General Principle:
As soon as acceptance is posted through the mail, a contract is formed. This is known as the ‘postal rule’.
Name:
Adams v Lindsell (1818) 1 B & Ald 681
Facts:
Lindsell wrote to Adams, hoping to sell Adams some wool. He requested a reply be sent "in course of post". The letter containing the offer was sent out on the 2nd September. It did not arrive, however, until the 5th of September. On the 5th, Adams posted back a letter containing his acceptance. When the letter actually arrived to Lindsell, quite a long period of time had passed. Lindsell had since assumed that the offer had been turned down and he sold the wool to a third party. Adams brought a claim for breach of contract.
Ratio:
The court said Adams was to be awarded damages. The court ruled that Adams accepted when he posted his letter.
Application:
Postal rule dictates that a contract takes place as soon as the letter is posted, regardless of whether that letter reaches the offerer in time. The offerer, if he allows acceptance through the post, is held responsible for contracts he may have formed but may not be aware exist.
Analysis
In general, had the offer not been withdrawn, it could have been accepted. The courts have implemented the "postal" rule to circumvent the issue of a letter's time spent in the postal system. The problem with the postal system is that it generates a period of uncertainty until the recipient receives the letter. During this time, neither the offeror nor the offeree knows if the offer has been accepted or withdrawn. The postal rule is an exception to the general contract law rule that an offer is accepted when it is communicated. It was established in Adams v. Lindsell that when mail is regarded to be the legitimate means of communication, acceptance takes effect when the acceptance letter is duly mailed.
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