50 3: Formation of contract I Part B The law of obligations
Under the postal rule, the offeror may be unaware that a contract has been made. If that possibility is
clearly inconsistent with the nature of the transaction the letter of acceptance takes effect only when
received. In particular, if the offer stipulates a particular mode of communication, the postal rule may not
apply.Holwell Securities v Hughes 1974
The facts: Hughes granted to the claimant an option to purchase land to be exercised 'by notice in writing'.
A letter giving notice of the exercise of the option was lost in the post.
Decision: The words 'notice in writing' must mean notice actually received by the vendor; hence notice
had not been given to accept the offer.Acceptance of an offer may only be made by a person authorised to do so. This will usually be the offeree
or their authorised agents.Powell v Lee 1908
The facts: The claimant was appointed to a post as a headmaster. Without authorisation, he was informed
of the appointment by one of the managers. Later, it was decided to give the post to someone else. The
claimant sued for breach of contract.
Decision: Since communication of acceptance was unauthorised, there was no valid agreement and hence
no contract.Offer and acceptance are key areas of contract law. You must be able to both identify and explain any
relevant legal rules and principles.8.5 Cross-offers
If two offers, identical in terms, cross in the post, there is no contract. For example, if A offers to sell their
car to B for £1,000 and B offers to buy A's car for £1,000, there is no contract, because there is no
acceptance.8.6 Unilateral contracts
The question arises as to whether contractual obligations arise if a party, in ignorance of an offer,
performs an act which fulfils the terms of the offer. If A offers a reward to anyone who finds and returns
their lost property and B, in ignorance of the offer, does in fact return it, is B entitled to the promised
reward? There is agreement by conduct, but B is not accepting A's offer since they are unaware of it.R v Clarke 1927
The facts: A reward was offered for information leading to the arrest and conviction of a murderer. If the
information was provided by an accomplice, he would receive a free pardon. C claimed the reward,
admitting that he had acted to save his own skin and that all thought of the reward had passed out his
mind.
Decision: There could not be acceptance without knowledge of the offer.However, acceptance may still be valid even if the offer was not the sole reason for the action.Williams v Carwardine 1833
The facts: A reward was offered to bring criminals to book. The claimant, an accomplice in the crime,
supplied the information, with knowledge of the reward.
Decision: As the information was given with knowledge, the acceptance was related to the offer.Exam focus
point