguments, Vice Chancellor Becon sided with Dickinson and ordered for specific performance. Dodds and Allen both filed appeals.
Procedural History
The case was initially heard by Vice-Chancellor Bacon on January 25, 1876. The Vice-Chancellor ruled in favor of Dickinson and granted a decree for specific performance of the contract. Dodds and Allan appealed this decision.
I.R.A.C. Format
Issue
Is the defendant required by the (MOA) to sell the property to the plaintiff?
Rule of Law
A promise to keep a specific offer available for a set time is merely a promise until it is rendered binding by deliberation and acceptance.
Reasoning and Analysis
A signed contract is not necessarily the end of the matter. Certain procedures must be followed to ensure that a binding contract exists.
When opinions differed, there was no need to keep the offer on the table. The offeree’s right to accept is lost whenever the offeror takes concrete action to engage in the proposed contract, and the offeree learns of this fact reasonably.
The court reasoned that the statement made by Mr. Dodds was nothing more than a promise, and no binding contract formed. Therefore, the offer to purchase the residence is revocable at any time before acceptance without needing further action on either party’s part. The defendant was allowed to accept a more advantageous offer made by the other party.
A person who has promised to accept an offer before a certain amount of time still has the right to sell the property to someone else. Furthermore, if the plaintiff had declined the offer, there would have been no legally enforceable agreement between the parties.
Conclusion
There was no binding contract for the sale of the property between Dodds and Dickinson.
Key Takeaways
- An offer to sell property can be withdrawn before acceptance.
- Actual knowledge of an act inconsistent with the continuation of the offer can serve as notice of withdrawal.
- Accepting an offer does not create a binding contract if one party has already sold the property to another.
Relevant FAQs of this case
Is a Memorandum of Agreement (MOA) legally binding?
The memorandum of agreement is a deal-maker that features the key elements of the purchase contract. However, it is not legally binding, like the purchase contract. Because of this, it is common to see a memorandum of agreement broken by either party.
For example, maybe the seller gets cold feet about selling their house. Or perhaps they get a higher offer before signing the purchase contract by both parties involved.
Memos are often used in real estate markets to lay out the terms of a potential sale.
This is a way for both parties to ensure that they are on the same page about the deal and that any possible misunderstandings will be cleared before moving forward with other documents.
References
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