Different views have been argued against the application of traditional rule like the postal rule, which
was established in 1818 as a legal norm in contract formation. The postal rule came about in a time
where the main and fastest form of business communication was by post. Through the decades many
alternative methods of communication have been developed, including the telephone, telex,
telegraph, facsimile and e-mail.
The postal rule creates an exemption to principle that acceptance is not completed until it is
communicated, by stating that acceptance is complete on posting. Postal rule provides assurance for
acceptor, he knows there is a binding contract as soon as he posts letter of acceptance. offeror can
create certainty for himself by insists on he must receive acceptance before it is binding, he can get rid
of the rule but if he chooses not to then he is subject to limitations of postal communication.
In Adams v Lindsell (1818) the defendant wrote to the plaintiff offering to sell them some wool and
asking for a reply 'in the course of post'. The letter was delayed in the post. On receiving the letter the
plaintiff posted a letter of acceptance the same day. However, due to the delay the defendant's had
assumed the plaintiff was not interested in the wool and sold it on to a third party. The plaintiff charged
for breach of contract.
It was held that there was a valid contract which came in to existence the moment the letter of
acceptance was placed in the post box.
This case established the postal rule. This applies where post is the agreed form of communication
between the parties and the letter of acceptance is correctly addressed and carries the right postage
stamp. The acceptance then becomes effective when the letter is posted. It is rather easy for the parties
to exclude the postal rule, unless the offeror has clearly stated in the terms of the offer that acceptance
must be communicated by other means the offer must be accepted through the terms of the postal
rule. Such a situation arose in the case Holwell securities Ltd v Hughes (1974)
Dr Hughes granted Holwell Securities an option to purchase his house for £45,000. The option was to be
valid 'by notice in writing' within 6 months. Five days before the expiry, Holwell posted a letter applying
the option. This letter was never received by Hughes. Holwell wanted to enforce the option relying on the
postal rule stating the acceptance took place before the expiry of the option.
It was held that by requiring 'notice in writing', Dr Hughes had specified that he had to actually receive
the communication and had therefore excluded the postal rule.
There are further cases highlighting the method of communication in relation to acceptance, where a
method of communication is predetermined by the offeror. Clear wording is required if the method of
communication is to be mandatory. In Yates Building Co v RJ Pulleyn (1975) the acceptance was to be
sent by “registered or recorded delivery post”. The plaintiff sent his acceptance by through the standard
post service. The defendant declined to accept the offer. The courts found that there was a binding
contract in place with the receipt of the acceptance by letter. This ruling was appealed and the court
further outlined the findings by stating the offeror did not state that the only method of acceptance as
outlined would be binding.
Another area that the postal rule strictly tested was the withdrawn or revoked original offer. Under the
postal rule, the letter of acceptance is relevant on posting. Letters communicating revocation come into
effect only when the letter revoking the offer is delivered. In case of Byrne v Van Tienhoven (1880) it was
proven by the plaintiff, they had accepted the original offer by posting a response to the defendant. The
letter of revocation was received after their letter of acceptance had been posted by the plaintiff.
Postal system became increasingly efficient the courts were compelled to examine further policy
considerations in order to determine whether the postal acceptance rule should be retained. Technology
has rapidly advanced and the postal acceptance rule was initially formulated. Prior to the advent of email and the Internet, communication technologies such as the telephone, telex, telegram and facsimile
had been developed. As each of these technologies became a tool of commerce the courts were forced
to fight with the application of the postal acceptance rule.
 Telephone
In Entores v Miles Far East Corporation(1955) difference between the telephone and the postal system
on the basis that communications via the telephone are immediate and therefore similar to face to face
negotiations. It is well established that acceptance of an offer by telephone is subject to the general rule
that acceptance is not effective until communicated to the offeror.
 Telegrams
The application of the postal acceptance rule to telegrams was first addressed in Cowan v O'Connor. This
case held, with justification that where an acceptance is communicated to an offeror by telegram, a
contract is formed when the telegram is given to the post office for dispatch. This decision is based on
the assumption that the sending of a telegram is similar to the mailing of a letter, telegram will be
complete when it is given to the post office. Consequently, it appears that the postal acceptance rule will
extend to communication of an acceptance by telegram.
 Facsimiles (Fax)
Although there has been no detailed legal analysis on the application of the postal acceptance rule to
facsimiles, acceptance of an offer will not be effective until it is received by the offeror. Further the
posting rule does not apply to instantaneous forms of communications. For example in Entores Ltd v
Miles Far East Corporation [1955] the Court held that the posting rule did not apply to an instantaneous
form of communication. The general principle that acceptance takes place when communicated applies
to instantaneous forms of communication. Courts have similarly held that the posting rule does not apply
to acceptances by fax.
What is e-mail?
Before considering on an analysis of the legal principles relating to the formation of contracts and their
applicability to contracts supposedly formed by e-mail, it is essential to examine the process involved in
sending an e-mail.
 E-mail is composed by sender
 Sender activates command to "send" e-mail.
 E-mail is stored on sender's ISP's server.
 The e-mail is transmitted over the Internet. This may involve the e-mail being transferred
between numerous servers before it reaches the recipient's ISP.
 The e-mail is stored on the recipient's ISP's server until it is downloaded by the recipient.
 The recipient reads the e-mail.
