THE POSTAL RULE IN CONTRACT LAW.

This rule was first established in the case of the court of Adams v Lindsell ([1818] 1 B.The court had to decide the exact moment of contract formation by post.It was found that parties were not sure when acceptance was communicated by post. Due to delay in communication by post the parties could also not be aware if communication was made.
This created a number of problems and has led to a formulation of the rule.This rule as accepted in the common law legal systems is: “Where the circumstances are such that it
must have been within the 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, the acceptance is complete as
soon as it is posted”. (Adams v Lindsell [1818]and Henthorn v Fraser [1892].
The uncertainty regarding the moment of contract formation does not happen in the environment of
In face-to-face communication or in distance contracting there’s no uncertainty on the moment when the contract is formed because of the instantaneous method of communication used. In this kind of contracting, all parties are aware of contract conclusion and they do not face
problematic issues such as delay or failure of transmission which occur in non instantaneous communications.
In contrast, the case of Adams v Lindsell, adopted the rule to avoid the extraordinary and mischievous
consequences which could follow if it were held that an offer might be revoked at any time until the offeree
was in the position of accepting it had been actually received(House hold Fire and Carriage Accident
Ins.Co.V. Grant)(Re Imperial Land Co of Marseilles).
Justification for the postal rule:-
1.It seems to provide the best solution in determining the time when the parties
reach consensus ad item and it was felt, that at the time of posting the letter, there would be a greater chance of
a ‘meeting of minds’ occurring than at the later time when the letter was delivered.
2.The offeror must be considered as having made the offer throughout the time that his offer is in the post and therefore the agreement between the parties is complete as soon as the acceptance is posted. (Henthorn V. Fraser). This idea depends on the assumption that the offer creates a power binding both parties and acceptance is an exercise of that power.In the beginning offeror has power to determine acts constituting acceptance. However, after the offeror makes that determination, the legal consequences are out of his hands because an offer has then become effective and the offeree has an advantage over the offeror in the contract formation process. The offeree may need additional time to decide
whether or not to accept the offer and during that time, may need to spend money and effort in reaching a
decision.
3.Some go further, considering the post office as an agent of the offeror. In Household Fire and Carriage
Accident Insurance Co. v. Grant,Thesiger LJ suggested agency as a basis for this rule
as he affirmed:
“How then are these elements of law to be harmonized in the case of contracts formed by
correspondence through the post? I see no better mode than that of treating the post office as the agent of both
parties”.
This argument has not been accepted as the post office and telegram company are clearly not agents to which acceptance may be communicated especially as we know that the post office as a
governmental agency for public service working under its own regulations could never be an agent in this
area.Moreover, letters are always sealed when posted and therefore the contents of a sealed letter cannot
realistically be said to have been communicated to the post office, which in any case is at most an agent to
transmit the acceptance, and not to receive it. The mere delivery of letters by post does not of itself complete a
contract.
In fact, it can be said that this rule is efficacious as it is cognizant of both of the business convenience
of the offeree and the fair allocation of risk, as it establishes a finite date for the contract and avoids circular
communication. Any delay which occurs between sending and receiving post letters creates
potential risk for both parties due to the uncertainty as to when the message is deemed to have
been received. This justification may be considered as the corner stone for application of the postal acceptance
rule.
Treitel (1991) concludes that “courts in applying the postal rule aim to bring a rationale of necessity and
predict that if the contract were to come into force it can best be achieved on sending the acceptance.”
For example, if the offeror asks for notification, then the offeree would need notification of the receipt
and so on. Another way of illustrating this is demonstrated if we consider that A is required to receive B’s
acceptance, then B should have the right to receive notification from A, that the acceptance was received, and
A should have the right to receive notification from B, that the notification of receipt of the acceptance was
received and so forth. Carrying this on to its logical conclusion, putting the risk in the hands of the offeror
would appear logical since it is he who is the master of the offer and he is the position to or stipulate a
specific action in order to be exposed to the potential risk.
These traditional justifications have been argued in respect to post contracting since as we explained
above there is a gap of time and a delay between sending a letter and receiving it and parties are not in a
position that they can control transmission of letters by post.