Giving illustrations, explain the postal rules that govern offer and acceptance where contracts are communicated and concluded through post

  • Postal rules of acceptance

Where the offeror expressly or by implication authorises the offeree to communicate his acceptance by post, acceptance is deemed complete when a properly addressed and stamped letter is posted not withstanding any miscarriage in the course of postage. It is so held in ByrneV. Van Tienhoven.

In the words of Lindley J in Adams V. Lindsell. “it may be taken a settled that where an offer is made and accepted by letters sent through the post, the contract is concluded when the letter accepting the offer is posted even though it never reaches its destination.”

·         Express authorization

In Adam V. Lindsell the offeror expressly authorized the offeror to use the post. On Sept 2, 1817 the defendant made an offer the plaintiff to sell a quantify of wood and required an answer in the “course of the post.” The defendant misdirected letter arrived on Sept. 5th. The plaintiff accepted the posted letter on the same day. The letter of acceptance was received by the defendant on Sept. 9th. On sept 8th the defendant sold the wood to a third party. Question was whether there was a contract between the parties.

It was held that there was a binding contract between the parties conducted on Sept 5th and the defendant was liable in damages for breach of contract.

·         Implied authorization

In Household Fine insurance Co. V. Grant, Grant posted a letter on Sept 30th 1874 offering to buy 100 shares in the plaintiff company. On Oct. 20th 1874 the company secretary made out of a letter of allotment of 100 shares in favour of Grant and entered his name in the register of members.

The letter was posted but never reached Grant. Grant refused to take up the shares and was sued by the company for the amount due on the shares. Grant argued that he was not a member since his offer had not been accepted. However, it was held that he was liable as a binding contract came into existence when the letter of allotment was posted to him.

A similar holding was made in Henthorn V. Fraser.

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