Should The Postal Rule Be Extended to Emails?
Since the inception of The Postal Rule in 1818 by the precedent case of Adams v Lindsell, it has been an ongoing and probable debate about whether should it extend to emails.
The Postal Rule says that acceptance takes effect the moment the letter of acceptance is posted(dropped into the postbox or handed over to the mail person collecting the mail).
One of the rationales given for the rule is that the offeror nominates the post office as the implied agent(middle party) and thus receipt of the acceptance by the post office is regarded as that of the offeree. Take note that the postal rule is developed centuries ago whereby the letter is the main form of communication and it may take days for the letter to arrive to the offeror, whereas in modern times, instantaneous modes of communications such as email and fax have been developed. However….how instantaneous is considered “instantaneous” as even when you send out an email, the email will be stored and go through several servers before reaching the other party. (example is when you send out an email, it may take 5-10 minutes to reach the other party). The same goes for whatsapp whereby they have the “one-tick” and then seconds later “double-tick”(to shows that the recipient have read the message. But the main questions also bores down to when is the message considered received? Is it when there is one tick? Two ticks? or when the recipient take out her handphone and read the message?
The main effect of the posting rule is that the risk of acceptance and burden of the letter being delivered late or lost in the post is placed upon the offeror. If the offeror is reluctant to accept this risk, the offeror can always expressly require actual receipt as a condition before being legally bound by his offer.
It is well-established that the general rule governing the acceptance of an offer is that acceptance is not effective until it is being communicated to the offeror. However, an equally well-established exception to this general proposition is the postal rule. Although the postal rule(sometimes being considered unfair to the offeror) is deeply entrenched in our legal system, the scope of the rule and the applicability to modern forms of communication such as whatsapp, twitter, email etc have not been conclusively determined by the courts.
The rule was established by a series of 19th century cases, starting with Adams v Lindsell(1818) B & Ald 681, which was later confirmed and expanded in Dunlop v Higgins (1848) 1 HL Cas 381, Household Fire Insurance Company v Grant(1879) 4 Ex D 216 and the most famous case of Henthorn v Fraser [1892] 2 Ch 27 where the most renowned formulation of the postal rule is propounded.
(As long as the letter of acceptance is accepted, it is considered posted and there is an agreement; regardless of whether the letter actually is delayed or reaches the hands of the offeror or not). The following consequences that follows are of particular importance because in situations where either time or place of formation of a contract is a major issue.
Although the postal rule is deeply rooted in our legal system, it can be easily excluded by parties to a contract. It can be displaced if the parties either expressively or by implication from the terms of the contract requires that the acceptance is received by the offeror. (Bressan v Squires) The problem only lies if they do not express or implied this from the beginning of the contract.
Similarly in the case of Holwell Securities v Hughes, it is suggested that the postal rule “probably does not operate if its application produce manifest inconvenience and absurdity”.
When we talk about modern forms of communications. technology has rapidly advanced since the 1800s when the postal rule is being created. As email, fax etc slowly seeps and establish into the concept of communication in modern society and we embrace mankind’s further advancements, more and more tools of technology are used in the modern world of commence today. The courts were forced to grapple with the application of the postal rule.
In Entores v Miles Far East Corporation, the courts drew a fine distinction between the telephone and postal system, whereby communication by the telephone is virtually instantaneous, thus analogous to face to face communications.
The application of postal rule to telegrams was first address in Cowan v O’Connor(where acceptance is communicated to the offeror by telegram, a contract is form when the telegram is given to the post office for dispatch). This is based on the assumption that the sending of the telegram is same as mailing of the letter…however it is being criticized in subsequent decisions. Despite the lack of judicial reasoning, subsequent decisions have proceeded upon the basis that acceptance by telegram will be complete when it is given to the post office.
As for Telexes, it is held that Telexes are “virtually instantaneous” (Entores v Miles Far East Corporation). As a result when an acceptance is sent, it is not until the offeree’s message is received that the contract is complete.
The decisive factor which motivated Lord Denning’s decision not to extend the application of the postal acceptance rule to telexes is the ability of the contracting parties to ascertain whether the acceptance has been received by the offeror. He reasoned that where an instantaneous method of communication is used, usually one party will know if some part of the acceptance has not been received, which effectively removes the risk of a party proceeding upon the mistaken assumption that an acceptance has been communicated. This reasoning circumvents the policy considerations (such as certainty and business convenience) which have traditionally been relied upon to support the existence and continued application of the postal acceptance rule.
