Contract Acceptance by Email

Introduction

This paper will consider the proper place of email communication within the mail-instantaneous communication dichotomy. Consequently, this work will aim to determine whether the postal rule for contractual acceptance should be applied in the case of emails or whether emails  are better defined as instantaneous communication to which the postal rule should not apply. On carrying out this analysis, this essay will analyse the justifications offered for the use of the postal rule and for its rejection in cases where communication is instantaneous. This will allow for the synthesis of the key qualities of instantaneous justification, allowing this paper to determine, whether email qualifies as instantaneous communication and whether the objections against the application of the postal rule apply in the case of emails with the same force as in established instantaneous forms of communication.

The Postal Acceptance Rule - Background

The Postal Acceptance Rule (The Postal rule) is an exception to the general rule which states that acceptance must actually be communicated to the offeror by the offeree (McIver v Richardson (1813) 1 M. & S. 557; Mozley v Tinkler (1835) 1 C.M. & R. 692; Holwell Securities Ltd v Hughes [1974] 1 W.L.R. 155, 157; Allied Marine Transport Ltd v Vale do Rio Doce Navegaçao SA (The Leonidas D.) [1985] 1 W.L.R. 925, 937; Beale, 2014: Para 2-045).

The Postal rule can be simply stated to mean that when a party communicates their acceptance of an offer by post, their acceptance takes effect as soon as the letter is posted (Adams v Lindsell (1818) 1 B & Ald 681; Henthorn v Fraser [1892] 2 Ch 27; Dunlop v Higgins (1848) 1 HLC 381).”Posted” in this context means leaving the letter in the control of the post office (Brinkibon Ltd v Stahag Stahl and Stahlwarenhandelsgesellschaft mbH [1983] 2 A.C. 34, 41); however, note that placing the letter under the control of a post office employee who is not authorised to receive them, does not amount to posting (Re London & Northern Bank [1900] 1 Ch. 220).

While in the US, there is a presumption that a letter which is properly deposited in a prepaid envelope will have reached its destination (Re Cameron Estate 130 A 2d 173 (Pa 1957),  there is no such presumption in English law (Mik, 2009: 7). Further, there is a requirement that the letter in question must be properly addressed (Re London & Northern Bank [1900] 1 Ch. 220). However, there is no rule that the dispatching of a letter by the relevant postal service has to happen quickly to make acceptance possible before the offer expires; in fact everything after posting, even the receipt by the offeror is not relevant (Mik, 2009: 7). The main reason for the postal rule is the perceived potential for injustice if it is not enforced (Beale, 2014: Para 2-048); for instance in the case of In Re Imperial Land Co of Marseilles (Harris’s case) (1872) LR 7 Ch 587, Mellish LJ pointed out the potential injustice of allowing an offeror to revoke his offer before the offeree’s mailed acceptances reached him. It was deemed unfair, that the offeree would be unable to take advantage of an advantageous deal simply because his letter had to traverse the Atlantic (in the example provided by Mellish LJ).

Instantaneous communication

It is notable, that the postal rule is often not active when it comes to instantaneous communication (Beale, 2014: 2-049).  For instance, telephone and telex communication is not covered (Entores Ltd v Miles Far East Corp. [1955] 2 Q.B. 327; Brinkibon Ltd v Stahag Stahl und Stahlwarengesellschaft mbH [1983] 2 A.C. 34; N.V. Stoomv Maats “De Maas” v Nippon Yusen Kaisha (The Pendrecht) [1980] 2 Lloyd’s Rep. 56, 66; Gill & Duffus Landauer Ltd v London Export Corp GmbH [1982] 2 Lloyd’s Rep. 627). The reason why the postal rule is not, generally, applied in cases with instantaneous forms of communication is that in such situations the offeree normally knows straight away that delivery has failed and can, therefore, make alternative arrangements to ensure that his acceptance is properly communicated (Entores Ltd v Miles Far East Corp.; Brinkibon Ltd v Stahag Stahl und Stahlwarengesellschaft mbH; Beale, 2014: 2-050). This is contrasted to the situation, in which an offeree who uses post may find himself, since he may be unaware of the failure of delivery until it is too late to accept; before the offer expires or is revoked (Beale, 2014: 2-050).

The way “fax communication” is approached, could shed some light on how email should be approached. The sender of a fax knows immediately whether the fax has been received, which could place faxes in the instant communications bracket (Beale, 2014: 2-051). Indeed, it has been held that faxes are “instantaneous communication” (JSC Zestafoni Nikoladze Ferroalloy Plant v Ronly Holdings Ltd [2004] EWHC 245 (Comm), [2004] 2 Lloyd’s Rep. 335) and that if the sender knew that his fax was not delivered in full or at all, the mere sending of a fax could not amount to acceptance (JSC Zestafoni Nikoladze Ferroalloy Plant v Ronly Holdings Ltd). While a fax might appear to be delivered properly, it may have arrived in an illegible format; therefore, it has been argued that, in such cases a fax may constitute valid acceptance (as the instantaneous communication advantage is nullified) (Beale, 2014: 2-051). It has been argued that the same logic should apply to email acceptance (Beale, 2014: 2-051).

