Theattributes of a letter are governed and under the purview of the postal rule.Generally, in contract law, an offer is said to be accepted when the acceptanceis communicated to the offeror. But in case of letters, an acceptance is saidto take place the moment the letter stating the acceptance is posted by theofferee (the person to whom the offer is made).
The postal rule works on thefollowing principles viz. : #offer made by letter is effective only after it is received by the offeree#acceptance is effective as soon as the letter of acceptance is posted by theofferee.#for revocation to be effective, the intimation about revocation shall bereceived by the offeree before the letter of acceptance is posted by theofferee.Thepostal rule is also termed as the arbitrary rule because it was framed as inthe early 19th century, no proper regulation on acceptance andformation of contract through letters was present and moreover no other effectivemeans of communication was available.Postalrule states that once the letter of acceptance is posted, postal acceptancecomes into existence2. the Post Office3 is considered as the agent of the offeror. The postal rule ofacceptance is also known as the rule of convenience4. Reasons for creation of postal ruleThis rule was created in the year 1818 during the caseof Adam vs Lindsell5 where, the problem of clear establishment as to when thecommunication was made, whether the communication was made, and if there wasany contract formation surfaced and henceforth the court had to establish aruling in this regard.
The main reason behind creation of this rule was tosafeguard the offeree from any wrong doing causing revocation of the offer whenthe offeree was in the position to the accept the offer and the offer had beencommunicated to the offeree. Famous cases to be cited in this regard are :-Adam vs Lindsell (1818)Henthorn vs Fraser (1892) The postal rule led to a lot of effectiveness in thecontract making procedure as :# It facilitates the principal of “consensus ad idem”and stresses that the minds of offeror and offeree have greater chance ofcoinciding at the time when offeree posts the letter of acceptance than at thetime when letter of acceptance is received by the offeror# The post office is considered as an agent of theofferor thus, when the post office receives the letter of acceptance from theofferee, acceptance is said to be completed. The only drawback being encountered in this rule isthe delay and gap caused in sending or receiving the letter of offer oracceptance, as the case may be, and both the parties exercise no control overin the transmission6 process. Continued application of postal ruleAs the postal rule is ancient, its usage in currenttime has become a matter of debate after the advent of new and faster means ofcommunication. Business in today’s world has expanded beyond regionalboundaries and instances of transactions has also increased numerously.
Internet is currently a major factor aiding the business process. Postal rulewas made effective to solve the disputes arising out of delay in the receipt ofletter of acceptance. It determines whether the communication was made, whenthe acceptance was sent and whether the contract was formed.
But the postal rule has undergone a lot of changessince its primal enforcement as to keep up with the time, but still someelements are lacking as in :· If a letter lost, thereis no method to determine if it was addressed properly7 or not. And whetherit contained the acceptance by the offeree.· The technologicaladvancement has made postal system almost deplete.· Post office cannot belegally termed as an agent of offeror and the post man is not authorised todeliver contractual documentation. Impactof electronic transactions act 1999 (cth) and electronic transactions act2000(vic) on postal rule Theelectronic transactions act 1999 came into force on March 2000. It wasbasically created to spread awareness about the availability and ease ofconducting activities via electronic transactions.
Same is the applicabilityfor electronic transactions act 2000Themain significance of this act is that it gives same status to electronictransactions as that of paper based transactions, for legal purposes. But apartfrom this, the act validates electronic transactions and proposes to infusemore acceptance to electronic means of communication for conducting businessrelated activities. Thecommonwealth electronic transactions act states in section 8(1) “forthe purpose of law a transaction is not invalid because it took place whollyor partly by means of one or more electronic communications.” The postal rule does not get much altered by theact but in terms of email, the Electronic Transactions Act defines that “thetime of receipt of an electronic message is when it enters the addressee’sinformation system. Moreover, it does not specify whether the sending orreceipt of the acceptance completes the formation of a contract8.” But,it is very important to note that the act was not specifically made keeping inmind the formation of contracts but it does outline the prepositions of anycontract that is formed through electronic communication. Someimportant cases that outline the effects on contract by email under the purviewof this law are:- #Nunin Holdings vs Tullarmarine Estates#Asher vs Goldman Sachs & Co#Reese Bros Plastics vs Hamon-Sobelco Australia Pvt ltd Should postal rule apply to email andother forms of modern communication Postalrule, created in the year 1818 was made after considering contracts by letters13,which is a non-instantaneous form of message.
