The postal rule
Acceptance by post is effective as soon as it is posted.This is an attempt to solve the problem of balancing the offeror’s need to
know whether he is bound, and the offeree’s need to know that he has done
what is needed to accept an offer. The following case was the first example
of its use.
The fact remains that one party or another has to bear the burden of the
delay in a letter of acceptance taking some time if sent by post. The court
takes the view that the postal rule is reasonable since it is the offeror who
starts negotiations, and therefore can bear the responsibility of this delay.
The offeror could, if needed, follow up the offer with an enquiry by a faster
means. The postal rule is essentially one of convenience, and it is easier to
prove posting than to prove receipt of a letter. However, it has been applied
fairly rigidly, at times operating harshly in favour of the offeree. In
Household Fire Insurance v Grant (1879) a letter of acceptance was lost in
the post and never arrived, but the court still held the acceptance binding.
What if a letter of acceptance is posted but is wrongly addressed? There is
no English case law exactly on this point, but it would seem logical that the
postal rule would not then apply, acceptance in these circumstances being
effective when it is received by the offeror. It was held in the case of Re
London and Northern Bank (1900) that a letter is posted when it is
correctly addressed and stamped, and placed into an official post-box or
into the care of a person authorised to receive mail.
28 Contract law
Adams v Lindsell (1818)
The defendants wrote offering to sell to the plaintiffs some fleeces of
wool, asking for a reply ‘in course of post’. The letter containing the offer
was misdirected, and late in arriving, but when it did arrive the plaintiffs
posted an immediate acceptance back to the defendants. However, when
no reply was received by the expected time, the plaintiffs sold the wool
to someone else. It was held that a valid acceptance had been made when
the plaintiffs posted their reply, leaving the defendants in breach of
contract. This seems particularly harsh on the defendants (although they
did misdirect their letter in the first place).Consider the position of the plaintiffs if they had not misdirected their letter.
Are parties generally aware of the consequences of entering into postal
negoatiations? is the postal rule a fair rule?