Postal Rule of Acceptance

This paper examines the creation, development and application of postal rule of acceptance. Postal rules are exceptions of offer and acceptance rules defining some special problems in distant communication. Since 1818, the postal rules have been changed and developed a lot due to the formation of modern communications. This paper presents the application of the rules and continuing existence in modern society. In addition, this paper also discusses the impact of the Electronic Transactions Act 1999 and the Electronic Transactions Act 2000 on the postal rule.

Introduction

Postal rule issues are one of the controversial parts of in the law of contract. The long-distance communication raises some questions regarding to the time and type of contract formation. Remote communications are needed when business parties are not available for fact to fact connection. This raised many questions in contracts offer and acceptance. Postal rules were developed to solve the conflicts and problems in contract communication and acceptance. Today, in the highly developed IT communication technologies, debates also emerged as to whether the postal rules could apply to contract through emails. This paper is divided into two parts. The first one illustrates on the history and current situation of postal rules while the second part examines the postal rule under the impact of two important Acts.

2.0 The explanation of Postal Rule of Acceptance

Offer and acceptance is the most fundamental part in contract law which determined the existence and operation of contract among parties. Postal rules were created as an exception to the general offer and acceptance rules. In general offer and acceptance rules, an offer could be withdrawn or revoked anytime before its acceptance. There are often conflicts about when the offer was accepted or revoked. Postal rules were created to solve the problematic issues between offeror and offeree. Distant communication also raised some particular issues. Post or mailing is often referred as “snail mail” because it could take a long period of time to get to the recipient. This may cause some problems according to the formation and revocation of a contract. Offerors could not precisely know when the acceptance and revocation took place. (Gibson and Fraser, 2008)

3.0 The creation of Postal Rule of Acceptance

The postal rule was first created in the Adam v Lindsell [1818] B & Ald 681. The court had to decide the contract formation period by mail. Two parties communicated by post in which the precise time of the acceptance could not be determined. Mailing often lasts for a few days and both parties could not aware of the communication at the same time. This caused lots of problems and led to the creation of postal rule. (Yamaguchi, 2004) According to Adams v Lindsell [1818] and Henthorn v Fraser [1892], the postal rule was stated as “Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as it is posted.”

In the face-to face situation, business parties can communicate if any questions occur. While in the environment of distant contracting or indirect business, instantaneous method of communication is not available. In this kind of situation, business parties could hardly aware of the acceptance or refusal of a contract. Postal rule is used to solve problematic cases such as the delay of communication.

4.0 Application of Postal Rule to Emails

With the development of IT technology, distances between people are greatly shortened. People can communicate with each other through various methods: telephone, email, on-line chatting and etc. Many law professionals express their views whether emails and other on-line contract methods are instantaneous communication to which general acceptance rules could apply. (Hill, 2004) Actually, website acceptances depend on the actual time and space between sending and accepting of the contract. For example, email communications are treated differently than website contracting. The following will discuss postal rule application on emails.

In email contracts, there is absence of legislative establishment regarding to determine the acceptance or revocation of offer. During the transmission of information through emails, the message is considered to be sent out when the offeror gets online and presses the icon. Offeree may receive the message when it is successfully sent, or the offeree will receive a failed delivery notice in its email box. Computers and internet may take several minutes or longer to respond. Regarding the timing issues in the electronic transactions, emails might not be treated the same as contracting through websites, which is generally regarded as an example of instantaneous method of communication. (O’shea and Skeahan, 1997)

Since there are many delays and failure situation in sending and receiving message through emails, parties could not get instantaneous communication between each other. Postal rules should be applied to email contracts but there are no legislative acts to decide the time and status of emails. Website acceptances are clearer that general rules of offer and acceptance could be applied to. Postal rules need to be developed and applied to the email communications which could benefit all parties. New technologies will develop more instant communication methods and email may be the last place for the application of postal rules.

5.0 The impact of the Electronic Transactions Act 1999 and the Electronic Transactions Act 2000 on the Postal Rule of Acceptance

Based on the United Nations Commission on International Trade Law’s Model Law on Electronic Commerce (UNCITRAL), the Electronic Transactions Act 1999 (Cth) was started on March 15th 2000, as a part of Australia government’s strategic policy to develop its information economic. Australian government especially the Electronic Commerce Expert Group which was established to report the issues relating to ecommerce adopted UNCITRAL to deal with conflicts in B2B business. UNCITRAL ensured that people would benefit from the growth of new information technology (IT).

According to the report released by the Attorney General’s E-Commerce Expert Group in April 1998, the country of offeror conducting business will govern the contract if the contract acceptance occurs at the offeror’s place of business, unless parties agreed. The Electronic Transactions Act 2000 was created to respond to the report. According to the Act, the electronic communication corresponded to “the person to whom the information is required to be given consents to the information being given by means of an electronic communication” and “. .. the time of receipt of the electronic communication is the time when the electronic communication enters that information system”. This statement reiterated the current postal rule application in email contracts which are not received until the offeror get into the system. This legislation will not be applied to the telex machines or facsimile.

These two Acts give new insights to the application of postal rules. Once instantaneous communication exists, postal rules will still be used to determine conflicts in distant business. Postal rules have been amended and developed a lot since its creation to meet the ongoing business demand.

6.0 Conclusion

This paper addressed on the issue of postal rules, its creation, developing and application in current business such as email communication. Postal rules were created in 19th century to solve distant business conflict and continued to be applied to current business situations. The justification of using postal rules in the age of mailing may be regarded the same as new communication method-email. Different from online business contract, emails could not be considered as an instantaneous communication method because there are gaps and delays in sending and receiving information. Both sender and receiver could not communicate directly between each other. Postal rules could still be applied to email contracts. Now, government has established new regulation and rules (such as Electronic Transactions Act 1999 and the Electronic Transactions Act 2000) to guide the use of postal rules in online business. Under the guidance of these Acts, there will be much greater clarity regarding to the application of general offer and acceptance rules. The amendments in postal rules allow supervision on online business. This would facilitate the online business communication and benefit both parties. Postal rules have become mature and complete after more than 200 years application. We believe that it will still valid in modern business world and continue to guide healthy business performance.