Learn this case to the Letter! Ho ho ho...
What Happened in Adams v Lindsell
This is the case that lead to the creation of the all important 'postal rule' - still in use today despite being formed in 1818!
- Adams v Lindsell was the case where one party wrote to the other offering to sell wool.
- It was made explicit that the response be made via post and so the defendants sent their reply showing agreement the very same day.
- Unfortunately, the party selling the wool had sent their post to the wrong address and therefore it took longer than expected to reach the buying party.
- What this meant was that even though the response to the offer was sent the same day the offer was received, it arrived to the sellers later than the expected date.
- As a result, the day before the response from the buying party arrived, the sellers had sold the wool onto someone else.
- The sellers argued that they were not in a binding contract because they had not yet received confirmation of their offer.
The Court's Ruling
Judge Law (fitting name I know!) ruled that the buyers were in the right and that the contract was indeed binding for the following reasons:
- Paradox - If the rule was that you must first receive the post before a contract becomes binding then no contract could ever be made via post. This is because the binding notification that the first post was received would need to be posted back to the first party itself. But then there would need to be binding notification for the post containing the first notification of receival. Ad infinitum.
- As a result of the paradox, we must consider that every second the letter from the buyers were in the post they were making an offer to the sellers. Then, when the sellers post their affirmation, there is consensus ad idem and the acceptance is in effect (the contract is made).
- It seemed to the judges that there were only two times at which acceptance was made: during the post or upon receival. It was only through the realisation of a paradox that they decided upon the answer.
Lessons to Take Away from the Adams v Lindsell Case
- If you are accepting an offer that was made to you via post, and the response is demanded to also be by post (the advent of the internet makes these matters even more complex) then you should remember that it is the posting process itself of your acceptance letter that is the moment of acceptance, not the moment that the receiving party gets your letter.
As new technologies arise so must new laws to accommodate the new situations people may find themselves in.
The advent of the postal service implored the law system to think creatively and not just literally about when an offer is made, when consensus ad idem is achieved and when a legally binding contract is created.
Later, in the 1892 case of Henthorn v Fraser it was determined that acceptance of a contract is made at the moment that the acceptance letter is posted.
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