Whether the Postal Rule is Redundant

In order for a contract to be established, it is important that an offer is made and the acceptance of the offer is communicated to the offeror. However, this is not necessarily the case under the postal rule. According to the postal rule, “when acceptance is communicated by post, the contract is formed as soon as the letter is sent, without need for it ever to reach the offeror.” [1] This essay will focus on whether the postal rule is “redundant” in modern contract law. In order to do so, there will be a discussion on why it should or should not be applied in modern communication technology such as electronic mail and chat messengers by citing different views from academics, position in a recent Singaporean case law and United Nations’ Model Law.

The postal acceptance rule was developed in the case of Adams v Lindsell [2] . It was decided that the contract will take immediate effect once the letter of acceptance has been posted even if the letter might have never been received by the offeror. Today, as modern communication technology plays a prominent role in humans’ lives, whether or not the postal rule is “redundant” in today’s world has been a hot topic for academics. First of all, from sending to receiving till the reliability of third party, email and post appear to be very similar from “distributing platforms, periodic transfer and the mechanics of message dispatch and retrieval”. [3] For a more practical situation, Hill sums it up well: “A sender posts a message via third party (a service provider) to the recipient, and that recipient does not get their mail until they actually log in or open their mail box and read their messages.” [4] In addition, Murray adds that as the sender will have no guarantee that the email messages will arrive, it “demonstrates many of the characteristics of ordinary mail”, thus postal rule should apply to email acceptances as well. [5] However, Christensen provides a more authoritative argument against the use of postal rule. It is suggested that “similar issues of delay” such as “possibility of delays, incorrect addresses or technological failures” rose by Lord Wilberforce in Brinkibon Ltd v Stahag Stahl und Stahlwarenhandels-Gesellschaft mbHf [6] regarding telexes apply to email as well, hence “no universal rule can cover all such cases: they must be resolved by reference to the intentions of the parties..” [7] 8

It must be further stressed that postal rule only applies to non-instantaneous communication and it does not apply to instantaneous method of communication such as telephone and telex. [9] Therefore, many authors centre their argument on the instantaneousness of email before reaching a conclusion. According to Tamim and Kamaldeen who cited America’s Restatement (Seconds) of Contracts as authority, electronic mail should be treated like a face-to-face and telephonic message because parties could immediately “clarify ambiguities and misunderstandings” and the formation of contract can be concluded “within few minutes”, which is totally impossible in post as the acceptance will not reach the offeror in days or even weeks. [10] However, Murray disagrees with his point on the basis that even the delivery receipt is not instantaneous. He submits that “email with a request for delivery receipt is more analogous with a recorded delivery letter than a fax or telex”, which means even with the delivery receipt, it is not instantaneous, unlike all other instantaneous methods where “senders know immediately whether their transmission is successful.” [11]

Strictly speaking, instantaneous means “occurring with no delay” [12] . “Email is called ‘absolutely’, ‘not completely’, ‘nearly’, ‘almost’, ‘virtually’, ‘more or less’ or ‘in effect’ instantaneous.” [13] That means as long as there is some delay, email should not be considered as an instantaneous form of communication. Therefore, it seems that Tamim and Kamaldeen’s arguments regarding how email is instantaneous is highly questionable. This view is challenged by Hill, who suggests “merely virtually instantaneous” would be good enough to be considered as ‘instantaneous’ according to the law. The author further argues that the actual time it takes for the acceptance email to be delivered to the offeror’s machine would suffice the condition for email to be instantaneous. [14] However, Al Ibrahim, Ababneh and Tahat suggest that email is not an instantaneous method of communication “since there are some delays and gaps between sending and receiving messages [and] parties do not communicate instantaneously between one other”.

Meanwhile, Mik approaches a rather different view than most academics in the context of instantaneousness. Mik, who cited Coote’s argument as reference, believes that “email is nothing by itself… [and] the traditional classification into instantaneous into and non-instantaneous must therefore be abandoned.” [15] Ultimately the ‘instantaneousness’ depends on the way the communication is conducted, rather than the method of communication. For instance, there is a possibility for parties to exchange emails like instant messages and telephone if they attend their machines. [16] If this is the case, the acceptance could just have been regarded as instantaneous, hence postal rule should not apply. Even though it is possible, it is undesirable to ‘guess’ whether or not the recipient is sitting in front of the computer awaiting receipt, just like how irrelevant it is to see “whether or not a person is sitting at telex or a fax awaiting a response”. [17]

