Posting rule
The posting rule (or mailbox rule in the United States, also known as the "postal rule" or "deposited acceptance rule") is an exception to the general rule of contract law in common law countries that acceptance of an offer takes place when communicated. Under the posting rule, that acceptance takes effect when a letter is posted (that is, dropped in a post box or handed to a postal worker); the post office will be the universal service provider, such as the UK's Royal Mail, the Australia Post, or the United States Postal Service. In plain English, the "meeting of the minds" necessary to contract formation occurs at the exact moment word of acceptance is sent via post by the person accepting it, rather than when that acceptance is received by the person who offered the contract.
The rules of contracts by post (postal rules) include the following:
One rationale given for the rule is that the offeror nominates the post office as his or her implied agent, and thus receipt of the acceptance by the post office is regarded as receipt by the offeror. The main effect of the posting rule is that the risk of acceptance being delivered late or lost in the post is placed upon the offeror. If the offeror is reluctant to accept this risk, he can always expressly require actual receipt as a condition before being legally bound by his offer.
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 and Carriage Accident Insurance Co Ltd v Grant (1879) 4 Ex D 216 and Henthorn v Fraser [1892] 2 Ch 27.
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.
Example 1:
Example 2:
Example 3:
Under the posting rule, performance is a means of acceptance. If A orders 1000 blue coathangers and B ships them out, that shipment is considered to be a conveyance of acceptance of A's offer to buy the coathangers. Defective performance is also an acceptance, unless accompanied by an explanation. For example, if A orders 1000 blue coathangers, and B mistakenly ships 1000 red coathangers, this is still an acceptance of the contract. However, if B ships the red coathangers with a note that they sent these because they had run out of blue coathangers, this is not an acceptance, but rather an accommodation, which is a form of counter-offer.
An interesting implication of the operation of the posting rule is that an acceptance is complete once the letter of acceptance is posted; it makes no difference whether the offeror actually receives the letter. This was demonstrated in Byrne v Van Tienhoven (1880) 5 CPD 344. If a letter of acceptance were to be lost, acceptance has still taken place.
Furthermore, 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 apply to acceptances by telephone or fax.
The courts are yet to decide whether e-mail should be regarded as an instantaneous form of communication. If the offeree were to convey acceptance by commercially unreasonable means – by cross-country pony express, for example – the acceptance would not be effective until it had actually been received.
A letter is regarded as "posted" only when it is in the possession of the Post Office; this was established in the case of Re London & Northern Bank [1900] 1 Ch 220. A letter of acceptance is not considered "posted" if it is handed to an agent to deliver, such as a courier. This is not the case under the Uniform Commercial Code.
The posting rule does not apply to option contracts or irrevocable offers where acceptance is still effective only upon receipt. This is because the offeree no longer needs protection against subsequently mailed revocations of the offer.
American case law[edit]
The Court of Appeals for the Third District of Texas considered the mailbox rule in 1994 in the case of Cantu v Central Education Agency and others. The Texas Business and Commercial Code, following the Uniform Commercial Code, states that "unless otherwise unambiguously indicated by the language or circumstances, ... (1) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances".[1] Cantu had hand-delivered a letter resigning from an offered contract of employment to the Central Education Agency's office in San Benito on a Saturday, and it was therefore read by its recipient on the Monday morning. The letter stated that outstanding pay should be forwarded to an address in McAllen, around 50 miles (80 km) from San Benito. A letter was posted back on the Monday evening, accepting the resignation. On the Tuesday morning, Cantu hand-delivered a letter withdrawing her resignation, but the superintendent of schools advised her that her resignation had already been accepted, by virtue of an acceptance letter being posted to the McAllen address. Cantu argued that postal acceptance was not valid because her withdrawal letter had been hand-delivered. The trial court and the appeal court accepted the Agency's opinion that it was reasonable, taking account of all the circumstances, for the Agency to accept the resignation by mail.[2]
The majority rule in the United States 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 does also apply to option contracts.[3]
Australian case law[edit]
In Tallerman & Co Pty Ltd v Nathan's Merchandise (1957) 98 CLR 93, 111-112[4] Dixon CJ and Fullagar J took a more restrictive view. "The general rule is that a 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.
Civil law jurisdictions[edit]
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.[5] The Vienna Convention on the International Sale of Goods chooses a compromise between the two approaches: According to 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.[6]