Analysis of the Postal Rule

Analysis of the Postal Rule The purpose of this brief is to examine and evaluate the effectiveness and relevance of the Postal rule in the modern context of contract law. Generally, the Postal rule is used to resolve disputes where there is no formal communication received, or it is delayed by post. It is a set of principles that allow the courts to establish that a contract has or has not been formed at a particular point in time, despite the absence of the offeror receiving any formal communication of an offer. Specifically, this brief sets out to examine the aged precedents that the Postal rule relies upon to survive, and analyse them in conjunction with the changing face of communication on a global scale. Finally, it will attempt to recommend a conclusion based upon this discussion, and assess a way forward for the UK jurisdiction, given the increase of use of electronic communication, and the embracing of such means in the community worldwide. The postal rule is an alternative means of accepting an offer . It is a set of rules that govern whenever communication of acceptance has been sent by post, and are used to resolve any disputes where there is doubt as to the effectiveness of the communication of the offer. The general rule that has been adopted under English law in regards to acceptance by post is given by the case of Adams v Lindsell . [1] This case involved the defendants offering to sell wool to the plaintiffs, and asking for a reply by post. The plaintiffs’ letter was delayed in the post, and hence the defendants sold the wool to someone else, believing that the plaintiffs were no longer interested in the deal. However, the court heard that the plaintiffs had sent a letter of reply on the same day they received the offer, and hence the court held that there was an enforceable contract. The principle behind this decision was that a communication of acceptance of an offer becomes valid once it is posted by the offeree, not when it is received and opened by the offer or. This principle allows for a party to still have rights to an enforceable contract even where the procedural matters are delayed beyond their control. It effectively exonerates the offeree from any liability once a letter of acceptance has been posted to the offeror, and places the onus on the offeror to satisfy the procedural requirements of the contract. As was seen in Adams v Lindsell if the offeror does not wait for a reasonable period of time for confirmation, and subsequently disposes of the goods or services, then they may be liable if it so happens that the confirmation arrives at a later stage. Justifications for the Postal Rule A number of justifications for the postal rule of Adams v Lindsell are discussed by Ewan McKendrick in his book, ‘Contract Law’. Firstly, it is argued that the Post Office acts as an agent of the offeree, and hence once the letter is received by an agent, this constitutes valid communication of acceptance. [2] McKendrick says th at this is open to debate, given that the Post Office clearly has no express authority to contract on behalf of the offeree. [3] Secondly, it is argued that given the offeror has chosen to initiate negotiations by post, then the offeror must bear all responsibility associated with the postage of documents relating to the contract. However, this justification has been brought into question by the decision in Henthorn v Fraser , [4] where it was held that the postal rule only applies where it is reasonable to use the post. As McKendrick discusses, the issue of what exactly constitutes a reasonable situation to use the post is questionable, for example, where two parties live a significant distance from one another it may be reasonable to use the post, however it is not necessary to initiate negotiations through the post. [5] It would, therefore, be unlikely that such a justification could be relied upon; given there is uncertainty as to when it becomes reasonable to use the po st. A more solid justification is that an offeree should be able to rely upon the fact that he or she has posted the acceptance, and hence has satisfied his or her procedural duties under the rules governing the formation of a contract. McKendrick says that a better way of viewing the postal rule in light of this justification is that, once the letter is posted, the offeror cannot revoke his offer, rather than the acceptance taking effect once the letter has been sent. [6] It places the onus squarely on the offeror, given that the offeree has complied with all reasonable requests required of him in accepting the offer. However, the general rule discussed in Adams was further elaborated upon and entrenched in the later case of Household Fire and Carriage Accident Insurance Co Ltd v Grant . [7] In this case, it was held that an acceptance of offer communicated by post becomes valid once it has been posted by the offeree, not when it is received and opened by the offeror. This fur ther strengthens the justification that it is the responsibility of the offeror to allow for any delays or mishandlings by the Post Office in regards to any contractual negotiations conducted by post.