Understanding the basics of the postal acceptance rule

HomeBlogUnderstanding the basics of the postal acceptance rule

Post seems to be the most formal mode of communication and is still around today, despite most of our communications being through email and instant messaging services. However, when receiving contracts, it is important to know about the postal acceptance rule; including when and how it applies, and what you can do about it.

The Postal Acceptance Rule is primarily within the realm of contract law, and operates within the mechanism of acceptance of a contract; a key part of contract formation. It has a large set of rules to be aware of when dealing with the mail service and will likely affect the way you do business.

What is the Postal Acceptance Rule?

The postal acceptance rule is an exception to the general rule of contract formation; that a contract is only formed when the offeree’s (the one who is accepting the contract) communication of acceptance is received by the one who made the offer (the offeror). When it is enlivened, the postal acceptance rule will make an acceptance effective as soon as the letter is posted. This seems simple, but can become tricky if you consider how acceptance affects a late or lost postal service.

When does the Postal Acceptance Rule apply?

The rule is very strict and applies as soon as it is posted. So it does not matter if the post is lost or is late, acceptance under this rule means the offer has been accepted. In this case, the offeror bears the risk of using the mail service to allow communication of acceptance of an offer for a contract. Thus, once the letter is posted, it is too late to revoke or alter the contract. This rule was initiated into law when post was contemplated by the parties as a way to communicate acceptance of the offer.

Previous cases hold the element that a contract is considered accepted when it is posted. It should be stated that if cancellation of the contract was communicated and received before it was posted, the postal acceptance rule will not be activated, as technically, the contract was not accepted. 

Therefore, one should be careful when using the post as a means to deal with the formation of a contract, as they may be at risk if they never receive communication of acceptance of the offer. This may result in a person subject to a contract suing another party for not fulfilling the terms of a contract due to them not receiving acceptance in the mail. Although it may seem outdated, this rule is still very much applicable and effective in the law today. 

When won’t the Postal Acceptance Rule apply?

There is a way around this rule. If you include a provision within the contract that acceptance is required to be communicated to the one who sent the contract, it will be negated. This is because it is assumed that the postal acceptance rule applies when nothing to the contrary is stated, however, when something like explicit communication of acceptance is required within the contract, this cancels out the rule.

Legal Advice

If you believe you may be subject to a cause in action resulting from an issue of the postal acceptance rule, please don’t hesitate to get in touch with us. We provide a FREE 30 minute consultation with our experienced lawyers and staff to see where you stand and how you should proceed (if you need to!) with your legal issue. Book here now.