Postal Rule

1 January 2017

In the modern world, technology had improved, the advance technology had led to a convenience life, and people can easily receive and send out a message and even a contract. The purpose of this research essay is to explain the detail of postal rule. The brief definition of postal rule is a rule of contract law that makes an exception to the general rule that an acceptance is only created when communicated directly to the offeror (Duhaime. org n. d). The postal rule was established in the case of Adams v Lindsell .

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This essay also will show weather the postal rule should or should not be continue, and the rules and method to determine the timing of acceptance sent by fax and email. Discussion of Findings Postal rule are being use of the modern technology style of communication of acceptance, which leads to exception to the general rule that acceptance has to been done by face to face between offeree and offeror. This applies under a situation that a sender may mail an acceptance to a recipient inbox; in fact, the acceptance never reaches the recipient.

If the parties between the sender and recipient loses or delays the acceptance mail, there is still a binding of contract. The following cases which applied to this rule. In Henthorn v Fraser , this case had noted “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.

If the sender had delivery the acceptance not by the method that the recipient had decided and the sender had knowledge and accept this as the method of delivery, there will be no binding of contract. There is no alternative ways. Next, the postal rule was state that there will be an acceptance even it wasn’t brought to the offeror’s attention. Since the acceptance was posted, postal rule will be applied. In a result, the court will have others opinion to decide which rule to applied. This following case would apply to the rule.

In Household Fire & Carriage Acident Insurance Co. v. Grant , in this case, post office is the party between sender and recipient. The circumstances in this case were “If the post office be such common agent, then it seems to me to follow that, as soon as the letter of acceptance is delivered to the post office, the contract is made complete and final and absolutely binding as if the acceptor had put his letter into the hands of a messenger sent by the offerer himself as his agent to deliver the offer and receive the acceptance.

In additional, postal rule do not apply when the contract had express specified terms. In Holwell Securities v. Hughes , Hughes granted Holwell an option to purchase his premises. This option will practice ‘by notice in writing’ within 6 months. Holwell was posted an acceptance 5 days before the expiry date, but Hughes did not receive the letter. Holwell sought specific performance. The court was held, by requiring ‘notice in writing’, Dr Hughes had specified that he had to actually receive the communication and had therefore excluded the postal rule.

This rule also applies on the Saskatchewan River Bungalows Ltd. v. Maritime Life assurance Co . In this particular case, the contract term incurred wording such as “the acceptance must be received at the head office of X” acceptance have to delivery with such method and only was acceptable or encouraged. There is another case that defines the postal rule, which is Brinkibon Ltd. v. Stahag Stahi und Stahwarenhandelsgesellschaftt mbH . In the case, communication were conducted internationally, and using a variety of communication method.

The court first held that the general rule “A contract is formed when acceptance is communicated by the offeree to the offeror. If it is necessary to determine where a contract is formed … this should be at the place where acceptance is communicated to the offeror. ” This case is then decided with the instantaneous communication. Instantaneous communication may explain as the contract has completed where and when the acceptance was received. In the case of Entores Ltd v Miles Far East Corporation shows the different of acceptance between postal rule and instantaneous communication law.

The fact in this case were a trading company that based in London send an offer by telex to a company based in Amsterdam. The contract was not fulfilled then Entores tend to sue the Dutch company for damages. The legal issue of this case were the court have to decide where is the contract had made. Regarding to the case, Lard Justice Bowen said “One cannot doubt that, as an ordinary rule of law, an acceptance of an offer ought to be notified to the person who makes the offer, in order that the two minds may come together.

Unless this is done the two minds may be apart, and there is not that consensus which is necessary according to English law – I say nothing about the laws of other countries – to make a contract”. According to the rule of the law, a contract made at where and when the acceptance received, that was where the recipient is. Referring to Brinkibon Ltd. v. Stahag Stahi und Stahwarenhandelsgesellschaft mbh which also send an offer by telex. The court held the postal rule does not apply to direct/instant forms of communication (including telex).

Instantaneous communication is a direct method of communicate, where and when the acceptance are received there will the contract had make. In opponent, postal rule will not emphasize on whether the receipt really received the acceptance, since the acceptance was post, there will be a binding of contract. Professor David Walker had mention that “The postal rule is an anomaly and inconsistent with the rules for acceptance by oral communications, telephones and probably telex, and with the rules for offers and withdrawals of offers.

Whatever rule is adopted there will be a period of uncertainty, with one party or other not knowing whether the acceptance has arrived, but the balance of convenience lies in favour of a uniform rule that contractual communications are effective when they have been received. ” Any delaying of sending and receiving information indicates high potential risk that both of the parties have to duel with uncertainty or issue that causing by the delay. It can be said postal rule are important to apply for few reasons. Now days, business agreement are often been done by mails or letter.

Postal rule are to assure the written agreement and communication has legal effect if one of the parties has bad faith. Another reason for applying postal rule is that to prevent and avoid any business uncertainty regarding the timing of sending and receiving email contract. This is to protect both of the parties. For example, if sender X sends her acceptance one hour before the office hour end to recipient Y. Recipient Y left she work place earlier because her family members was injured in a car accident and she had apply an emergency leave to take care her family.

