Describe how the postal rule works in English contract law giving examples of relevant case law?

Answer 1

he postal rule is a historical ruling, which came about in a time where the main and quickest form of business communication was by post. Through the decades other forms of communication have been invented which are now much speedier – telex, phone , fax and now instant messaging and email. Central requisites to the forming of a contract are those of offer and acceptance. The general rule in law states that acceptance is communicated, and has been received by the offeror . The ruling applies where the means of communication are deemed instantaneous Entores Ltd v Miles Far East Corpn (1955).

The exception to this rule is the Postal Rule.

Where post is the requested form of communication between parties or where it is an appropriate and accepted means of communication between parties, acceptance is complete as soon as the letter is posted. Even if the letter was mislaid or lost and does not reach the offeror. It is a requirement that the letter of acceptance has been properly posted London and Northern Bank (1900). It is found telegrams also fall under the postal rule.

An issue that rises from the Postal rule is that there is a period of time, where person(s) are in the dark as to whether a contract is in existence or not. Courts have decided that the offeror assumes all the risk, as the offer is still open during the time the letter of acceptance is in the post Adams v Lindsell(1818).

The decision was based on the fact that an acceptance of an offer could go on ad infinitum, back and forth between the parties. If one had to acknowledge the receipt and then the acknowledgment had to be acknowledged so on and so forth.

Unless the offeror has clearly stated in the terms of the offer that acceptance must be communicated by other means the offer must be accepted through the terms of the postal rule. Such a situation arose in the case Holwell securities Ltd v Hughes (1974), where the in the terms of the offer it was clearly indicated acceptance had to be by “notice in writing”. The letter of acceptance was lost in the post; therefore Hughes did not receive a valid acceptance as he had not received a “notice in writing”.

There are further cases highlighting the method of communication in relation to acceptance. Where a method of communication is stipulated by the offeror. Clear wording is required if the method of communication is to be mandatory.

In Yates Building Co v RJ Pulleyn (1975) the acceptance was to be sent by “registered or recorded delivery post”. The plaintiff sent his acceptance by through the standard post service. The defendant refused to accept the bid as it was not sent to them by the methods as they had outlined in the offer. The courts found that there was a binding contract in place with the receipt of the acceptance by letter. This ruling was appealed and the court further outlined the findings by stating the offeror did not state that the only method of acceptance as outlined would be binding.

Another area the postal rule was rigorously tested was where the original offer was withdrawn or revoked. When does the revocation come into effect under the postal rule?

Under the postal rule, the letter of acceptance is relevant on posting. Letters communicating revocation come into effect only when the letter revoking the offer is delivered. Key case dealing with revocation under the postal rule is Byrne v Van Tienhoven (1880). The judges ruled in this case in favour of the plaintiff. The judges ruled it was proven by the plaintiff they had accepted the original offer by posting a response to the defendant. The letter of revocation was received after their letter of acceptance had been posted by the plaintiff.