Analysis of the postal rule and its extension to the private courier services

1. Introduction:

Adams v. Lindsell[1], though accepted to be the case that brought forth the postal rule, was not the first case to discuss postal acceptances. This honor falls upon Kennedy v. Lee[2] where Lord Chancellor Elden says:

“The party seeking the specific performance of such an agreement, is bound to find in the correspondence… a proposal met by that sort of acceptance, which makes it no longer the act of one party, but of both.[3]”

 Treitel believes that Adams v. Linsell was not intended by the court to be a general rule that should be followed in every case but was to be an isolated decision.[4] This is so because Lindsell had sent a letter to Adams agreeing to sell him wool but had misaddressed the letter. Therefore, Adams received the letter late, and could not reply in time. The court found for Adams and it can be inferred that the decision of the court was based on the principle of unjust enrichment enveloped by the postal rule. Because, allowing Lindsell to dishonor the contract was unjust, as, had he not mistaken the address, Adams would have received the letter in time and the contract would be binding. Treitel believes that Adams v. Lindsell did not intentionally create the rule but was erroneously inferred.[5]

In light wherein, the judgement that made the rule itself allegedly did not intend to make the rule, it is imperative to look as to why then is this judgement discussed so much. In addition, there are other reasonable justifications that need to be considered. Thus, the aim of the essay is to analyze the justifications provided for the postal rule by various judgements and to discuss its applicability to include courier services as well.

1.1  Ad Infinitum Justification:

The first justification is based on the principle of ad infinitum. Lord Ellenborough in the judgement of Adams v. Lindsell says that:

“no contract could ever be completed by post. For if the [offeror] were not bound by their offer when accepted by the [offeree] until the answer was received, then the [offeree] ought not to be bound till they had received the notification that the [offeror] had received their answer and assented to it. And so it might go on ad infinitum[6]”

Treitel in The Law of Contracts, by Edwin Poole, opines that, it would be reasonable to conclude that the acceptance was concluded when the notice of the said acceptance reached the offeror regardless of whether the offeree was aware of it or not. Such a scenario will not lead to an infinite number of letters.[7] This principle is also one that has been accepted in India, wherein the Indian Contract Act, 1872 stipulates “the communication of acceptance is complete…as against the acceptor, when it comes to the knowledge of the proposer.[8]” Apart from the argument presented above, the postal rule was practically more applicable in the 19^th Century. In the modern world, a clause can be inserted in the contract itself that the acceptance would become binding from the time of receipt and not from the time of posting. This extra clause in the contract negates the rule set forth by the court and makes the rule redundant.

1.2  “Common Agent” Justification:

Another important justification provided by the courts is that the post office acts as the common agent for both the parties. This principle was discussed in the case of Household Fire and Carriage Accident Insurance v Grant[9] and Thesiger LJ compounded that:

“…if the post office be such common agent, then it seems to me to follow that, as soon as the letter of acceptance is delivered to the post office, the contract is made as complete and final and absolutely binding as if the acceptor had put his letter into the hands of a messenger sent by the offeror himself as his agent to deliver the offer and receive the acceptance.”[10]

However, one fails to understand how the post office can be the ‘common agent’. The judgment does not give any reason for making the post office the common agent. The postal rule in this regard is strongly criticized by Bramwell LJ, dissenting, stating:

“I am at a loss to see how the post office is the agent for both parties. What is the agency as to the sender? Merely to receive? But suppose it is not an answer, but an original communication? What then? Does the agency of the post office depend on the contents of the letter?”[11]

In addition to Bramwell’s perspective, it is also important to note that the agency of the Post Office is only limited to the extent of ‘transmission’ and not ‘reception’ and therefore the contents of the sealed letter cannot be said to have been communicated to the Post Office, as it is just the letter that is received, and not its contents.[12] Therefore if the contents of the letter are not communicated, one cannot realistically hold the offeror bound by the letter of acceptance on the basis that its agent (the post office) has received the letter, when it itself has not practically received the letter.

1.3  “Evidential Difficulties” justification:

This justification is based on the assumption that people generally do not keep records of the letter that they have posted to others and what was the content of the said letter.[13] This is why the concept of postal rule is justified because it validates the contract as soon as the communication is put into motion. However, as stated by Treitel[14] that just because people generally do not keep records of the letters they send and receive is not a reason strong enough to inculcate a rule. As Thesiger LJ admits:

 “It is impossible…to adjust conflicting rights between innocent parties, so as to make the consequences of mistake on the part of a mutual agent fall equally upon the shoulders of both.”[15]

1.4  Problems with Postal Rule:

Apart from the justifications, the postal rule also poses many problems. The courts have to deal with situations wherein the letter was never received by the offeror and instead was lost or got delayed due to myriad reasons. It is illogical and impractical to hold someone bound to a contract when he/she has not received the acceptance at all. Still this aspect was completely ignored by the English Courts in the case of Dunlop v Higgins,[16] wherein the letter was delayed due to bad weather. The court justified the rule by saying that, if the offeror has not received the letter, it is his duty to “make enquiries”. A greater burden then, evidently falls on the shoulders of the offeror and not equally as Thesiger LJ had admitted. It is unjust to make the offeror wait for the letter of acceptance perpetually and to presume that an acceptance is on its way where instead there may be a possibility that the offer is not accepted at all and therefore no communication is received. This would bind him not to sell his goods somewhere else, which in the practical world is next to impossible.

