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Posting Rule
Last updated: 08-Jul-2015

In Henthorn v Fraser [1892] 2 Ch 27, Lord Herschell stated the rule relating to the acceptance of offers by post as follows, at p. 33:

Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.

Entores Ltd v Miles Far East Corporation [1955] 2 QB 327, Court of Appeal, per Denning LJ:

In all the instances I have taken so far [telephone and teleprinter], the man who sends the message of acceptance knows that it has not been received or he has reason to know it. So he must repeat it. But suppose that he does not know that his message did not get home. He thinks it has. This may happen if the listener on the telephone does not catch the words of acceptance, but nevertheless does not trouble to ask for them to be repeated: or the ink on the teleprinter fails at the receiving end, but the clerk does not ask for the message to be repeated: so that the man who sends an acceptance reasonably believes that his message has been received. The offeror in such circumstances is clearly bound, because he will be estopped from saying that he did not receive the message of acceptance. It is his own fault that he did not get it. But if there should be a case where the offeror without any fault on his part does not receive the message of acceptance—yet the sender of it reasonably believes it has got home when it has not—then I think there is no contract.

My conclusion is that the rule about instantaneous communications between the parties is different from the rule about the post. The contract is only complete when the acceptance is received by the offeror, and the contract is made at the place where the acceptance is received.

LJ Korbetis v Transgrain Shipping BV [2005] EWHC 1345 per Toulson J:

11. If the letter is wrongly addressed, very different considerations apply. Common sense dictates that it is unfair to the intended recipient that he should be bound by something which he is unlikely to receive because of the fault of the sender. Moreover, if he is to be so bound, such a rule would have the potential to give to the careless would-be acceptor an unfair advantage. Suppose that the would-be acceptor realises that the letter or fax has been sent to the wrong address or number. On the owners' argument, a contract would already have come into existence. In the practical world, the acceptor would then have an option whether to reveal the contract to the offeror, or to keep silent about it. If the market had moved, this could be a valuable option. The would-be acceptor, in that situation, would also have the opportunity to nurse his option by waiting to see how the market moved before deciding whether to reveal the existence of the contract. Even if the law crafted some form of rule of good faith to prohibit a party from acting in such a way, such a rule could in the nature of things be difficult to enforce. It is not hard to envisage circumstances in which only the would-be acceptor would know when he discovered the true position.

12. Interestingly, the postal rule itself began with a case of a misdirected letter, but in that case it was the offer which was misdirected. I refer to Adams v. Lindsell. There the offeror’s letter to sell goods at a certain price, if the offer were accepted in due course of post, was misaddressed, but it was accepted promptly by letter on its actual receipt. The court considered it fair that the consequences of the delay should lie at the door of the party responsible for the delay, i.e. the offeror. On the facts of that case, the goods had been sold by the offeror to a third party after it would have expected to receive a reply, if it had sent its offer letter to the correct address, but before it in fact received the offeree’s letter of acceptance. Considering that it was only fair that the adverse consequences of delay should rest with the party responsible for the delay, the court held that acceptance was complete on the offeree sending its letter of acceptance, so establishing the postal rule.

13. If in that case the delay had been occasioned by the offeree misdirecting its letter of acceptance, rather than the offeror misdirecting its letter of offer, it is difficult to see that the court would have arrived at the result which it did.

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