OCR A2 Law - The Law of Contract - Formation of a Contract - Acceptance (2)

Acceptance usually occurs in 1 of 2 ways via instantaneous methods or via the post.

Postal rule: Acceptance via this method is valid when the letter has been sent, so long as the letter is correctly stamped and addressed. It is still valid if the letter is lost, destroyed or if it never got received.

This was established in the case of "Adams v Lindsell". In this case an offer was made to sell wool by post. A letter of acceptance was posted on the 5th and was valid on the 9th September. It was held the contract was made on the 5th, when the letter of acceptance was posted. This was confirmed as 'good law' in "Household Fire Insurance v Grant". In this case Grant was accepted as a shareholder and a letter of acceptance was posted to Grant but was never received. It was held the contract was still valid, as the contract was formed when the company posted the letter.

AO2: This rule seems harsh and unfair as the offeror is in a contract he doesn't even know about until the letter is received. Problems could arise if the offeror revokes or sells the goods on to another person. However, judges find the rule reasonable and convenient as the offeror starts the negotiations and therefore, must bear the burden of the delay. It could be classed as an out-dated principle. However we can exclude the postal rule by using a clause.