Part acceptance takes place. 2 Postal Rule

    Part A                                

The Postal Rule

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Offer and acceptance is the principal part in the
contract law which ensure the creation as well as the fulfilment of the
agreement made between the two parties. An offer need to be made to a specific
person: it can be made to the whole world Carlill v Carbolic Smoke Ball Co. 1893 1. However, a contract is perfected only when acceptance takes
place. Acceptance must be communicated to the offeror Carlill v Carbolic Smoke Ball Co.
1893. The Postal rule is a controversial part of The Contract law which
makes an exception to the general rules of offer and acceptance, whereby,
acceptance is effective from the time that the letter of acceptance is posted,
irrespective of delay or failure of delivery. Its prerequisites are:

Offer made by post received by offeree

Acceptance made effective when posted

Revocation only possible if the offeree receives it
before acceptance is made through post.

 

However, the rule doesn’t apply when the offer
excludes acceptance through post. The offeror must be clear and precise about
the form in which the acceptance takes place. 2

 

Postal
Rule Creation

The postal rule came into existence as an aftermath of
the case Adams v Lindsell 1818. 3 This was an English Contract case which
included in two parties involved for the sale of wool. The defendants made an
offer through post to the plaintiffs for selling of certain fleeces of wool on
2nd September stating that they wanted a response by 7th
of September. The letter of offer was wrongly addressed and the plaintiffs
didn’t receive it until 5th of September who then posted acceptance
on the same day but was not received by the defendant until 9th of
September. Having not received a response, defendants sold the wool to someone
else on 8th September. Defendants argued that they weren’t bound by
the contract as acceptance wasn’t made at the stipulated time frame. Upon
hearing from the court, the judge announced that it wasn’t conceivable for any
contract to be accomplished through post, the judge argued that if the
defendants were not bound by the contract because the acceptance wasn’t
received on time, the plaintiffs could also argue that the contract wasn’t
binding because they didn’t receive for any information that the defendants had
received the acceptance and this would go on for an indefinite time. Thus, in
this case there was a contract in existence before the wool was actually sold
to the third party, despite the fact that acceptance wasn’t received by the
defendant. The defendant was at breach in the contract.

This case led to the creation of the Postal Acceptance
Rule. Henthorn v Fraser 1892 4 was the case in which the court decided
the exact time of acceptance, i.e. the exact time when the letter of acceptance
is posted.

 

                                                Application
of The Postal Rule

With respect to geographical locations when businesses
deal with each other, it is certain that a direct communication is possible
when they are nearby. On the other hand, if the businesses are distant from
i.e. in cases of indirect business or distance contracting each, instantaneous
mode of communication cannot be a certain thing to achieve. So, problems may
arise between the parties with regards to the contracts such as offer not
reaching to the offeree in time, delay in communication for acceptance or refusal
of offer, offer revocation and so on. As a method to eradicate such problematic
issues, the court created the Postal Rule5
whereby, Acceptance takes place at the time of post. This rule is still in
continuation despite the modern measures of communications being established
which safeguards the parties from contractual disputes because as of now it
will be easier for the parties to gather for evidence regarding that letter of
acceptance has been sent to the offeror for attention or receiving.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                   
Part B

 

 

 

Electronic
Transactions Act 1999 (Cth)

Electronic Transactions Act was introduced on 15th
March, 2000 with an objective to set a framework for recognition and
acknowledgement of the information technology with regard to social prosperity
of Australia, bolster the use of electronic transactions, encourage confidence
for electronic transaction usage in business and community and to enable for
business and community to use electronic communication in dealings with the
government. It is based upon United
Nations Commission on International Trade Law’s Model Law on Electronic
Commerce (UNCITRAL) which attempts for benefit of the general public through
development of Information Technology (IT). 6

 

Electronic
Transactions Act 2000 (Vic)

A report was published by the Attorney General’s
E-Commerce Expert Group during the period of April 1998, which stated that the
country of the offeror conducting business regulates the contract in case
acceptance related to the contract arises at the offeror’s place of business,
unless agreed by the parties. 7 This
act commenced on 1st September, 2000 with objectives to create legal
requirements for establishing and validating electronic communications,
allowing third parties to produce electronic communication documents, for
recording and storing of documents in electronic forms, determine the time and
place of dispatch of the documents and to ensure that the electronic
communication binds the originator of the document. 8   

