Adams v Lindsell

Contract Law Case Summary

Adams v Lindsell (1818) 1 B & Ald 681

The case of  Adams v Lindsell is taught to university law students when studying offer and acceptance. It is often thought by students to have set a rather strange precedent. However, this is because modern students are viewing Adams v Lindsell in a modern context, rather than the somewhat different context of previous times. This piece will explain the facts which occurred in Adams v Lindsell and what the court decided. It will then go on to describe when the rule in Adams v Lindsell will be applicable.

Facts in Adams v Lindsell

The facts of Adams v Lindsell are that: the defendants wrote to the plaintiffs on 2 September, offering to sell them some wool and requested that the plaintiffs reply ‘in course of post’. The letter which contained the offer was wrongly addressed and therefore the plaintiffs did not receive it until 5 September. As a result of this delay, the letter of acceptance was not received until 9 September by the defendants, and this was two days later than the defendants would have expected to receive it. Because of this, on 8 September the defendants had sold the wool to a third person. The question for the court in Adams v Lindsell was therefore whether a contract of sale had been entered into before 8 September when the wool was sold to the third party. If the acceptance was effective when it arrived at the address or when the defendant saw it, then no contract would have been made and the sale to the third party would amount to revocation of the offer. However, the court held that the offer had been accepted as soon as the letter had been posted. Thus, in Adams v Lindsell there was indeed a contract in existence before the sale of the wool to the third party, even though the letter had not actually been received by the defendant. The defendant was therefore liable in breach of contract.

The Postal Rule in Adams v Lindsell

The ‘postal rule’ in Adams v Lindsell has since been confirmed in Household Fire and Carriage Accident Insurance Co v Grant (1879) 4 EX D 216 where the defendant applied for some shares in a company. These were then allotted to him but he never received the letter of allotment. It was held that a contract existed. More recently, Adams v Lindsell has been reinforced by Brinkibon Ltd v Stahag Stahl and Stahlwarenhandelsgesellschaft GmbH [1983] 2 AC 34 where it was held that acceptance is effective when it is placed in the control of the Post Office, ie. placed in a post box or handed to an officer of the post.

There are several theories about the rule in Adams v Lindsell. One such theory is that the rule prevents an offeree from accepting by post but then nullifying this acceptance by rejecting the offer by a quicker means of communication. Another theory is that without the rule an offeree would not be able to know for certain whether they had actually entered into a contract or not. It can be seen that in all cases one of the parties is going to suffer hardship, and the rule in Adams v Lindsell results in this party being the offeror rather than the offeree. This can perhaps be justified because when an offeror chooses to start negotiations by post he takes the risk of delay and accidents in the post. Furthermore, the offeror can avoid the rule in Adams v Lindsell by expressly stipulating that he is not to be bound until actual receipt of the acceptance.

A further theory for the existence of the postal rule as adopted in Adams v Lindsell is that if the offeror, either expressly or impliedly, indicates that postal acceptance is sufficient then they should bear the consequences of the postal rule, as the defendant did in Adams v Lindsell. Moreover, Adams v Lindsell could be considered support for the idea that the offeror should be considered as making the offer all the time that the offer is in the post, and that therefore the agreement between the two parties is complete at the moment that acceptance is posted.

In Adams v Lindsell itself it was suggested (at 683) that if the rule did not exist “no contract could ever be completed by the post. For if the [offerors] were not bound by their offer when accepted by the [offerees] till the answer was received, then the [offerees] ought not to be bound till after they had received the notification that the [offerors] had received their answer and assented to it. And so it might go on ad infinitum”.

One further reason for the existence of the rule in Adams v Lindsell is that the Post Office can be considered to be the common agent of both parties, and therefore communication to this agent immediately completes the contract. However, where the letter is not addressed then this will not be enough. Therefore, mere delivery of the acceptance to the agent does not of itself complete a contract for the purpose of the rule in Adams v Lindsell.

The Adams v Lindsell postal rule only applies when it is reasonable to use the post as a means of communicating acceptance. So, an offer made in a letter sent by post could be accepted by post. Yet at other times postal acceptance may be reasonable. For example in Henthorn v Fraser [1892] 2 Ch 27 it was held to be reasonable to post acceptance in response to an oral offer because the parties lived some distance away from each other. However, Adams v Lindsell will not normally apply where acceptance is made by post in response to an offer made by telex, email or telephone. Furthermore, Adams v Lindsell will not apply if the acceptor knew that the postal service was at that time disrupted.

Consequences of Adams v Lindsell

Adams v Lindsell therefore has three consequences in English law.

Firstly, a posted acceptance prevails over a previously posted withdrawal of the offer which had not yet reached the offeree when the acceptance was posted.

Secondly, acceptance takes effect on posting even where it never reaches the offeror or only does so after delay.

Finally, the contract is taken to have been made at the time of posting so as to take priority over another contract made after the original acceptance was posted.