acceptance is posted. Provided the letter is properly
stamped, addressed and posted, the contract is formed
on posting, even if the letter is delayed or never reaches
its destination. This special rule was established in 1818.
Acceptances sent by electronic means are likely to be
treated in the same way as telephone or telex accept-
ances; the seller’s acceptance will only be effective when
received by the customer. The problem of applying this
approach to e-commerce is that if a seller is doing busi-
ness with customers based in different countries, the
contract will be formed in the country (and jurisdiction)
where the customer is based. E-traders can avoid these
difficulties by confirming customers’ orders by e-mail
and asking the customer to confirm the purchase by
clicking on a confirmation button. The effect of these
precautions is that the contract will be concluded at the
seller’s place of business.
Clearly, the ‘postal rules’ are a potential problem for
an offeror: if the letter of acceptance is lost in the post,
the offeror may be unaware that a binding contract has
been formed. An offeror can protect himself by spe-
cifically stating that the acceptance is only complete when
received on or before a certain date.Part 3Business transactions
214
Adamsv Lindsell(1818)On 2 September 1817 the defendants who were wool
traders based in Huntingdon wrote to the claimants, who
were woollen manufacturers in Bromsgrove, offering to
sell them some wool and asking for an answer ‘in course
of post’. This letter was wrongly addressed and as a
result it did not reach the claimants until 5 September.
The same day the claimants posted a letter of accept-
ance which reached the defendants on 9 September.
The evidence was that if the offer letter had been cor-
rectly addressed a reply ‘in course of post’ could have
been expected by 7 September. On 8 September the
defendants sold the wool to someone else. It was held
that the contract was formed when the claimants posted
their letter of acceptance. In reaching this conclusion the
court may have been influenced by the fact that it was
the defendants’ misdirection of the offer letter which led
to the delayed acceptance.Household Fire Insurance Cov Grant
(1879)
Grant applied for shares in the claimant company. A
letter of allotment was posted but Grant never received
it. When the company went into liquidation, Grant was
asked, as a shareholder, to contribute the amount still
outstanding on the shares he held. The Court of Appeal
held that Grant was a shareholder of the company. The
contract to buy shares was formed when the letter of
allotment (acceptance) was posted.The ‘postal rules’ have been applied to acceptances by
telegram but not to more instantaneous methods of
communication such as telex and telephone.
Entoresv Miles Far East Corp(1955)The claimants, a London company, made an offer to the
defendants’ agents in Amsterdam by means of a telex
message. The Dutch agents accepted the offer by the
same method. The claimants later alleged that the de-fendants had broken their contract and wished to serve
a writ (now claim form) on them, which they could do if
the contract was made in England. The Court of Appeal
held in favour of the claimants. The decision of the court
was expressed by Parker LJ in the following terms:
‘So far as Telex messages are concerned, though the
despatch and receipt of a message is not completely
instantaneous, the parties are to all intents and purposes
in each other’s presence just as if they were in telephonic
communication, and I can see no reason for departing
from the general rule that there is no binding contract
until notice of the acceptance is received by the offeror.
That being so, and since the offer...was made by the
[claimants] in London and notification of the acceptance
was received by them in London, the contract resulting
therefrom was made in London.’ The approach of the
Court of Appeal was confirmed by the House of Lords in
Brinkibonv Stahag Stahl(1982).
Comment. The decisions of the Court of Appeal and
House of Lords in Entores and Brinkibon respectively
were considered by Mann J in Apple Corps Ltdv Apple
Computers, Inc(2004), a case which required the court
to decide where a contract had been formed. The con-
tract had been completed during the course of a transat-
lantic telephone conversation between parties in London
and California, but the judge was unable to say precisely
which party had made the offer and which accepted. He
held that in principle it is possible for a contract to be
made in two (or more) places at once.