The only good, as Treitel opines, that comes from the postal rule is that in certain cases, the postal rule provides more predictability. “It serves a useful function in limiting the offeror’s power to withdraw his offer at will”[17], but the question then arises, that do the pros outweigh the cons and is it justifiable to impose more responsibility on one party even though they may be as innocent as the other. As Bramwell LJ, vehemently puts it: “Mischief may arise if my opinion prevails. I believe equal if not greater, will, if it does not prevail.”[18]

1.5  Applicability of Postal Rule in the modern world:

In the modern world of emails, telephones and telefax, the applicability of the postal rule is close to negligible[19]. The reason for this is that when the offeree sends the letter of acceptance, it instantaneously reaches the offeror and comes to his knowledge. In addition, if there is a problem with the communication, that it is delayed or wrongfully sent, the very nature of the communication makes the offeree conscious that the communication has not been completed, thus making it the responsibility of the offeree to ensure the success of the communication.

2. Extension of the postal rule to Courier Services

Courier is a modern form of communication that provides for a quicker and a logistically sound delivery.[20] To answer the question whether the postal rule should be extended to courier services as well, we need to look at the foundations that the postal rule is based on. The Post Office is considered to be the agent for both the parties because it is presumed that it, in its sacrosanct nature, due to the fact that it is a government organization, will not act biased. However, this may not be the case with a private organization, which may be biased to one party, thereby it may intentionally hamper with the transportation of the letter. The letter would be binding from the date of posting but would reach the offeror intentionally late, thereby providing an unjust added advantage to the offeree. This makes the offeror predictable as the contract is binding from the date of posting the letter, but the performance would only start after the contract practically reaches the offeror. Nevertheless, this reason alone cannot be the justification for not extending the rule to courier services. The real reason then lies in the fact that if the postal rule is myriad with problems, it should then, not be extended to include courier services as well.

3. Conclusion

The application of the postal rule, in the 21^st century modern world is too outdated. Even in the 19^th century, it received much criticism from judges, including its creators (Thesiger LJ). In a world where speed is everything, the rule is like an ageing watchdog, whose purpose is irrelevant today. Therefore, the postal rule should be regarded as more of a museum piece as a symbol of historic law whose days in the modern world are fast numbered.

List of References

1. Adams v. Linsell, (1817) 3 Mer. 441.
2. Alexander Richmond, Rationale & relevance of the postal rule of acceptance in the 21st century, http://www.academia.edu/4684620/Postal_Rule, (Last visited, Oct. 14, 2021).
3. Dunlop v Higgins, (1848) 1 H.L.C. 381.
4. Edwin Poole & Treitel, The Law of Contract (13th ed. Sweet & Maxwell 2011).
5. Going Postal: An Examination of the Postal Rule and Its Modern-Day Relevance 4, http://ssrn.com/abstract=1603488 (last visited Oct. 14, 2021).
6. Household Fire and Carriage Accident Insurance v Grant, (1879) 4 Ex. D. 216 CA
7. Indian Contract Act, 1872.
8. Kennedy v. Lee, (1818) 1 B&A 681.
9. The Law of Contract, 11th Edition, 2003 at page 25; Going Postal: An Examination of the Postal Rule and Its Modern-Day Relevance 3, http://ssrn.com/abstract=1603488 (last visited Oct. 14, 2021).

[1] (1818) 1 B&A 681

[2] (1817) 3 Mer. 441.

[3] Ibid.

[4] The Law of Contract, 11th Edition, 2003 at page 25; Going Postal: An Examination of the Postal Rule and Its Modern-Day Relevance 3, http://ssrn.com/abstract=1603488 (last visited Nov. 8, 2014).

[5] Going Postal: An Examination of the Postal Rule and Its Modern-Day Relevance 4, http://ssrn.com/abstract=1603488 (last visited Nov. 8, 2014).

[6] Adams v Lindsell 1818 1 B&A 681 at page 683

[7] The Law of Contract, 11th Edition, 2003 at page 26

[8] Indian Contract Act, 1872

[9] (1879) 4 Ex. D. 216 CA

[10] Ibid.

[11] (1879) 4 Ex. D. 216 CA

[12] Edwin Poole & Treitel, The Law of Contract (13th ed. Sweet & Maxwell 2011)

[13] Going Postal: An Examination of the Postal Rule and Its Modern-Day Relevance 7, http://ssrn.com/abstract=1603488 (last visited Nov. 8, 2014).

[14] Edwin Poole & Treitel, The Law of Contract, at page 26 (13th ed. Sweet & Maxwell 2011)

[15] (1879) 4 Ex. D. 216 CA

[16] (1848) 1 H.L.C. 381

[17] Edwin Poole & Treitel, The Law of Contract, at page 27 (13th ed. Sweet & Maxwell 2011)

[18] (1879) 4 Ex. D. 216 CA at page 238

[19] Edwin Poole & Treitel, The Law of Contract (13th ed. Sweet & Maxwell 2011)

[20] Alexander Richmond, Rationale & relevance of the postal rule of acceptance in the 21st century, http://www.academia.edu/4684620/Postal_Rule, (Last visited, 8^th Nov, 2014).