2022 Oct A

Q1) “The postal rule will not be applied where it leads to inconvenience or absurdity”. Discuss

The postal rule, set out in Adams v Lindsell (1818) constitutes that acceptance takes place when the
letter of acceptance is posted by the offeree. This is an exception to one of the rules of acceptance that it
must always be communicated to the offeror. This case is controversial as it was apparently biased
against the offeror; the defendants (offerors) were held liable for breach of contract although they had
dealt with the claimants faithfully.

The statement above are the words of Lawton LJ in the obiter of Holwell Securities v Hughes. This essay
will discuss the difficulties of the postal rule and how the development of the law has countered them to
evaluate whether the statement in the question is true.

The rule in Adams v Lindsell has been infamous among commentators who argue that the offeror would
never know when his offer has been accepted and if he receives a response after an unreasonable
amount of time, he could still be held liable for breach. Further, once the letter has been posted by the
offeree acceptance would be binding as they cannot reject the offer through faster means. Others argue
that without this rule the offeree would not be able to rely on the efficacy of his acceptance. In Adams v
Lindsell itself it was suggested (at 683) that if the rule did not exist “no contract could ever be completed
by the post. For if the [offerors] were not bound by their offer when accepted by the [offerees] till the
answer was received, then the [offerees] ought not to be bound till after they had received the
notification that the [offerors] had received their answer and assented to it. And so, it might go on ad
infinitum”. In other words, the postal rule is in the interests of certainty and predictability. In all cases,
the decision will always be harsh on one of the parties.

The following is an assessment of the practical difficulties of the postal rule and how they can be avoided
to prevent ‘absurdity and inconvenience.’

The first is that the offeror would not know how long he should wait for acceptance to reach him. He can
avoid this by mentioning in his offer that acceptance is only binding if it reaches him by a certain time or
simply that it must come to his knowledge. An example of this is Holwell Securities Ltd v Hughes (1974),
where the offeror expressly stated that acceptance had to be ‘by notice in writing’. The court interpreted
these words to mean communication; thus, the postal rule is inapplicable. Thus, the offeror can always
use terms like ‘let me know’ to oust the operation of the postal rule where it may cause hardship.

Another point that critics raise is whether a lost letter of acceptance should have binding affect. In a
Scotland case the traditional application of the postal rule was rejected in this case (Mason v Benhar
Coal and Co (1882)). This is justified because the offeree, being the one to make the acceptance, is in the
best position to know whether their acceptance has reached the offeror and if not, take reasonable steps
to make it happen. However, this case is only of persuasive effect and English law will stick to the
traditional application. However, if the letter does not reach the offeror due to the offeree’s mistake or
carelessness then the offeror is not liable (Korbetis v Trangrain Shipping BV). Due to the absence of a
balanced and fair English judgement for when a letter is lost with neither the offeree not the offeror
being its cause, it can be argued that Lawton J’s statement in the question is not entirely correct. Perhaps
it can be defended by mentioning that the offeror has chosen to begin negotiations by post so any risk of
delay or loss should reasonably be borne by him.
Further, English law is also ambiguous as to dealing with a situation where an offeree posts his
acceptance and sends a rejection later using faster means since there is no English authority for this
point. In a Scottish case Countess of Sunmore v Alexander it was held that a revocation can overtake an
acceptance. On the one hand, it is clearly absurd to find a contract to have legal effect when both parties
believe otherwise. On the other, it is in the interest of certainty that the traditional application is stuck
to, and any letter of revocation is treated as breach of contract. Secondly, using the judgement of the
Scottish case would allow the offeree to exploit the offeror by rejecting the offer when it become s a bad
bargain for him. It is hard to find a balancing conclusion that would do justice to both parties and cause
both to be satisfied. There is no English authority on this point.

However, another limitation to the operation of the postal rule has been set out in Henthorn v Fraser;
that it may only be applicable if it is reasonable to use post. This would definitely be the case where the
offer is made by post. However, it may also be the case where it is not possible for the offeree to
communicate in a different way. It is noteworthy that the postal rule is restricted only to letters and not
instantaneous modes of communication since the offeree is able to know if their acceptance is
communicated to the offeror (Entores v Miles Far East Corp). here it can be seen ho the postal rule is
being ignored to avoid inconvenience.

In the end, it is clear that there is strong case both for and against Lawton LJ’s claim that the ‘postal rule
is not applied where it would lead to inconvenience or absurdity’. The best justification for it is that in
this day and age with instantaneous forms of communication available cheaply, the offeror has made the
choice to use post and thus be bound by the rule. It can thus be presumed that the offeror did not find it
inconvenient. Nevertheless, English law has gaps where cases of lost letters and revocation of the offer
before acceptance arrives are concerned. These must be filled if inconvenience and absurdity is to be
avoided.