E-mail as non-instantaneous communication

Whether or not the Postal rule should apply to email communication arguably turns on whether or not it is qualitatively instantaneous, that is to say, whether it displays the characteristic of instantaneous communication which would make it unfair for the postal rule to apply (such as the ability to instantly know if receipt has occurred). On the point of whether e-mail is instantaneous, it has been said that it is ‘almost’ instantaneous (Counts and Martin, 1996: 1086), ‘more or less’ instantaneous (Carter, 2002: 03-360 and 03-390), ‘nearly’ instantaneous (Burnstein, 1996: 76), ‘virtually’ instantaneous (Carter and Harland, 2007: 232) and ‘absolutely’ instantaneous (Norman, 1996: 86).  Furthermore, the High Court held; the Postal rule should not apply to email communication since such communication was ‘instantaneous’ (David Baxter Edward Thomas and Peter Sandford Gander v BPE Solicitors (a firm) [2010] EWHC 306 (Ch)).  It is apparent that, the “instantaneousness” of emails is not clearly defined, which is problematic  considering whether or not the Postal rule should apply is closely related to this quality of emails (Fasciano, 1997).

However, some commentators point out that “instantaneousness” may not be the correct way to approach the issue(Mik, 2009: 17). It has been argued, the way some commentators approach “instantaneousness” is linguistically illogical since “instantaneous” should by definition mean no delay whatsoever; therefore qualifications such as “almost” or “nearly” allow for the possibility of delay, which means that “instantaneousness” is the wrong term to use (Mik, 2009: 16-18).  This is because if one begins to consider, how much delay would render a communication non- instantaneous, then this becomes an issue of control (over the communication on the part of the sender/offeree) and not one of “instantaneousness” (Mik, 2009: 17).  If control is the operative factor, then the Postal rule should apply, in situations where the sender loses control over the communication (cannot confirm successful delivery) at the point of sending (Mik, 2009: 18). In terms of emails, it has been argued that email senders can determine whether delivery was successful; however, analysis of common email protocols has demonstrated a number of flaws on this argument. For instance, notifications of failed delivery are not automatic and depend on the sending system being set up to request them and the receiving system being set up to provide them (Mik, 2009: 19).  Further, there are noted delays in the actual issuance of failed delivery messages (Mik, 2009: 19).

Moreover, even if one focuses on “instantaneousness” rather than control, email communication could hardly be called instantaneous, since it features many steps and relays (often across the globe) and there is often a notable delay between sending and receipt (Christensen, 2001). In line with this reasoning and in stark contrast to the decision of the English High Court in Thomas v BPE Solicitors, Rajah JC of the Singapore High Court  held in Chwee Kin Keong v Digilandmall.com Pte Ltd, [2004] 2 SLR 594; [2004] SGHC 71, that:

“… unlike a fax or a telephone call, it is not instantaneous. Emails are processed through servers, routers and internet service providers. Different protocols may result in messages arriving in an incomprehensible form. Arrival can also be immaterial unless a recipient accesses the email, but in this respect email does not really differ from mail that has not been opened.”  (Digilandmall:97).

It is submitted that the position of the Singapore High Court is much more in tune with technical realities than the English High Court.

Should the postal rule apply to email?

The above discussion highlights a key reason to apply the postal rule to email communication. At a superficial level, the established rule is that the postal rule does not apply to instantaneous communication; however, email has been argued to be the digital equivalent of normal mail and thus not instantaneous (Gardner, 1992). The above analysis   (endorsed in Digilandmall) has also demonstrated that email is not an instantaneous form of communication. Beyond “instantaneousness”, the nature of email also means that it may often prevent the sender/offeree from being certain whether their acceptance has been properly delivered; in this regard email is much closer in nature to ordinary main than to established instantaneous forms of communication. Therefore, it is submitted that the postal rule ought to apply.

Commentators also advance two further justifications for this position. Firstly, applying the postal rule to contracts concluded by email would help business certainty; it has been argued that while the postal rule would produce a clear conclusion time and date (the time and date of sending), rejecting the application of the postal rule would cause confusion since the time and date of contract conclusion could then depend on many diverse factors (al Ibrahim, Ababneh and Tahat, 2007). Secondly, a detailed analysis of EU/UK and US approaches to dealing with contract conclusion through websites, indicates that the reasoning employed in the relevant pieces of legislation would not apply to email communication. Therefore, this arguably demonstrates that the general rule is unlikely to be endorsed internationally, in the case of contracts concluded by email (al Ibrahim, Ababneh and Tahat, 2007).

