At this moment it would be relevant to point out the other given reasons for the rule, and the various arguments against them. Take the reason given in Henthorn v. Fraser, for example, whereby the offeror must be considered as having made the offer the whole time the offer is in the post, and therefore the agreement must be complete as soon as the acceptance is posted. But why should posting have any significance? Surely other means of proof of intention to accept should then also be valid.
Another reason for the rule is that the Post Office is employed as a common agent to both parties, and a communication to this agent completes a contract. Effectively the offeror has said to the offeree, ‘I appoint the Post Office as my agent to receive your acceptance, and therefore directly you hand it to the Post Office you will have communicated it to me’. However it is ridiculous to assume that the contents of a sealed letter can be said to have been communicated to the Post Office. Here the ‘agent’ should be employed purely to transmit the acceptance, and not to receive it. Also, the idea that the Post Office is the common agent is not often actually thought of, and usually comes as a surprise to both parties.
It is argued that it is easier to prove that a letter has been posted, than that it has been received, the English rule thereby minimising the difficulty of proof. But again, the logic to this reasoning is questionable, especially when looking at the theory of Winifield on this subject. To summarise Winifield’s learned theory, it can be said that the above logic depends on the parties keeping records of incoming and outgoing letters. Winifield separates possible parties in to two groups, “citizens” and “merchants”, and when looking at all possible combinations of the two, concludes that ‘it is doubtful whether there is anything to choose between the two rules’.
Another apparent benefit of the rule is that it limits the offeror’s power to withdraw the offer at will. However, it is common practice that those countries using the receipt rule place legal limits on the offeror to prevent this anyway.
Having looked at the reasons for the rule and their various contradictions, we can also briefly mention here a number of other problems with the rule.
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Fax- With this mode of acceptance the offeree knows when the acceptance has been transmitted, but is unaware if the message is garbled.
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Negotiations may have been started by the offeree- This is difficult to tell, especially with counter-offers.
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The law favours the offeree- even though the offeror is in ignorance as to the actions of the offeree.
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The law would be more convenient if there was one rule for all modes of acceptance.
- The offeree could speculate on the market at the offeror’s expense.
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The rule appears to be the opposite to the natural expectations of a layman, ‘It is thought that a layman would be somewhat surprised to learn that…it is the present law that an offer stated to be open for acceptance until 5pm on Friday can be validly accepted by a letter arriving at 10 o’clock on the following Monday morning.’
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Could a telegram revoke a contract before a letter reaches the offeror? In England there is no authority on this matter, but in the USA and in New Zealand the telegram would have no effect. The majority of English writers agree.
Taking all of the above arguments into consideration, it is proposed by the writer, that England abolishes its postal acceptance rule, and follows Scotland into a unified rule for the whole of the United Kingdom. The three main reasons given for this include the benefits of a unified rule between England and Scotland, the benefits of having one rule for all modes of acceptance, and the rule being in compliance with the general expectations of a layperson. Indeed, all of the reasons mentioned above add to this argument.
In Scotland, since its alteration, the Formation of Contracts Bill provides that,
“(2) An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror”
This rule could be adopted by England for a more acceptable and logical modern approach to the postal acceptance rule. It is expected by the writer that a number of learned writers and jurists in England today would agree with this proposal, as was the case when the change was proposed in Memorandum No. 36 in Scotland. When asked, a number of consultees expressed their views on this point in response to the memorandum, all favouring the replacement of the postal rule by a receipt rule.
It can therefore be concluded, that the rule is currently far from acceptable, and that the Law Commission needs to perhaps re-think its position on the matter. A receipt rule will become increasingly beneficial as different modes of acceptance become available through technology. It can also not be disputed that a UK rule would be far more beneficial to the legal systems of both England and Scotland.
KIMBERLEY STAVERS
Principles of Contract (9th ed. 1920) §199
1 Contracts (Rev ed. 1936) §81
Anson, Law of Contract (Corbin’s ed. 1930) 46-47
The two most common rules are acceptance on posting (dispatch) or acceptance on receipt.
See Winifield [1939] 55 LQR 499, at 511.
Dunlop v. Higgins [1848] 1 HLC 381; Household Fire and Carriage Accident Insurance Co Ltd v. Grant [1879] 4 Ex D 216; Re Imperial Land Co of Marseilles (Harris’ Case) [1872] LR 7 Ch App 587; Henthorn v. Fraser [1892] 2 Ch 27
Chitty on Contracts, 28th ed., 1999
See London & Northern Bank [1900] 1 Ch 220
Bruner v. Moore [1904] 1 Ch 305; Stevenson Jacques & Co v. McLean [1880] 5 QBD 346
Telex, telephone, fax, e-mail, and electronic data interchange. See Brinkibon Ltd v. Stahag Stahl und Stahlwarenhandelsgesellschaft m.b.H [1983] 2 AC 34
Adams v. Lindsell [1818] B&Ald 681 at 683
It is rather fictitious to assume that an ‘acceptance of and acceptance’ must be necessary.
As in Germany [BGB §130], Sweden, Norway, Denmark and Poland [Code des Obligations, Art. 70]
Household, etc, Insurance Co Ltd v. Grant [1879] 4 ExD 216 at 220
See Winifield [1939] 55 LQR 499 at 508, Hebb’s Case [1867] LR Eq 9, 12
Henthorn v. Fraser [1892] 2 Ch 27 at 33
The latter being much more likely to keep reliable records of incoming and outgoing mail.
Scottish Law Commission, No 144 [1993] at 4.6
Pollock; Anson, Contract (18th ed. 1937) 27; Chitty, Contracts (19th ed. 1937); Benjamin, Sale (7th ed. 1931)
The Scottish Consumer Council, Prof. David Walker and Prof. William McBryde, for example.