Academics are in support of the application of postal rule in email not only because email is “functional equivalent” to paper communications [18] , most importantly, the sender has the same control over letter of acceptance sent to the offeror. As Deveral Capps puts it, “once an email is dispatched, the sender has no control over ensuring that the email reaches the person to whom it was addressed.” [19] Also, Christensen suggests that the offeree will not know whether the email has been received, hence applying the general rule would place a reasonable amount of risk. [20] However, there are also differences between post and emails in the context of control. Depending on the application, email software allows “unsend” function for senders to retract the mails they’ve sent before the recipients read the emails, which is totally impossible for posts once the letters have been handed to the post office. Furthermore, “delivery” and “read” receipts are also available, which enables the sender to check whether or not the email has been delivered to and read by the addressee. [21] Senders would also receive notifications for delivery failure, and those functions would allow the sender to send the email again. Essentially, that means if the offeree’s acceptance message failed to get sent, he would have the control over the communication process and send the message again. [22] Thus, for a case like this, Hill believes that since the sender (offeree) has the “greatest opportunity to minimise the risks”, the general rule of communication- “acceptance must actually be received by the offeror” should apply instead. [23]

While readers might have had enough of rather similar arguments about whether or not postal rule should apply to modern communication technology such as electronic mail, the High Court of Singapore finally provides a more authoritative answer regarding the subject matter in the case of Chwee Kin Keong v Digilandmall.com Pte Ltd. [24] As V.K. Rajah JC points out, “unlike a posting, e-mail communication takes place in a relatively short time frame.” [25] The recipient rule is “more convenient and relevant in the context of both instantaneous or near instantaneous communications.” [26] Therefore, in the context of Singapore, the receipt rule is adopted for “respecting the commercial imperative of certainty.” [27] Poole also suggests that the usage of postal rule should be avoided as the “precise method” of transmitting the messages could be quite complicated, for example, whether “the parties communicate via a common server, whether the messages are sent directly to the recipient’s server, or whether they are stored before dispatch.” [28]

In addition to case law, the United Nation Commission on International Trade Law (UNITRAL) tries to clarify its position by adopting the Model Law on Electronic Commerce, which has also been briefly discussed by a few authors such as Capps, Ibrahim, Abahneh and Tahat. However, it must be noted that the UK Government has not adopted this law. [29] Even though this is so, it is still worth mentioning in relations to the view regarding postal rule’s role in modern communication technology. According to paragraph one of Article 15 deals “specifically with the time and place dispatch and receipt of data messages (email)” [30] , “the dispatch of a data message occurs when it enters an information system outside the control of the originator or of the person who sent the data message on behalf of the originator”. [31] That means the email is considered to be “sent” once it reaches the third party and available to read from the inbox of the addressee. Although it appears to have no different than the postal rule, according to Capps, “the Model Law fails to refer to the postal rule at any time”. It was argued that by referring to postal rule, it would have “exceed[ed] the aim of the Model Law” as the Model Law wants to “achieve the same degree of legal certainty as paper-based communications”. [32] While one would argue that the UNCITRAL is similar to postal rule and therefore it still has its use in modern technology; some academics like Capps insist that even if the UNCITRAL “recognises the postal rule has its place”, it “does not exist within an electronic communications environment”. [33]

Besides electronic mail, which is what most academics’ main discussion is surrounded, other web-based interaction such as instant messengers could also be one of the modern communication technology. In most cases, the communication is considered as instantaneous as “both parties monitor the communication process in real time.” [34] However, there are always situations where “a message may appear on the screen, no failure notification is issued — yet no reply from the addressee is forthcoming.” [35] As Mik points out, “[if] email can be used to exchange messages in real time, when both parties attend their computers; instant messengers can be used for delayed communications.” [36] It passes through the same “third person” or “agency” as email, the Internet service provider. Suppose the offeree sends the acceptance via instant messenger but the offeror never receives it, has the offeree done enough to form a contract? Even though it is an interesting topic to explore, it is very difficult to take a comparison between email and instant messengers, but rather “between dealings face-to-face and dealings at a distance”.

In conclusion, it appears that the postal rule should not be applied in modern communication technology such as electronic mail. [37] First of all, the delays and gaps means that electronic mail should not be considered as ‘instantaneous’. Moreover, it is often possible for the offerees to check whether or not the offerors have received and checked the email through the “receipt” and “read receipts. More importantly, the Singaporean case of Chwee Kin Keong v Digilandmall.com Pte Ltd even suggests avoiding the use of postal rule, which has added to the authority in addition to academics’ opinions. Finally, as the title of this essay quotes, “the postal rule was an arbitrary solution to early nineteenth century developments in communications.” Therefore, there is no reason to adapt an old rule aiming at old development to the modern technology. Otherwise, as Tamim and Kamaldeen describe in their article, it would be no different than “putting an old wine in a new bottle.” [38]