In Facsimiles, although there has been no detailed judicial analysis on the application of the postal acceptance rule to facsimiles, in several recent decisions Australian courts have proceeded upon the assumption that as a facsimile transmission is a virtually instantaneous method of communication, acceptance of an offer will not be effective until it is received by the offeror(Hamon-Sobelco Australia Pty Ltd v Reese Bros Plastics Limited).
It only gets more complicated when there is a combination of technologies involved, example in Express Airways v Port Augusta Air Services where a telegram containing an offeree’s acceptance was sent by the Post Office as a telex to the telex machine of the offeror. The problem encountered by the court was that the postal acceptance rule had been held to apply to acceptances communicated by telegram, but not to acceptances communicated by telex.
This reasoning was considered but not followed by the Supreme Court of Western Australia in Leach Nominees Pty Ltd v Walter Wright where an acceptance that was contained in a telex given over the telephone to the post office was to be transmitted via a public telex facility.
Therefore in light of the above discussions, the inevitable question remains: should the postal rule extend to emails? The answer to this question is whether the courts classify email as a “virtually instantaneous” form of communication.
Essentially, ‘e-mail’ is a generic term that is used to describe, a variety of forms of electronic messaging.
Internet e-mail is, in many ways, similar to the process which occurs when sending a letter via the conventional postal system. Once a message is “sent” or “posted” by the e-mail sender it may pass through a variety of different computer systems owned by a number of third parties. At the time of sending the e-mail the sender has no means of knowing the path that the message will take before it is received by the recipient’s computer system. Quite often this involves the e-mail being sent between countries or States notwithstanding the fact the sender and recipient may be in adjacent buildings. Key similarities between the systems of communication are the intervention of third parties and the inability to foresee the pathway of the message or letter once it is “sent” or “posted”.
There are a wide variety of commercial e-mail software packages currently available on the market and it is not intended to examine the full functionality provided by each available software package. However, for present purposes it is important to note the possible extent of control and status monitoring which a sender has over his or her e-mail messages. In relation to other methods of communication, issues of control and knowledge have proven to be decisive factors in determining the applicability of the postal acceptance rule.
Many modern e-mail systems allow a sender to monitor whether an e-mail has been received, opened or deleted by the recipient. Like whatsapp we have the “one-tick” and “two-ticks”. But problems lies whereby the offeror accidentally delete the emails which have been sent but haven’t open the email to see the acceptance.
What if the offeror is being trapped on an island without a handphone or laptop to view the acceptance? Should silence amount to acceptance? Is it being fair to the offeror, example of the cases of Re Selectmove(if the offeree placed the burden on herself to speakup, it will amount to acceptance) and Felthouse v Bindley(if the offeror placed the burden on the offeree to speak up, it will not amount to acceptance.. When will the burden be placed on the offeror? That will be the main question as well.
Is email instantaneous? There appears to be some confusion as to what is required to constitute a “virtually instantaneous” communication.
Recently, it has been suggested that issues such as incorrect addressing of e-mail, failure to read e-mail by recipients and delay in the internal distribution of e-mails by organisations demonstrate that e-mail is not an instantaneous means of communication. 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 virtually instantaneous form of communication notwithstanding the fact that there may be delays between the sending and receipt of an e-mail message. In this arrangement the e-mail does not pass into the control of third parties and the only delay which may be experienced results from either the processing power of the computer systems used or the bandwidth of the communication network. There is a strong argument analogous to that applied to telexes that this form of communication is virtually instantaneous.
However, with Internet e-mail (which provides a greater degree of flexibility of use) considerable delays may occur between when a message is sent and when it is received by the recipient. These delays result from the complex path over which the e-mail is sent. For example: If person A in Australia sends an e-mail message to person B in the United States of America, usually there will be no direct link between the computer systems.
It is possible for a delay of hours or even days to occur between when an e-mail is sent and when it is received even if the sender and recipient are in close proximity. The delay which may be experienced when sending an e-mail message via the Internet may therefore give rise to the suggestion that this method of communication is not 100% virtually instantaneous at all times.
In light of the above analysis, it becomes apparent that it is difficult to classify e-mail as either an “instantaneous” or “non-instantaneous” means of communication. However, despite the possibility that a delay may occur between the sending and receipt of an e-mail message, given the decisions of the courts in relation to telexes and facsimiles it is most likely that the courts will conclude that e-mail is a “virtually instantaneous” method of communication. E-mails are transmitted via the telephone network at the same speed as facsimiles and the time delays which are experienced when sending an e-mail are generally shorter than the delays which occur when sending a letter via the conventional postal system.
