Question

What is the postal rule? Is there a similar rule for facsimile transmissions?

Answer 1

Explanation to the above problem is as under:

The posting rule also known as the "postal rule" or "deposited acceptance rule" is an exception to the general rule of contract law that states acceptance of an offer takes place when communicated. Under the posting rule, that acceptance takes effect when a letter is posted .i.e. dropped in a post box or handed to a postal worker. In other words, contract formation occurs at the exact moment when the word of acceptance is sent via post by the person accepting it, rather than when that acceptance is received by the person who offered the contract.

The rules of contracts by post (postal rules) include the following:

1. An offer made by post/letter is not effective until received by the offeree.
2. Acceptance is effective as soon as it is posted.
3. For revocation to be effective, it must be received by the offeree before they post their letter of acceptance.

One rationale given for the rule is that the offeror nominates the post office as his or her implied agent, and thus receipt of the acceptance by the post office is regarded as receipt by the offeror. The main effect of the posting rule is that the risk of acceptance being delivered late or lost in the post is placed upon the offeror. If the offeror is reluctant to accept this risk, he can always expressly require actual receipt as a condition before being legally bound by his offer.

The case law that established the Postal Rule is:

In Adams Vs Lindshell (1818) the defendant wrote to the plaintiff offering to sell them some wool and asking for a reply ‘in the course of post’. The letter was delayed in the post. On receiving the letter the plaintiff posted a letter of acceptance the same. However, due to the delay the defendant’s had assumed the plaintiff was not interested in the wool and sold it on to a third party. The plaintiff charged for breach of contract. It was held that there was a valid contract which came into existence the moment the letter of acceptance was placed in the post box.

This implies that where post is the agreed form of communication between the parties and the letter of acceptance is correctly addressed and carries the right postal stamp. The acceptance became effective when the letter is posted.

It must be noted that:

The posting rule applies only to acceptance. Other contractual letters (such as revoking the offer) do not take effect until the letter is delivered, as in Stevenson, Jacques & Co v McLean (1880). The implication of this is that it is possible for a letter of acceptance to be posted after a letter of revocation of the offer has been posted but before it is delivered, and acceptance will be complete at the time that the letter of acceptance was posted—the offeror's revocation would be inoperative.

Example:

Day 1: A makes an offer to B.

Day 2: A decides to revoke the offer and puts a letter in the post box to B revoking the offer.

Day 3: B puts a letter accepting the offer in the post box.

Day 4: B receives A's revocation letter.

The letter of revocation can be effective only when received, that is Day 4.

However, a contract was formed on Day 3 when the letter of acceptance was posted.

Thus, it was too late for A to revoke the offer.

Yes, similar rule (postal rule) is applied for facsimile transmissions.