Acceptance: Postal Rule

1. Issue

2. Introduction
Postal rule is a sub-role originating from acceptance. Acceptance is generally defined as an unconditional
agreement to all terms of an offer as provided by Tinn v Hoffman where it was ruled that when the offer
was 1,200 tons of iron, order of 800 tons does not constitute acceptance. Most importantly, acceptance must
be communicated which was supported by Entores’ case and this forms the general rule of all acceptance.
However, in Adams v Lindsell, the court put forward that the contract was concluded once the acceptance
was posted and this forms the basis of the postal rule. The postal rule can be applied to any acceptance sent
by post, subject to the conditions that the letter must be correctly addressed, stamped, and sent by registered
post. The postal rule can also be used in non-instant mode of communication, such as telegram. In Cowan v
O’ Conner, the court held that acceptance came into effect when telegram was sent. Besides that, the postal
rule indicates that acceptance must be reasonable. If the offer did not indicate a method of acceptance, an
appropriate method should be implied to form the means used to make the offer. Henthorn v Fraser ruled
that despite the fact that the offer was handed over in person, the acceptance by post was reasonable as the
parties live in different towns.

3. Effects
Postal rule has 3 main effects. First, according to Household Fire Insurance v Grant, even if the letter of
acceptance fails to reach the offeror, acceptance is still considered to have taken place. In this case, the court
held that defendant was a shareholder and owed the money although he never received the letter of
acceptance and thus he was unaware of it. Second, the offer may be revoked by the offeror anytime before
acceptance is communicated. If an acceptance is posted after the offeror posts a revocation of the offer, but
before that revocation has been received, the acceptance will be binding. In Bryne’s case, it is highlighted
that revocation must be communicated. Third, Dunmore v Alexander has established that postal acceptance
can be withdrawn by faster means of communication, but the Court’s views were only obiter on this point.

4. Exceptions
However, there are exceptions to postal rule. First, the offeror may avoid postal rule by making it a term that
acceptance only takes effect once it is communicated. In Holwell Securities Ltd v Hughes, the offeror
stated that the acceptance had to be ‘by notice in writing’, and the courts ruled that the word ‘notice’ meant
that acceptance will only be valid when communicated. Second, postal rule would not be applied if an instant
method of communication is used, as the acceptor would usually know at once that he is unable to
communicate with the offeror. In Entores’ case, it was held that the postal rule would not be applied when
telex is used to communicate acceptance as telex is an instant method of communication that allows both
parties to negotiate as if they were in each other’s presence. This was supported by Brinkibon v Stahag
Stahl, where acceptance happens when telex is received and read during business hours. However, The
Brimnes allows contract to be formed despite fax not being read simply due to conduct of offeror not to read
it. The fax is considered acknowledged so there is communication of acceptance.

5. Modern Developments
 Acceptance: Postal Rule
However, it is a known fact that business communication today has been revolutionised and it is due to the
advent of portable communication gadgets such as smartphones, tablets, and laptops. Such gadgets are a
form of instant communication which is similar to the second exception as discussed above. Such
communications are easily accessible as there are free Internet hotspots around and Internet mobile data
provided by telecommunication companies. Furthermore, with smartphone applications such as
“WhatsApp”, there are features that indicate that a message has been sent and read respectively. Thus, it is
believed that acceptance via such communication can take place instantaneously and errors can be amended
instantaneously as well, which shows that the postal rule may not be as relevant today. However, it should be
acknowledged that there are certain transactions that utilise postal service hence, indicating that postal rule
may still be relevant in such transactions.

Contents (Without Issue and Conclusion): 706 words