At that time, only post officeservices served as means of reliable communication. But today, the scenario haschanged completely. Internet has taken over on majority of operations and a bigpart of the business in the world is carried out over the internet. This alsoleads to a thought process which considers the rapid revolution in the means ofmodern communication might make the postal rule redundant. A very famousexample being, “Entores ltd vs Miles far east corporation (1955) 2 QB 327″whereby the court held that postal rule does not apply to acceptance by telex,as telex is an instantaneous form of communication. In the same way when theacceptance takes place over telephone or fax, the postal rule does not apply.
Asthe postal rule works on the principal that acceptance is complete when theofferee posts the letter of acceptance irregardless of the fact that the letterof acceptance has reached offeror or not, “Byrne vs Van tienhoven (1880) 5 CPD344”. Even the loss of letter in transit or before it reaches the offeror didnot relieve the offeror from the responsibility of carrying out the contract.The modern means of communication brought in a great aid to increase transparencyby introducing the availability of receipt system.
This system helps theofferor to know if the acceptance has been forwarded to him, and the offereealso gets to act in time in case the acceptance is not yet posted to theofferor because latest means of communication provide the option to check ifacceptance has been sent or not. Anotherinteresting case being “Brinkibonltd vs Stahag-Stahl und Stahlwarenhandelgesellschaft mbh gmbh” In”Tallerman & Co Pvt ltd vs Nathan’s Merchandise (1957) 98 CLR 93, 111-112″, Dixon CJ and Fullagar J stated “the general rule is that a contract is notcompleted until acceptance of an offer is actually communicated to the offeror,and a finding that a contract is completed by the posting of a letter ofacceptance cannot be justified unless it is to be inferred that the offerorcontemplated and intended that his offer might be accepted by the doing of thatact.14″UniformComputer Information Transactions Act 2000 section 204(4) states “if an offerin an electronic message evokes in electronic message accepting the offer, acontract is formed when an electronicacceptance is received.15″Emailis one of the most common forms of digital messaging and means of digitalcommunication all over the world.
Butstill, the status of email is quite ambiguous. The scope of ELECTRONIC COMMERCEREGULATIONS ACT does not extend to email. There is still no common agreement todecide whether email is instantaneous or non instantaneous form ofcommunication.
Moreoverno formal authority is yet operational to monitor the email operationability.Although a lot of arguments have been made upon the categorisation of emailsfor the purpose of forming contracts. One such argument states “postal ruleshould apply to email as email is neither direct nor reliable16 and theperson sending the email does not know immediately whether the communicationwas successful”17. And also once the offeree has sent the mail statingacceptance, its no more in his control to retrieve the email back. Anotherargument being, in email also, the risk of onus is put on the person makingselection of the means of communication. According to Edwards and Waelde,”email is deemed to be received when sender receives the recipientsacknowledgement of the delivery18.”Thereare arguments for and against the inculcation of email under the postal rule.But this discussion makes it quite obvious that postal rule, though almost twocenturies old, can still be applied on modern non instantaneous forms ofcommunication.
A recent case in the court of Singapore backs this claim. Buttelegraph, telephone and telex are out of the purview of postal rule. Footnotes :1 https://en.
wikipedia.org/wiki/Contract#Offer_and_acceptance2 Stephen Graw, 2011, An Introduction to the Law of Contract, 7th Ed., Thomson Reuters.3 Brinkinbon Ltd vs Stahag undStahlwarenhandelsgesellschaft mbh (1983) 2 . A.C.
34 at 414 (1999) 1 EBL 5,6, Issue 55 (1818) 1 B & Ald 6816 P.Fasciano “Internet Electronic Mail : A lastBastion for the Mailbox Rule” . (1996-1997) 25 Hofstra Law Review 15427 D.M.
Evans ‘The Anglo-American Mailing Rule :Some problem of Offers . and Acceptance in contracts bycorrespondence” (1966) 15 International and . Comparative Law Quarterly 553-5758 Formation of Contracts by Email – Is it Just the Sameas the Post? by Sharon .
Christensen (2001) 1(1) QUTLJ 22.9 1994 1 VR 47 at 83.10 (1955) 2 QBD 327.11 1991 1 QB 129.
12 (1988) 5 BPR 11-106.13 D.Capps “You’ve got mail” (2003) N.L.J 90614 L.
Koffman (2001) “The Law of Contract”. See also A.W.B Simpson(1975), . 91 LQR 24715 D.
Capps “You’ve gotmail” (2003) N.L.J 90616 Clearly the delay in e-mail communication will not be as long as thedelay . using postal services, butuncertainity whether a message has arrived could . be just as great.17 Edwards,Waelde (2009) law and the internet, p.10518 Asabove, p.105