The postal rule
Adams v Lindsell
(1818) 106 ER 250
The defendant wrote to the claimant offering to sell them
some wool and asking for a reply 'in the course of post'. The letter was
delayed in the post. On receiving the letter the claimant posted a letter of
acceptance the same day. However, due to the delay the defendant's had assumed
the claimant was not interested in the wool and sold it on to a third party.
The claimant sued for breach of contract.
Held:
There was a valid contract which came in to existence the
moment the letter of acceptance was placed in the post box.
This case established the postal rule. This applies where
post is the agreed form of communication between the parties and the letter of
acceptance is correctly addressed and carries the right postage stamp. The
acceptance then becomes effective when the letter is posted.
Holwell Securities v
Hughes [1974] 1 WLR 155
Dr Hughes granted Holwell Securities an option to purchase
his house for £45,000. The option was to be exercisable 'by notice in writing'
within 6 months. Five days before the expiry, Holwell posted a letter
exercising the option. This letter was never received by Hughes. Holwell sought
to enforce the option relying on the postal rule stating the acceptance took place
before the expiry of the option.
Held:
By requiring 'notice in writing', Dr Hughes had specified
that he had to actually receive the communication and had therefore excluded
the postal rule.
Hyde v
Wrench (1840) 49
ER 132 Chancery Division (Decided by Lord Langdale MR)
The defendant
offered to sell a farm to the claimant for £1,000. The claimant in reply
offered £950 which the defendant refused. The claimant then sought to accept
the original offer of £1,000. The defendant refused to sell to the claimant and
the claimant brought an action for specific performance.
Held:
There was no
contract. Where a counter offer is made this destroys the original offer so
that it is no longer open to the offeree to accept.
Scammell and Nephew v
Ouston [1941] AC 251 House of Lords
The parties entered an agreement whereby Scammell were to
supply a van for £286 on HP terms over 2 years and Ouston was to trade in his
old van for £100. There was then some disagreement and Scammel refused to
supply the van.
Held:
There was no certainty as to the terms of the agreement.
Whilst there was agreement on the price there was nothing in relation to the HP
terms stating whether it would be weekly or monthly instalments or how much the
instalments would be.
Sudbrook
Trading Estate v Eggleton
[1983] AC AC 444 House of Lords
A lease gave
the tenant an option to purchase the freehold of the property at a price to be
agreed by two surveyors one appointed by the tenant and one appointed by the
landlord. The tenant sought to exercise the option but the landlord refused to
appoint a surveyor. The landlord claimed that the clause was too vague to be
enforceable as it did not specify a price.
Held:
The clause was
not too vague to be enforceable as it put in place a mechanism to ascertain the
price.
