The Postal Rule
Offer and acceptance is the principal part in the contract law which ensure the creation as well as the fulfilment of the agreement made between the two parties. An offer need to be made to a specific person: it can be made to the whole world Carlill v Carbolic Smoke Ball Co. 1893 1. However, a contract is perfected only when acceptance takes place. Acceptance must be communicated to the offeror Carlill v Carbolic Smoke Ball Co. 1893. The Postal rule is a controversial part of The Contract law which makes an exception to the general rules of offer and acceptance, whereby, acceptance is effective from the time that the letter of acceptance is posted, irrespective of delay or failure of delivery. Its prerequisites are:
Offer made by post received by offeree
Acceptance made effective when posted
Revocation only possible if the offeree receives it before acceptance is made through post.
However, the rule doesn’t apply when the offer excludes acceptance through post. The offeror must be clear and precise about the form in which the acceptance takes place. 2
Postal Rule Creation
The postal rule came into existence as an aftermath of the case Adams v Lindsell 1818. 3 This was an English Contract case which included in two parties involved for the sale of wool. The defendants made an offer through post to the plaintiffs for selling of certain fleeces of wool on 2nd September stating that they wanted a response by 7th of September. The letter of offer was wrongly addressed and the plaintiffs didn’t receive it until 5th of September who then posted acceptance on the same day but was not received by the defendant until 9th of September. Having not received a response, defendants sold the wool to someone else on 8th September. Defendants argued that they weren’t bound by the contract as acceptance wasn’t made at the stipulated time frame. Upon hearing from the court, the judge announced that it wasn’t conceivable for any contract to be accomplished through post, the judge argued that if the defendants were not bound by the contract because the acceptance wasn’t received on time, the plaintiffs could also argue that the contract wasn’t binding because they didn’t receive for any information that the defendants had received the acceptance and this would go on for an indefinite time. Thus, in this case there was a contract in existence before the wool was actually sold to the third party, despite the fact that acceptance wasn’t received by the defendant. The defendant was at breach in the contract.
This case led to the creation of the Postal Acceptance Rule. Henthorn v Fraser 1892 4 was the case in which the court decided the exact time of acceptance, i.e. the exact time when the letter of acceptance is posted.
Application of The Postal Rule
With respect to geographical locations when businesses deal with each other, it is certain that a direct communication is possible when they are nearby. On the other hand, if the businesses are distant from i.e. in cases of indirect business or distance contracting each, instantaneous mode of communication cannot be a certain thing to achieve. So, problems may arise between the parties with regards to the contracts such as offer not reaching to the offeree in time, delay in communication for acceptance or refusal of offer, offer revocation and so on. As a method to eradicate such problematic issues, the court created the Postal Rule5 whereby, Acceptance takes place at the time of post. This rule is still in continuation despite the modern measures of communications being established which safeguards the parties from contractual disputes because as of now it will be easier for the parties to gather for evidence regarding that letter of acceptance has been sent to the offeror for attention or receiving.
Electronic Transactions Act 1999 (Cth)
Electronic Transactions Act was introduced on 15th March, 2000 with an objective to set a framework for recognition and acknowledgement of the information technology with regard to social prosperity of Australia, bolster the use of electronic transactions, encourage confidence for electronic transaction usage in business and community and to enable for business and community to use electronic communication in dealings with the government. It is based upon United Nations Commission on International Trade Law’s Model Law on Electronic Commerce (UNCITRAL) which attempts for benefit of the general public through development of Information Technology (IT). 6
Electronic Transactions Act 2000 (Vic)
A report was published by the Attorney General’s E-Commerce Expert Group during the period of April 1998, which stated that the country of the offeror conducting business regulates the contract in case acceptance related to the contract arises at the offeror’s place of business, unless agreed by the parties. 7 This act commenced on 1st September, 2000 with objectives to create legal requirements for establishing and validating electronic communications, allowing third parties to produce electronic communication documents, for recording and storing of documents in electronic forms, determine the time and place of dispatch of the documents and to ensure that the electronic communication binds the originator of the document. 8
Impacts of The Electronic Transactions Act 1999 (Cth)
And Electronic Transactions Act 2000 (Vic)
on The Postal Rule
Electronic Transaction Act 1999 (Cth) mainly emphasizes on facilitation, verification, validation, storing and reproduction of the electronic transactions. Electronic transactions Act 2000 (Vic) takes into consideration of storing the time record of the electronic transaction and states that electronic communication is the time when it enters into the electronic system. This reflects the application of the postal rule in emails which are not received by the offeror unless the offeror operates the system. 9
As a whole, these two Acts have given new experiences and insights to the use of postal guidelines in the modern age. After instantaneous communication exists, postal principles will in any case be utilized to decide clashes in business that operate distantly. Postal guidelines have been corrected and built up from time to time in a considerable measure since its creation, in order to adapt according to the existing timeframe, technological advances and also as per the needs of the progressing business demand. 10
Application of Postal Rule on Email and other forms of Modern Communication
With the outburst of technology, the courts must be on an alert on if the coverage of postal rule can be extended to the other advanced forms of communication namely instantaneous communication. Modern means of communication ascertain the sending and the receiving of messages on an instant, so the Postal Rule application can be seen obsolete in this regard. Alternative means of communication is inclusive of Telephone, Fax, Electronic Mails (Email)
Telephone is a modern form of communication where contracting parties can verbally discuss upon the formation, conditions, revocation, acceptance and other related aspects required for creating and operating a legal contract. It is effective in the sense that communication takes place within an instant and that communication between the distant parties is also available easily. But, in Entores v Miles Far East Corporation the court drew a distinction between postal rule and telephone in the sense that communications through telephones are virtually instantaneous and are similar to face to face communication between the offeror and the offeree such that general rule of acceptance is not effective until communicated to the offeror. The courts should consider applying postal rule in telephone as this avoids contract related delays and also is simple to carry out.
Fax is another form of instantaneous communication where offeror and offeree may send messages though the use of fax machines. Whenever an offer by fax is accepted, it is deemed to be accepted as it is printed out by the offeror’s fax machine irrespective of whether or not anyone is there to receive it. In NM Superannuation Pty Limited v. Hughes (1992) the NSW Supreme Court decided that if the fax machine is switched on, the owner indicates that s/he is ready to accept messages and this would be sufficient for the communication of notice, even if it arrives after normal hours. Same rules apply for other forms of electronic communication as well but the court is not in the favor of applying postal rule over instantaneous modes of communication stating that effective acceptance must be communicated. However, in my view applying postal rule on fax will be a step forward in the growth of the Postal Rule itself as it will be able to grasp the current needs of quick paced and fastmoving business demands.
c. Electronic Mail (Email)
Electronic mails are an integral part of modern world where people communicate with each other in a digital method with the help of computer networks. Basically,