The postal rule
The origin of the postal rule is the case of Adams v Lindsell ((1818) 1 B & Ald 681 (KB)). Where acceptance is made by post, it takes effect the moment the letter is put in the post box. This means that the contract will have been formed before the offeror learns of the acceptance.
The postal rule can apply even if the letter is lost in the post and the offeror never receives the acceptance.
It is important to recognise that the postal rule is not always applied. It will not apply if it has been excluded by the terms of the offer or if its application would be manifestly absurd (Holwell Securities V Hughes). For example, if all the previous negotiations had been carried out using a different mode of communication (such as by telephone), it may be considered absurd to apply the postal rule. In addition if the offeror says “let me know if you accept my offer” – this could be enough to disapply the rule.”
Extending the postal rule?
The courts have not extended the rule to modern, instantaneous forms of communication such as telephone, telex or fax (Entores v Far East Miles – The position regarding Faxes is slightly more complicated.).
Entores v Miles Far East Corp ([1955] 2 QB 327)
The plaintiffs in London made an offer by Telex to the defendants in Holland. The defendant's acceptance was received on the plaintiffs' Telex machine in London. The plaintiffs sought leave to serve notice of a writ on the defendants claiming damages for breach of contract. Service out of the jurisdiction is allowed to enforce a contract made within the jurisdiction. The Court of Appeal had to decide where the contract was made.
Denning L.J. stated that the rule about instantaneous communications between the parties is different from the rule about the post. The contract is only complete when the acceptance is received by the offeror: and the contract is made at the place where the acceptance is received. The contract was made in London where the acceptance was received. Therefore service could be made outside the jurisdiction.
But when exactly does receipt occur?
The Brimnes ([1975] QB 929)
The defendants hired a ship from the plaintiff ship owners. The ship owners complained of a breach of the contract. The ship owners sent a message by Telex, withdrawing the ship from service, between 17.30 and 18.00 on 2 April. It was not until the following morning that the defendants saw the message of withdrawal on the machine.
Edmund-Davies L.J. agreed with the conclusion of the trial judge. The trial judge held that the notice of withdrawal was sent during ordinary business hours, and that he was driven to the conclusion either that the charterers' staff had left the office on April 2 'well before the end of ordinary business hours' or that if they were indeed there, they 'neglected to pay attention to the Telex machine in the way they claimed it was their ordinary practice to do.' He therefore concluded that the withdrawal Telex must be regarded as having been 'received' at 17.45 hours and that the withdrawal was effected at that time.
Note: Although this is a case concerning the termination of a contract, the same rule could apply to the withdrawal and acceptance of an offer.
Silence?
Normally silence cannot be taken for acceptance. In the case of Felthouse v Bindley, Felthouse made an offer to his nephew to buy a horse for £30.15. The letter ended:
“If I hear no more about him, I consider the horse mine at £30 15 s.”
The nephew did not reply. The horse was subsequently sold at auction to a third party. Felthouse brought an action against the auctioneer claiming that he had a valid contract and the horse was his. The court held however that the nephew’s silence meant that he had not accepted Felthouse’s offer.
Acceptance by conduct
A valid acceptance can be made by conduct. This is demonstrated by the following case.
Brogden v Metropolitan Railway Co. ([1877] 2 App Cas 666)
B supplied coal to MRC for many years without an agreement. MRC sent a draft agreement to B who filled in the name of an arbitrator, signed it and returned it to MRC's agent who put it in his desk. Coal was ordered and supplied in accordance with the agreement but after a dispute arose B said there was no binding agreement.
It was held that B's returning of the amended document was not an acceptance but a counter-offer that could be regarded as accepted either when MRC ordered coal or when B actually supplied. By their conduct the parties had indicated their approval of the agreement.
Another, more common exception is the acceptance in a unilateral contract. Essentially this is a “promise for an act.” The case of Carlill v Carbolic Smoke Ball is useful again as an authority here.