 

 

 

 

 

 

 

 

 

 

Impacts
of The Electronic Transactions Act 1999 (Cth)

And
Electronic Transactions Act 2000 (Vic)

on
The Postal Rule

Electronic Transaction Act 1999 (Cth) mainly
emphasizes on facilitation, verification, validation, storing and reproduction
of the electronic transactions. Electronic transactions Act 2000 (Vic) takes
into consideration of storing the time record of the electronic transaction and
states that electronic communication is the time when it enters into the
electronic system. This reflects the application of the postal rule in emails
which are not received by the offeror unless the offeror operates the system. 9

As a whole, these two Acts have given new experiences
and insights to the use of postal guidelines in the modern age. After
instantaneous communication exists, postal principles will in any case be
utilized to decide clashes in business that operate distantly. Postal
guidelines have been corrected and built up from time to time in a considerable
measure since its creation, in order to adapt according to the existing
timeframe, technological advances and also as per the needs of the progressing
business demand. 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Part
C

Application
of Postal Rule on Email and other forms of Modern Communication

With the outburst of technology, the courts must be on
an alert on if the coverage of postal rule can be extended to the other
advanced forms of communication namely instantaneous communication. Modern means
of communication ascertain the sending and the receiving of messages on an
instant, so the Postal Rule application can be seen obsolete in this regard. Alternative
means of communication is inclusive of Telephone, Fax, Electronic Mails (Email)

            a. Telephone

Telephone is a modern form of communication
where contracting parties can verbally discuss upon the formation, conditions, revocation,
acceptance and other related aspects required for creating and operating a
legal contract. It is effective in the sense that communication takes place
within an instant and that communication between the distant parties is also
available easily. But, in Entores v Miles Far East Corporation the
court drew a distinction between postal rule and telephone in the sense that
communications through telephones are virtually instantaneous and are similar
to face to face communication between the offeror and the offeree such that
general rule of acceptance is not effective until communicated to the offeror.
The courts should consider applying postal rule in telephone as this avoids
contract related delays and also is simple to carry out.

 

b.      Fax

Fax is another form of instantaneous
communication where offeror and offeree may send messages through the use of
fax machines. Whenever an offer by fax is accepted, it is deemed to be accepted
as it is printed out by the offeror’s fax machine irrespective of whether or
not anyone is there to receive it. In NM Superannuation Pty Limited v. Hughes (1992) the NSW Supreme
Court decided that if the fax machine is switched on, the owner indicates that s/he
is ready to accept messages and this would be sufficient for the communication
of notice, even if it arrives after normal hours. Same rules apply for other
forms of electronic communication as well but the court is not in the favor of
applying postal rule over instantaneous modes of communication stating that effective
acceptance must be communicated. However, in my view applying postal rule on fax
will be a step forward in the growth of the Postal Rule itself as it will be
able to grasp the current needs of quick paced and fastmoving business demands.

 

 

 

 

 

 

 

 

 

 

c.              
Electronic Mail (Email)

 

Electronic mails are an
integral part of modern world where people communicate with each other in a digital
method with the help of computer networks. Basically, there are two forms of transmission
of the email messages i.e. through the use of internet or through Electronic Data
Interchange. When an email is sent through the use of internet, the sender
composes a message and activates “SEND” command option.  The email is then stored on to the Sender’s Internet
Service Provider (ISP) server. The mail then gets transmitted over the internet
which may involve third party servers to receive the email before the actual Recipient’s
ISP does. Afterwards the Email gets downloaded to the recipient’s ISP, which
enables the recipient to receive the email. The second method is through the Electronic
Data Interchange (EDI), whereby a direct email link is established between the
sender and the receiver. The transmission of email doesn’t involve with the
third parties with EDI, making it more of private method of communication
between the parties. A direct linkage between the parties make the email an
instantaneous form of communication which is exempted from the Postal rule by
the court.

However, there are some
arguments on why postal rules should apply to emails. It is somehow similar to
the letter post because it may involve similar delivery issues, where sometimes
the emails are not delivered at all. The sender of the email may not be wary of
the non-delivery of the email and emails may get delayed due to technical
issues as well. Emails may get misplaced or delivered to wrong places very
easily. More importantly, this is no guarantee such that the receiver may get
the email from the sender and that the receiver wishes to reply or access the
email quick enough.