The Postal Acceptance Rule was stated originally in Adams v Lindsell (1818) 1 B. & A. 681; 106 ER 250. Adams v Lindsell (1818) 1 B. & A. 681; 106 ER 250. The defendants had written on 2 September offering to sell some fleeces to the plaintiffs, woollen manufacturers of Bromsgrove, Worcestershire, and concluding with the words “receiving your answer in course of post”. The defendants carelessly misdirected their communication to Bromsgrove, Leicestershire. When it finally reached Worcestershire, the plaintiffs wrote at once accepting the offer. The defendants, not having received a reply by 7 September, (which would have been in the usual course of post), sold the fleeces to another buyer on 8 September. The acceptance did not reach the defendants until 9 September.
The Court held that the offer had been accepted at the moment the plaintiffs posted their letter on the evening of 5 September. The defendant’s argument that they had not heard from the plaintiffs in the normal course of post was rejected.
Expected Medium of Communication
For the Postal Acceptance Rule to apply, there must be a reasonable expectation that the post would be used as an appropriate means of communicating the acceptance. What the Court stated about this reasonable expectation in Henthorn v Fraser, [1892] 2 Ch 27 at 33, per Lord Herschell.
In Henthorn v Fraser, [1892] 2 Ch 27 at 33, Lord Herschell stated the true principle as follows . . . .
- “Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.”
The Rationale Behind the Postal Acceptance Rule
The logic behind the approach, now regarded as rebuttable, would seem to have been derived as follows. The postal acceptance rule was based on regarding the post office as an agent of one or both parties, as stated in Grant’s case (1879) LR 4 Ex. D. 216 at 221, 228, per Thesiger LJ. Thus, according to Thesiger LJ, any offeror, realising that the offeree might reasonably send his/her acceptance by post, was impliedly consenting to the application of the rule to that communication.
Lord Thesiger stated the rationale as follows.
- “if the post office be such common agent, then it seems to me to follow that, as soon as the letter of acceptance is delivered to the post office, the contract is made as complete and final and absolutely binding as if the acceptor had put his letter into the hands of a messenger sent by the offeror himself as his agent to deliver the offer and receive the acceptance.”
Contemporary Scope of the Rule
In Australia, the contemporary basis of the courts’ approach is that the more similar the means of communication is to the instantaneous interchanges of inter praesentes negotiations, (meaning that the parties are negotiating interactively), the more appropriate it is for the acceptance to be operative only on receipt by the offeror. See Entores Ltd v Miles Far East Corporation [1955] 2 QB 327 at pp. 332 – 334, digested as follows.
The plaintiffs were based in London, from where they sent an offer by telex to the agents in Amsterdam of an American Corporation. The offer was accepted by a message sent by the same method from Amsterdam to the plaintiff’s London office. The court held that the contract was made in London because, if there is instantaneous communication, the contract is made when and where the acceptance was received.
Intervening Revocation of the Offer
The postal acceptance rule applies, notwithstanding that the offeror has decided to withdraw the offer prior to receipt of the letter of acceptance or posted a letter of withdrawal. To be effective, revocation must be communicated to the offeree before the offeree has accepted the offer. This was covered in Byrne & Co v Leon Van Tienhoven & Co (1880) LR 5 CPD 344, set out as follows.
- 1 October: letter of offer posted
- 8 October: letter of revocation posted
- 11 October: letter of offer received
- 11 October: telegraph of acceptance posted
- 15 October: letter of acceptance posted to confirm telegraph
- 20 October: letter of revocation received
The Court held that the contract was completed on 11 October when the telegraph of acceptance was posted. The offer could have been revoked any time before acceptance, but once it was accepted there was a contract.
Practice Exam Question
In Kalgoorlie on 4th March, Wendy posted a written offer to supply 100 wheel bearings to Bay City Motors of Esperance for a price of $10.00 each. This offer reached Bay City Motors at 11.00 am on 6th march. Meanwhile, at 10.00 am on 6th march, Wendy posted to Bay City Motors a letter advising a price increase of $2.00 per bearing. This letter reached Bay City Motors on 8th March. However, at 1.00 pm on 6th March, Bay City Motors had posted an acceptance of the $10.00 offer which reached Wendy on 10th March.
Examine the legal position of Wendy and Bay City Motors, using the IRAC approach.
In Review
The postal acceptance rule only applies to acceptances. It does not apply to offers, nor does it apply to revocations of an offer. The threshold requirements are that: (a) the parties either intended or it was required, that the negotiations be conducted by post; and, (b) the negotiations were not inter praesentes negotiations.
Sources:
Adams v Lindsell (1818) 1 B. & A. 681; 106 ER 250.
Henthorn v Fraser, [1892] 2 Ch 27.
Grant’s case (1879) LR 4 Ex. D. 216.
Entores Ltd v Miles Far East Corporation [1955] 2 QB 327.
Byrne & Co v Leon Van Tienhoven & Co (1880) LR 5 CPD 344.
Join the Conversation