The origin of the postal rule is the case of Adams v Lindsell ((1818) 1 B & Ald 681 (KB)). Where acceptance is made by post, it takes effect the moment the letter is put in the post box. This means that the contract will have been formed before the offeror learns of the acceptance.
The postal rule can apply even if the letter is lost in the post and the offeror never receives the acceptance.
It is important to recognise that the postal rule is not always applied. It will not apply if it has been excluded by the terms of the offer or if its application would be manifestly absurd (Holwell Securities V Hughes). For example, if all the previous negotiations had been carried out using a different mode of communication (such as by telephone), it may be considered absurd to apply the postal rule. In addition if the offeror says “let me know if you accept my offer” – this could be enough to disapply the rule.”
Extending the postal rule?
The courts have not extended the rule to modern, instantaneous forms of communication such as telephone, telex or fax (Entores v Far East Miles – The position regarding Faxes is slightly more complicated.).
Entores v Miles Far East Corp ([1955] 2 QB 327)
The plaintiffs in London made an offer by Telex to the defendants in Holland. The defendant's acceptance was received on the plaintiffs' Telex machine in London. The plaintiffs sought leave to serve notice of a writ on the defendants claiming damages for breach of contract. Service out of the jurisdiction is allowed to enforce a contract made within the jurisdiction. The Court of Appeal had to decide where the contract was made.
Denning L.J. stated that the rule about instantaneous communications between the parties is different from the rule about the post. The contract is only complete when the acceptance is received by the offeror: and the contract is made at the place where the acceptance is received. The contract was made in London where the acceptance was received. Therefore service could be made outside the jurisdiction.
But when exactly does receipt occur?
The Brimnes ([1975] QB 929)
The defendants hired a ship from the plaintiff ship owners. The ship owners complained of a breach of the contract. The ship owners sent a message by Telex, withdrawing the ship from service, between 17.30 and 18.00 on 2 April. It was not until the following morning that the defendants saw the message of withdrawal on the machine.
Edmund-Davies L.J. agreed with the conclusion of the trial judge. The trial judge held that the notice of withdrawal was sent during ordinary business hours, and that he was driven to the conclusion either that the charterers' staff had left the office on April 2 'well before the end of ordinary business hours' or that if they were indeed there, they 'neglected to pay attention to the Telex machine in the way they claimed it was their ordinary practice to do.' He therefore concluded that the withdrawal Telex must be regarded as having been 'received' at 17.45 hours and that the withdrawal was effected at that time.
Note: Although this is a case concerning the termination of a contract, the same rule could apply to the withdrawal and acceptance of an offer.
Silence?
Normally silence cannot be taken for acceptance. In the case of Felthouse v Bindley, Felthouse made an offer to his nephew to buy a horse for £30.15. The letter ended:
“If I hear no more about him, I consider the horse mine at £30 15 s.”
The nephew did not reply. The horse was subsequently sold at auction to a third party. Felthouse brought an action against the auctioneer claiming that he had a valid contract and the horse was his. The court held however that the nephew’s silence meant that he had not accepted Felthouse’s offer.
A valid acceptance can be made by conduct. This is demonstrated by the following case.
Brogden v Metropolitan Railway Co. ([1877] 2 App Cas 666)
B supplied coal to MRC for many years without an agreement. MRC sent a draft agreement to B who filled in the name of an arbitrator, signed it and returned it to MRC's agent who put it in his desk. Coal was ordered and supplied in accordance with the agreement but after a dispute arose B said there was no binding agreement.
It was held that B's returning of the amended document was not an acceptance but a counter-offer that could be regarded as accepted either when MRC ordered coal or when B actually supplied. By their conduct the parties had indicated their approval of the agreement.
Another, more common exception is the acceptance in a unilateral contract. Essentially this is a “promise for an act.” The case of Carlill v Carbolic Smoke Ball is useful again as an authority here.
