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Contract: Essential Requirements and Formation

Communication of acceptance and the postal rule

  • 3 things to know
  • Components 2 and 3

Overview

General rule on communication of acceptance and postal rule.

What you need to know

Answer each one before you reveal it.

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Key term

State the general rule on communication of acceptance.

Numbers

Where instantaneous communication is used, where is the contract made?

Numbers

Which case approved the Entores approach in the House of Lords?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    State the general rule on communication of acceptance.

    Model answer

    Acceptance normally takes effect when it is actually communicated to the offeror. An uncommunicated acceptance leaves the parties without a contract.

  2. 2

    Where instantaneous communication is used, where is the contract made?

    Model answer

    Entores Ltd v Miles Far East Corp [1955] held that acceptance by telex takes effect where it is received. The contract in that case was made in London rather than Amsterdam.

  3. 3

    Which case approved the Entores approach in the House of Lords?

    Model answer

    Brinkibon Ltd v Stahag Stahl [1983] approved the receipt rule for instantaneous communication. Lord Wilberforce added that out-of-hours messages must be resolved by business practice and the parties' intentions.

  4. 4

    State the postal rule.

    Model answer

    Adams v Lindsell (1818) established that a posted acceptance takes effect when the letter is posted. The contract is complete at posting even though the offeror does not yet know of it.

  5. 5

    Does the postal rule apply where the letter never arrives?

    Model answer

    Household Fire Insurance v Grant (1879) held that a properly posted acceptance binds even if it is lost. The offeror bore the risk because posting had been contemplated as a means of reply.

  6. 6

    When does the postal rule not apply?

    Model answer

    The postal rule does not apply where post is not a reasonable means of reply. A letter that is wrongly addressed by the offeree also falls outside the rule.

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