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CONTRACT | Formation

Acceptance:
Postal Rule
Revision Note | Degree

8 DECEMBER 2012

Introduction
communication of acceptance by post raises issues of contractual timing and when acceptance is complete,
due to lapse of time between posting and arrival
therefore the 'postal rule' has been developed

Definition
the postal rule creates an exemption to principle that acceptance is not completed until it is communicated, by
stating that acceptance is complete on posting

ADAMS V LINDSELL (1818) 1 B & A 681

FACTS:

2 September: defendant (D) sent a letter offering to sell wool to plaintiff (P), requiring a response
'in course of post'
5 September: letter delivered to P (it was addressed insufficiently so took longer than usual), that
evening P accepted by post
8 September: D sold the wool to a third party, considering the offer had lapsed
9 September: D received P's accpetance, normally a response 'in course of post' would have
arrived on 7 September

ISSUE:

when was acceptance complete?

HELD:

acceptance complete and binding contract formed on evening of 5 September, when P posted
letter, D was in breach of contract

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 today, revocation of the offer would only be effective once it had been communicated to offeree,
so D selling the wool without notifying P would not mean offer was revoked, rules on revocation
less well defined in 1818

Certainty
postal rule provides certainty for acceptor, he knows there is a binding contract as soon as he postsletter of
acceptance.
offeror can create certainty for himself by stipulating he must receive acceptance before it is binding, he can
oust the rule but if he chooses not to then he is subject to limitations of postal communication

HOUSEHOLD FIRE & CARRIAGE ACCIDENT INSURANCE CO. V GRANT (1879) 4 EX D

216

FACTS:

D offered to buy shares in P's company

P allotted shares to D and sent him a confirmation letter, which was lost in the post
P's company went bankrupt and liquidator requested D make outstanding payments on his
shares, D refused stating there was no binding contract

ISSUE:

had D's offer been accepted?

HELD:

was a binding contract, postal rule applied: irrelevant acceptance was lost because a binding
contract formed once posted
Thesiger LJ: '.. if the post office be such common agent then it seems to me to follow that
as soon as the letter of acceptance is delivered to the post office, the contract is made as
complete and binding as if the acceptor had put his letter into the hands of a messenger
sent by the offeror himself as his agent to deliver the offer and receive the acceptance...'
Thesiger LJ: '..it is impossible... to adjust conflicting rights between innocent parties, so
as to make the consequences of mistake on the part of a mutual agent fall equally on the
shoulders of both...'
Bramwell LJ noted offeror could avoid postal rule by stating 'Your answer by post is only to
bind if it reaches me...'

Limitations
postal rule only applies to acceptance, not to other communication between contracting parties

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 postal rule does not apply: where not reasonable for acceptance to be sent by post

QUENERDUAINE V COLE (1883) 32 WR 185

FACTS:

D made an offer by telegram which P purported to accept by letter

ISSUE:

was it reasonable to accept by letter when the offer was made by telegram?

HELD:

postal rule did not apply, an offer made by telegram (instantaneous), implied that an equally quick
acceptance was required

postal rule does not apply: if letter was not properly stamped, addressed and posted

RE LONDON & NORTHERN BANK, EX P. JONES [1900] 1 CH 220

FACTS:

Dr Jones makes an offer to the bank, at 07.00 a letter of acceptance, addressed correctly, was
handed to a postman, who had no authority to receive letters only to deliver post
09.30: Dr Jones delivered letter to bank revoking his offer
19.30: bank's acceptance delivered to Dr Jones

ISSUE:

was the postal rule invoked?

HELD:

postal rule did not apply due to incorrect posting, a letter must be posted in post box or handed to
post office employee authorised to receive mail

postal rule can be displaced by the offeror

HOLWELL SECURITIES LTD V HUGHES [1974] 1 WLR 155

FACTS:

D issued a grant to sell a property to P, containing clause stipulating option must 'be exercised
by notice in writing to the Intending Vendor' within six months
P sent letter exercising the option, within the time limit, it was lost in the post and never received
by D

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 ISSUE:

did the postal rule apply?

HELD:

postal rule did not apply: post was suitable method of acceptance but language of offer implied D
required receipt of written acceptance
Lawton LJ: '.. the requirement of 'notice ... to', in my judgment, is language which should
be taken expressly to assert the ordinary situation in law that acceptance requires to be
communicated or notified to the offeror, and is inconsistent with the theory that
acceptance can be constituted by the act of posting...'
additionally, to allow the acceptance to be effective, without communication would 'produce
manifest inconvenience and absurdity'
Lawton LJ: 'In my judgment, the factors of inconvenience and absurdity are but
illustrations of a wider principle, namely, that the rule does not apply if, having regard to
all the circumstances, including the nature of the subject-matter under consideration, the
negotiating parties cannot have intended that there should be a binding agreement until
the party accepting an offer or exercising an option had in fact communicated the
acceptance or exercise to the other. In my judgment, when this principle is applied to the
facts of this case it becomes clear that the parties cannot have intended that the posting of
a letter should constitute the exercise of the option...'

if postal rule does not apply: acceptance only effective on communication (receipt of the letter)

Retraction
is the acceptor able to retract the acceptance before it comes to the attention of the offeror? strict application
of postal rule means retraction not possible, there is binding contract once letter is sent
postal rule developed to benefit the acceptor, so argued that it should not be applied in way which is
disadvantageous to him
if acceptor changes his mind after posting and offeror has yet to receive, imposing postal rule detrimental to
acceptor, not imposing would not cause offeror to suffer: withdrawal of acceptance occur prior to him realising
it had been given, so he would not yet been able to act upon it
allowing retraction creates unfair bias in favour of the acceptor (benefits from certainty and able to use
retraction to speculate at the expense of offeror) imbalance would exist where binding contract is formed by
virtue of postal rule: acceptor could retract acceptance but offeror not revoke offer
no English authority on retraction so situation is unclear, issue has been considered in other jurisdictions

WENKHEIM V ARNDT (1873) 1 JR 73

FACTS:

New Zealand case: P offered to marry D, who sent acceptance by letter

D's mother purported to retract acceptance by telegram (prior to acceptance being received by P)

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 ISSUE:

was the acceptance retracted?

HELD:

retraction was invalid

case cited to support view retraction is not possible, however, unanuthorised third party also
factor in decision

COUNTESS OF DUNMORE V ALEXANDER (1830) 9 SHAW 190

FACTS:

Scottish case: dispute over correspondence regarding the employemnet of a servant

ISSUE:

whether a letter sent later could retract a previous acceptance letter, if both arrived at same time

HELD:

no contract, so it appears postal acceptance could be withdrawn by speedier means

case cited to support view retraction may be possible, however, majority decision and reasoning
very unclear

This article can be found online at www.bitsoflaw.org/contract/formation/revision-note/degree/acceptance-postal-rule where links to further

resources are available.

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