Postal Rule Flashcards
- What is the Postal Rule?
The ‘postal rule’ decrees that a posted acceptance is binding from the moment of posting without any communication to the offeror.
- When is the Postal Rule taken to its illogical limits?
The postal rule is taken to its illogical limits the law will still be effective even if letter never arrived – Household Fire Insurance v Grant (1879)
- What happened in Adams v Lindsell?
The Defendant posted a letter of offer to sell wool at a certain price to the claimant.
The Defendant had incorrectly addressed the offer letter, so it arrived later than normal.
As soon as the claimant received it, he sent his acceptance by post that evening.
After a few days, the defendant felt that he should have received a reply if claimant wanted to accept, and so he sold the wool to someone else.
Defendant then received the claimant’s acceptance through the post.
Claimant argued that there was a binding contract between them and felt thatbthe wool should not have been sold to someone else.
The C of A agreed with the claimant.
The court held that it was not necessary for the letter of acceptance to have arrived before the defendant (offeror) would be bound in contract.
In order to facilitate business efficiency, it is better for the acceptance to become binding and effective once the letter is posted.
- What happened in Household Fire v Grant?
Defendant made an offer for shares in a company.
Company accepted by sending him a letter notifying him of the allotment of the shares.
House hold sent the Letter by post and got lost.
Therefore, defendant did not receive the letter and therefore did not pay for the shares.
The company was being liquidated, mr grant was asked to pay he refused and argued that there was never an actual contract between grant and house hold
Court held that there was a valid contract.
- What are the Limitations of the Postal Rule? (Henthorn v Fraser)
The postal rule only applies to acceptance of offers. It does not apply to making offers, revocation of offers, or any other elements in contractual negotiations.
The postal rule will only apply if the post was a reasonable way of accepting the acceptantce/communicating the acceptance as in the case of Henthorn v Fraser (1892)
- What did Lord Herschell say in Henthorn v Fraser?
‘it must have been within the reasonable 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’
- What does the offeror have the ability to do?
Offeror has the ability to exclude the rule, they can choose how they want the offeree to respond/communicate the offer they can do this implicity or explicity
- What happened in Quenerduaine v Cole?
Quenerduaine v Cole (1883) – the speed of communication of an offer is relevant.
Communcaited through post when the initial offer was made through a telegram, the court said this wasn’t valid and it would’ve been easier to communicate acceptance through telegram as it is faster,
- What happened in Holwell v Hughes?
Holwell Securities v Hughes (1974) - stating ‘notice inwriting’ means actual communication is required.
