CONTRACT LECURES TRANSCRIPTS 51 mins 49 secs
C. STRICKLAND
LECTURE 2
Track/Slide 22 06.03
Finally, we can consider the position with regard to postal acceptances.
The postal rule or dispatch rule is basically the opposite of the general or receipt rule.
In Henthorn v Fraser 1892 Lord Herschell stated:
‘If circumstances suggest that post was in the contemplation of the parties as a method
of communicating acceptance, then acceptance is complete on posting.’
Thus, for letters of acceptance sent by post the acceptance is complete NOT on receipt
by the offeror BUT WHEN THE LETTER IS POSTED (DISPATCHED) by the
offeree. This applies even if the letter actually never arrives. However, the offeree
must:
i.
be able to prove that he posted it and he can use registered or
recorded delivery for this purpose;
ii.
that he used the correct address, and that
iii.
he put a stamp on the letter.
An incorrectly addressed or non-stamped letter will probably not be
seen as an acceptance.
The key case is ADAMS v LINDSELL 1818.
Due to the inadequacy of this rule from the offeror’s point of view (there is a period
of time when he is contractually bound and he does not know this for sure) most
offerors will TRY TO AVOID the postal rule by EXPRESSLY STATING in the offer
that IF POST IS USED then the acceptance IS ONLY VALID ONCE THE LETTER
ACTUALLY ARRIVES –
See HOLWELL SECURITES v HUGHES 1974.
In this case, the defendant, Dr Hughes, had an agreement with Holwell Securities, the
plaintiffs, by Clause 1 of which Holwell Securities had an OPTION ( that is, an offer)
to buy Dr Hughes’ home for £45,000 SO LONG AS the option to buy was exercised
within 6 months of the date of the agreement.
Clause 2 of the agreement stated that the OPTION was to be exercised ‘by notice in
writing to the defendant’ that is,to Dr Hughes.
Although Holwell Securites posted the letter accepting the option to purchase within
the 6 months (by three days), the letter never arrived at dr hughes’ house.
Holwell Securities tried to rely on the POSTAL RULE of acceptance but in the Court
of appeal it was held that the postal rule had been avoided by dr hughes by use of the
express words ‘notice in writing to’.
Another interesting case is Yates Building Co Ltd v Pulleyn and Sons Ltd 1975. In
this case Pulleyn and Sons were selling plots of land at Haxby in Yorkshire. Yates
was a buyer of the plots. What was agreed between the two sides was that Yates
would buy one set of plots immediately and would be given three options to buy the
remaining plots in three stages over the next few years. Each time an option to buy
was exercised the take up of the option had to be made by May 6th in the relevant year.
Yates successfully took up the second and third lot of plots but problems arose with
the fourth attempt. In the option clause it stated that the option had to be exercised by
notice in writing by 6th May 1973 and had to be sent by registered or recorded delivery
post to the registered office of Pulleyns or their solicitors.
Yates sent the deposit for the fourth lot of plots and it got to Pulleyns solicitors by 6th
May. However, they sent it by ordinary post not registered or recorded delivery.
Pulleyn’s solicitors thus sent the letter back plus cheque stating that it had not been
sent properly.
Since this letter from Pulleyns got back to Yates’ solicitors after 6th May it was too
late to take up the option. Yates took the matter to court for a declaration that a
contract existed and asked for specific performance. The trial judge said there was no
contract because ordinary post had been used. On appeal to the Court of Appeal, it
was held that:
i.
the option clause was an offer – and the phrase ‘notice in writing’ in
the option clause had ousted the postal rule of acceptance
ii.
the option had been taken up in time because the requirement for
registered/recorded delivery was not a mandatory part of the offer and
so long as the option was taken up in time, that the letter actually was
received by the seller’s solicitors in time, it made no difference that it
was not sent by registered mail. To insist on only one method of
acceptance, the language would have to be very specific.