Many modern e-mail systems allow a sender to monitor whether an e-mail has been received, opened or
deleted by the recipient. Like facsimiles, these confirmation messages do not provide conclusive evidence
of receipt but they provide some information about the status of the e-mail. Depending upon the e-mail
system involved, the sender may be advised of the time when the e-mail is received by the recipient's
ISP, downloaded to the recipient's computer system or actually opened by the recipient. It is also possible
for users to delete e-mails which have been sent but not yet opened by the intended recipient depending
upon the restrictions imposed by the recipient's ISP and computer system. To a large extent the sender is
in control of the e-mail up until the point it is read by the recipient, or at least is able to monitor the
progress of the e-mail.
While the functionality provided by e-mail systems varies, it is unlikely that a Court will make a
determination regarding the applicability of the postal acceptance rule based solely upon the
functionality of the particular system used by the sender.
With respect, these factors are external to the e-mail communication network and are not determinative
of the "instantaneous" nature of e-mail communications. Where there is a direct link between computers
it is suggested that the e-mail system is a practically immediate form of communication despite the fact
that there may be delays between the sending and receipt of an e-mail message.
If it is concluded that e-mail is a nearly immediate method of communication, the consequence which
generally flows from this conclusion is that the postal acceptance rule will not apply to acceptances
transmitted by e-mail.
However, an argument which may be raised in support of the application of the postal acceptance rule is
that the offeree should not be held responsible for any faults which occur after they have transmitted the
message of acceptance. The foundation of this argument is that the offeree has effectively lost control
over the acceptance and has done everything possible to communicate acceptance to the offeror.
Implicit in this argument is the assumption that the offeror should bear the risk of problems which may
occur after the e-mail is transmitted by the offeree.
The success and total volume of commercial transactions which are currently conducted over the
Internet indicate that contracting parties do not need a rule such as the postal acceptance rule to
overcome any delays experienced in communicating by e-mail.
This issue is not as easily determined where the message is not directly delayed to the offeror as is the
case with telex and facsimile communications. In these situations it is possible for the message to be
placed within the custody and control of the offeror by delivery to its telex or facsimile machine or its email server, but not to come to the attention of the offeror.
Consequently, contracting parties cannot predict with any certainty when an acceptance transmitted by
e-mail will be effective. However, this uncertainty can be avoided by parties to a contract if they exclude
the operation of the postal acceptance rule.
Although it is often assumed that a binding contract will not come into operation until the e-mail
message is received by the offeror, to avoid any uncertainty the terms of an offer should clearly specify
when an acceptance of the offer will be effective. The uncertainty surrounding the applicability of the
postal acceptance rule to e-mail communications can easily be avoided by careful drafting.
In summary, while the postal acceptance rule remains deeply well-established in our legal system, it is
unlikely that the Courts will extend the scope of this rule to include acceptances communicated by email. Therefore, the general rule that rules the acceptance of offers will apply and an acceptance which is
sent by e-mail will not be effective until it is communicated to the offeror. This conclusion is dependable
with the approach taken with other forms of instantaneous communication and agreement with the
current policy of the Courts to restrict the scope of the postal acceptance rule.
Issue
1 This is an advertisement constituted an illegitimate offer for sale, and which are prohibited by Flora &
Fauna Ordinance (Chapter 469). It was held that the advertisement in question constituted in law
an invitation to treat and not an offer to sell; therefore this is an offence which the charges could not be
established.
2.In this question, an invitation to treat was made by Mario when he advertises in weekly newspaper.
Mario was inviting customers to make a proposal to them. When customer considers the offer then
anyone responding and asking for the items would be accepting, they are actually making the proposal
and now it up to Mario to accept it or not. Hence, proposal is made by Buyer when he is asking. . This
would mean the seller would be bound and could cause difficulties if, for example, the stock had run out.
Cases are determined on the objective intention behind the advertisement. The courts will consider
whether: the wording is sufficiently clear to be an offer, the advertiser intended to be bound and there
are issues of limited supply.
Principle - Generally, advertisements are invitations to treat, so the person advertising is not bound to
sell to every customer. Such a situation arose in the case in Partridge v Crittenden [1968).
The defendant placed an advert in a classified section of a magazine offering some “Bramble Finches” for
sale. Section 6 of the Protection of Birds Act 1954 made it an offence to offer such birds for sale. He was
charged and convicted of the offence and appealed against his conviction.
It was held that defendant's conviction was invalidated. The advert was an invitation to treat not an offer.
The literal rule of statutory interpretation was applied.
An offer and an invitation to treat are two different aspects. For an offer to be capable of becoming
binding on acceptance, the offer must be definite, clear, and final. If it is a mere preliminary move into
negotiation which may lead to a contract, it is not an offer but an invitation to treat. The offerer must
have been initiating negotiations from which an agreement may or may not in time result. The important
point to note is that, since an invitation to treat is not an offer, but rather an exceptional preliminary to
an offer, an invitation to treat is not capable of an acceptance which will result in a contract.
An invitation to treat is defined as an action inviting other parties to make an offer to form a contract,
whereas an offer is an expression made by offeror to offeree communicating the offeror’s willingness to
perform a promise. The distinction is important because accepting an offer creates a binding contract
while accepting an invitation to treat is actually making an offer. Advertisements, brochures and auctions
are usually an invitation to treat. The general rule is that advertisements are invitations to treat not
offers. It is important to note that generally, an offer should be made to a particular person or class of
persons.
Therefore advertisement, usually is an invitation to treat, is defined as a communication media use to
influence the audience to take some action for the particular products. Most commonly, the desired
result is to attract the audience attention with respect to a commercial offering. Advertisements have no
sufficient offer to contract. An advertisement is usually silent on matters which are valid to contract such
as the availability of the product or service advertised. Thus, advertisement is an expression of
willingness to negotiate, inviting the reader to request the service or goods prescribed.