Conclusion

This work has considered the position of emails within the context of the postal rule of contractual acceptance. This paper sought to highlight the justification for the application of the postal rule for normal mail and the justification for its rejection in cases of instantaneous communication methods.  It was shown that  the concept of “instantaneousness”, which is closely related to control, is in many ways concerned with ensuring that offerees; who have the ability to determine whether their acceptance has been successfully delivered, do not unfairly avail themselves of the postal rule, which was designed to protect offerees who did not have that ability from injustice. It was therefore necessary to consider the qualities of email communication in order to determine whether the postal rule ought to apply.

This paper examined both academic commentary and judicial authority in its attempt to isolate the necessary qualities of instantaneous communication which qualify it for exclusion of the postal rule; it also considered, which method of communication, email resembles most closely. It was demonstrated that email is not, an instantaneous form of communication and that while many commentators attach varying degrees of “instantaneousness” to it, it is arguably lacking in the characteristics which instantaneous communication are defined by.  It was therefore submitted, that email is indeed much closer in nature to normal mail and that the postal rule should apply. Further, it was argued that adopting the postal rule for email contracts would be both in tune with international interpretations and provide for business certainty.

Bibliography

Books and Journal Articles

al Ibrahim, M.,  Ababneh, A., and Tahat H. (2007) ‘The Postal Acceptance Rule in the Digital Age’ Journal of International Commercial Law and Technology, 2, 47.

Beale, H. (2014) Chitty on Contracts, 31st edition, London: Sweet & Maxwell.

Burnstein, M. R. (1996) ‘Note, Conflicts on the Net: Choice of Law in Transnational Cyberspace’ Vand J Transnat’l L, 29, 79.

Carter, J. W. (2002) Carter on Contract Vol 1, Sydney: Butterworths LexisNexis.

Carter, J.W. and Harland, D. J. (2007) Contract Law in Australia, 5th. Edition, Sydney: Lexis Nexis Butterworths.

Christensen, S. (2001) ‘Formation of Contracts by Email – Is it Just the Same as the Post?’ Queensland University Technology Law & Justice Journal , 1, 22.

Counts, C. L., and Martin, C. A. (1996), ‘Libel in Cyberspace: A Framework for Addressing Liability and Jurisdictional Issues in This New Frontier’ Alb L Rev, 59, 1083.

Fasciano, P. (1997) ‘Internet Electronic Mail: A Last Bastion for the Mailbox Rule’ Hofstra L Rev, 25, 971.

Gardner, S. (1992), ‘Trashing with Trollope: A Deconstruction of the Postal Rule in Contract’ Oxford Journal of Legal Studies,  12.

Mik, E. (2009) ‘The Effectiveness of Acceptances Communicated by Electronic Means, or — Does the Postal Acceptance Rule Apply to Email?’ Journal of Contract Law, Vol. 26(1), April.

Norman, K. B. (1996) ‘The ASB Home Page: Alabama Lawyers Go On-Line for a Wealth of Information’ Ala Law, 57, 328.

Cases

Adams v Lindsell (1818) 1 B & Ald 681.

Allied Marine Transport Ltd v Vale do Rio Doce Navegaçao SA (The Leonidas D.) [1985] 1 W.L.R. 925.

Brinkibon Ltd v Stahag Stahl and Stahlwarenhandelsgesellschaft mbH [1983] 2 A.C. 34.

Chwee Kin Keong v Digilandmall.com Pte Ltd [2004] 2 SLR 594; [2004] SGHC 71.

David Baxter Edward Thomas and Peter Sandford Gander v BPE Solicitors (a firm) [2010] EWHC 306 (Ch)

Dunlop v Higgins (1848) 1 HLC 381.

Entores Ltd v Miles Far East Corp. [1955] 2 Q.B. 327.

Gill & Duffus Landauer Ltd v London Export Corp GmbH [1982] 2 Lloyd’s Rep. 627.

Henthorn v Fraser [1892] 2 Ch 27.

Holwell Securities Ltd v Hughes [1974] 1 W.L.R. 155.

In Re Imperial Land Co of Marseilles (Harris’s case) (1872) LR 7 Ch 587.

JSC Zestafoni Nikoladze Ferroalloy Plant v Ronly Holdings Ltd [2004] EWHC 245 (Comm), [2004] 2 Lloyd’s Rep. 335.

McIver v Richardson (1813) 1 M. & S. 557.

Mozley v Tinkler (1835) 1 C.M. & R. 692.

N.V. Stoomv Maats “De Maas” v Nippon Yusen Kaisha (The Pendrecht) [1980] 2 Lloyd’s Rep. 56.

Re Cameron Estate 130 A 2d 173 (Pa 1957).

Re London & Northern Bank [1900] 1 Ch. 220.