Today's Postal Rule Application

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It is usually said that not only the offer be accepted, but the acceptance must be communicated to the offeror. Where the parties are negotiating face to face, this present no problem since the acts or words which manifest acceptance will also communicate it. Where the parties are negotiating at a distance by post, telephone, telegram, telex, fax or messenger the principle obviously has important applications. (Dudgale, 1992)

However in the case of postal acceptance, perhaps numerically the most common case, the rule is subject to an exception (Dudgale, 1992). It was decided in Adams v Lindsell (1818) that a postal acceptance was effective as soon as it was posted even if the letter is delayed, destroyed or lost in the post and it never reaches the offeror. On 2nd September, the defendant wrote an offer selling goods to the plaintiff and asked a reply by post. On 5th September the plaintiff received the letter and sent his acceptance by post. However the defendant had sold the goods to a third party on the 8th September and received the letter of acceptance by the plaintiff on 9th September. It was held that a binding agreement was made and the postal rule noted that the date of sending is the date of acceptance. (McKendrick, 2008)

In Household Fire and Carriage Accident Insurance v Grant (1879), this rule was applied even when the letter of acceptance was inadequately stamped or wrongly addressed, and it is open to the offeror to say expressly that he will not be bound until he receive the acceptance. Moreover, in Holwell Securities v Hughes (1974), the Court of Appeal held that such a requirement could be implied from the nature of the contract (exercise of an option). (Keenan, 2007)

Meanwhile, modern forms of communication such as e-mail, telephones with answering machines and faxes do not follow the postal rule. (Kelly, Holmes & Hayward, 2005). On the other hand the communication rule was applied to contracts of telex by the Court of appeal in...
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