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Business and Company Law Assignment

   

Added on  2020-05-28

10 Pages2424 Words189 Views
Running Head: BUSINESS AND COMPANY LAWBusiness and company lawName of the Student:Name of the University:Author Note

1BUSINESS AND COMPANY LAWAnswer One: History of Postal Rule of acceptance and its applicationIt can be said that the postal rule of acceptance is one of the most controversial areas ofcontract law1. The postal rule of communication was developed in 1818 and its provisions havechanged a lot over time. It is to be mentioned that the postal rule was developed solve theconflicts arising and doubts arising in communication and acceptance. Offer and acceptance arethe fundamental provisions in contract formation. Offer and acceptance determine the duties ofthe parties and are the fundamental building block of a contract2. It is to be mentioned that thePostal rule of acceptance was developed as an exception to the general rules of offer andacceptance. It is to be mentioned that in general an offer can be revoked prior to its acceptance. However conflicts have often arisen about the time of the revocation of offer. It has oftencreated a lot of confusion regarding whether the offer was accepted before or after it wasrevoked. Thus, to avoid this confusion the Postal rule was invented to solve the issue ofcommunication of the offer between the offeror and offeree. The postal rule was created in thecase Adam v Lindsell3. In this case the court was presented with the challenge of deciding thetime of the contract formation. The court held in the aforementioned case that the contract wasformed over the period of delivery of mail. Both parties of the aforementioned case hadcommunicated by mail intending to form a contract. However, it can be stated that the mailingtime lasts for days therefore the exact time of acceptance could not be decided. The problemsfaced by the court in deciding the exact time period of contract formation led to creation of thepostal rule. 1 McKendrick, Ewan.Contract law: text, cases, and materials. Oxford University Press (UK), 2014.2 Smits, Jan M., ed.Contract law: a comparative introduction. Edward Elgar Publishing, 2017.3 [1818] B & Ald 681

2BUSINESS AND COMPANY LAWThe postal rule was reapplied in the case Henthorn v Fraser4. The postal rule states thatan offer will be considered to be accepted once the communication of the acceptance of the offerhas been posted. However the postal rule is applicable in circumstances where the parties havecontemplated contract formation using post as the medium of communication as used ordinarilyby mankind. It can be stated that in face to face interactions both parties can communicateinstantaneously. However, in case of distant contracting instant communication of acceptance isnot possible. Thus, in such situations parties to the contract cannot be expected to be possibly aware ofthe refusal of offer after acceptance of the offer has been posted. In such cases of distantcontracting the postal rule is applicable. It can be stated that the postal rule has been re affirmedin the notable cases Household Fire Insurance v Grant5and in the relatively recent caseBrinkibon Ltd v Stahag Stahl GmbH6. In the latter case it was held by the court that posting aletter of acceptance at the post office constitutes acceptance that is binding upon the parties to thecontract. The court held that offeror and offeree must have understood and agreed to bear the risksassociated with postal system while choosing the same as the means of communicating the offer.However as time has progressed the courts have been faced with the challenge of applying thepostal rule in instantaneous communication. With advent of instantaneous methods ofcommunication, the dispatch of receipt of a message constitutes valid communication. Thereceipt has made the aforementioned postal rule obsolete. The issue of the receipt of a messagecan only constitute valid communication of acceptance. In the notable case Entores Ltd v Miles4 [1892] 2 Ch 275 [1879] 4 Ex D 2166 [1983] 2 AC 34

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