Is already a few days after Y return to her office or Y has checks her mailbox and view the acceptance, the acceptance will be delayed. This situation is often happen in a work place. Due to the delay, both parties have to face and solve the problem that cause by the delayed mail. According to Gardner, contracting by email has been considered as the digital equivalent of the postal system. (Gardner 1997). Another potential reason of applying postal rule is to avoid human errors, such as fill in the wrong address, hack by third parties. Sending and receiving mail are depending on the network, what if there is a network failure?

This might also the reasons that cause uncertainty. As a matter of fact, applying postal rule can prevent and avoid these uncertainties and have a definite time for mail contract. In the other hand, postal rule also creates difficulties. The offer can be accept without the knowledge of receipt, as long as the sender had post the acceptance. For example, sender A has post an acceptance to recipient B, but due to some reason the post of acceptance haven’t reach B. The recipient B then revokes offer before the receiving the acceptance and form another contract with party C over the same matter.

Few days later, B had received the acceptance from A. In a result, B had breach his own contract with A. This sad situation was form because the exception rules of acceptance and the advances of technology. In some situation, postal rule had harmed the innocent parties. Postal rule had only benefited the innocent parties, which is the sender. The acceptance had been accepted and a contract has been form without the knowledge recipient. The sender has the right to assume the contract is binding as long as the acceptance was posted.

The sender should have the intention to confirm with the recipient to make sure that the acceptance is knowledge by the recipient, not just assume that the contract are form when the acceptance was delivery. The question that whether postal rule should or should not exist it depend on the situation. The following paragraph will discuss what materials of communication should postal rule be used when postal rule are assumed should exist within the contract law. E-mail E-mail (electronic mail) is the exchange of computer-stored messages by telecommunication (Dr. Suresh, 2003).

Email as an electronic devises, deliver billions of mails across the network every year. Email is usually not directly reach to the recipient destiny, the mail will send through the global network although the recipient is just a few doors next to your house. Typically, a mail only takes a few seconds to reach the recipient after it is sent. In fact the mail was delay or not been received due to the network failure or network over loading. Since mail is not directly delivered to its destiny, it is not instantaneously. In a result, the sender has no control over the message or the sure that the mail is actually reaching its destination.

In this situation, postal rule should apply. In the other hand, the network operate properly, it form an instantaneously communication. Therefore, no one can say there is a delay that would cause the uncertainty for both party. In this situation, postal rule should not apply. Therefore, there is a grey area whether postal rule should apply in email. Telex Telex is a communications system consisting of teletypewriters connected to a telephonic network to send and receive signals (The American Heritage® Dictionary of the English Language, 2000). Telex had been judge by the court where the postal rule should not to apply.

This has been in the case of Entores Ltd v Miles Far East Corporation, 1955. The legal issue of this case is to decide whether postal rule should be applied to telex and it was held to be an instantaneous communication. Telex able to allow both party negotiate occurrence. In the other hand, the case of Brinkibon Ltd. v. Stahag Stahi und Stahwarenhandelsgesellschaftt mbH 1983 had examined when communication were instantaneous but not direct. In fact, Brinkibon case has a same result as Entores. The Lord Wilberforce had set guidelines to be used whether a form of communication may have postal rule applied:

The senders and recipients may not be the principals to the contemplated contract. They may be servants or agents with limited authority. The message may not reach, or be intended to reach, the designated recipient immediately: messages may be sent out of office hours, or at night, with the intention, or on the assumption, that they will be read at a later time. There may be some error or default at the recipient’s end which prevents receipt at the time contemplated and believed in by the sender. The message may have been sent and/or received through machines operated by third persons. And many other variations may occur.

No universal rule can over all such cases; they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgment where the risks should lie… Therefore, postal rule should not apply in telex. Web-click contract Web–click contract is a web version of the shrink-wrap licensing agreement that comes into force when an online buyer or user clicks on the “I Agree” button on the webpage to purchase (business dictionary. com n. d). Web-click contract are agreement completed over the internet. The acceptance had been formed when the act of clicking the button of “I agree” by the purchaser.

Once the button was pushed, it forms an enforceable contract. Referring Hotmail Corporation v. Van$ Money Pie, Inc 1998, the defendant have send a thousands of spam mail and set up many Hotmail accounts by using the accounts as a drop box. In a result, Hotmail obtain thousands of misdirected responses and also complaint about the spam. Hotmail sought a preliminary injunction preventing the defendant from using email service in the future. The court held granted this noting that the evidence supports a finding that the plaintiff will likely prevail on its breach of contract claim. The defendant has committed serious problems to the plaintiff.

Therefore, postal rule should apply in web-click contract. Short message service (SMS) Short message service is a system that enables cellular phone users to send and receive text messages. The SMS have similar factors will email, it deliver message depend on the frequency. Both parties have no control over the message delivered. Therefore, short message service should apply postal rule. Conclusion The advance of technology had led to an abuse of posted message. Postal rule are create to protect the benefit for both of the parties. In additional, postal rule might create a grey area, it depend on the situation.

Now days, the message are mostly delivered by third parties, such as post man or agent and by electronic media. The creation of postal rule has act as a guideline to prevent uncertainty occur between both parties. In my opinion, postal rule should continue exist, in terms of fairness between both sender and recipient.

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