The posting rule applies only to acceptance. Other contractual letters (such as one revoking the offer) do not take effect until the letter is delivered, as in Stevenson, Jacques & Co v Mclean (1880) 5 QBD 346. The implication of this is that it is possible for a letter of acceptance to be posted after a letter of revocation of the offer has been posted but before it is delivered, and acceptance will be complete at the time that the letter of acceptance was posted—the offeror’s revocation would be inoperative.
Further the posting rule does not apply to instantaneous forms of communications. For example in Entores Ltd v Miles Far East Corporation [1955] 2 QB 327, the Court held that the posting rule did not apply to an acceptance by telex as the Court regarded it as 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 phone or fascimiles.
Further additional info based on my research :
In American Case Law,
the majority rule is that the mailbox rule does not apply to option contracts. By default, an option contract is accepted when the offeror receives the acceptance, not when the offeree mails it. However, because the California Civil Code applies the mailbox rule to all contracts, California follows the minority rule, under which the mailbox rule also applies to option contracts.
In Australian Case Law,
In Tallerman & Co Pty Ltd v Nathan’s Merchandise (1957) ” contract is not completed until acceptance of an offer is actually communicated to the offeror, and a finding that a contract is completed by the posting of a letter of acceptance cannot be justified unless it is to be inferred that the offeror contemplated and intended that his offer might be accepted by the doing of that act.” The High Court included the element of intention.
In Civil Law Jurisdictions,
Civil law jurisdictions do not follow the postal rule. The classical civil law position is that acceptance, like any expression of will, can only be effective if it was communicated to the addressee, unless the lack of communication can be attributed to the latter.The vienna convention on the international sale of good chooses a compromise between the two approaches:
1. article 18(2) of the Convention, an acceptance is effective when it reaches the offeror. However, article 16(1) of the Convention provides for the most important consequence of the common law “posting rule”, that is, an offer may not be revoked if the revocation reaches the offeree after it has dispatched an acceptance.
Whereas in UNCITRAL model law,
Many countries have enacted legislation based on the UNCITRAL Model Law of Electronic Commerce. Such legislation is often entitled the Electronic Transactions Act. Among other issues, this legislation deals a default rule for the time that email (electronic communications) is sent and when it is received. However it is mistaken to suggest that it deals with a clarification of the postal acceptance rule for electronic communications.
There are two schools of thought.
(1) Ask if the postal acceptance rule applies to emails (electronic communications). If your answer is yes, then the relevant Electronic Transaction Act (ETA) can help. The postal acceptance rule states that there is a contract when posted – so we should apply the “sent” rule under the ETA. If the answer is no; then either apply the “received” rule under the ETA or ignore it and use the contract rule of communication.
(2) Instead, treat the Electronic Transactions Act as an intended substitute and statutory replacement of the postal acceptance rule; in which case the “received” rule should apply. The problem with this second school of thought is that there is nothing in the Model Law of Electronic Commerce, nor the ETAs which suggests that it was intended to replace the postal acceptance rule. We are still waiting for a court to decide.
The UNCITRAL rules on time of sending and receiving are:
(1) Unless otherwise agreed between the originator and the addressee, the dispatch of a data message occurs when it enters an information system outside the control of the originator or of the person who sent the data message on behalf of the originator.
(2) Unless otherwise agreed between the originator and the addressee, the time of receipt of a data message is determined as follows:
(a) if the addressee has designated an information system for the purpose of receiving data messages, receipt occurs:
(i) at the time when the data message enters the designated information system; or
(ii) if the data message is sent to an information system of the addressee that is not the designated information system, at the time when the data message is retrieved by the addressee;
(b) if the addressee has not designated an information system, receipt occurs when the data message enters an information system of the addressee.
Thus in conclusion i will say that although the email has sparked alot of debate whether is it a virtually instanteneous form of communication, i would say yes as it is faster then the letter by post. Thus email should not be subjected to the postal rule because the postal rule is developed at a time whereby communication takes days and the post office is the implied agent for the letter and holds great responsibility. Whereas in modern times like whatsapp, email etc, even sometimes when it takes days for the email to be received, it is still not an excuse as when this happens, it is only a technical fault of the system while in general email is fast and efficient as well as easy. Email also holds an advantage whereby the sender(offeree) can track the email. Therefore, my conclusion is that the postal rule should not be applied.
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