Adams v Lindsell (1818) 1 B & Ald 681

Facts

  • The defendants, Lindsell, sent a letter to the plaintiffs, Adams, on 2 September, offering to sell a quantity of wool and requesting a response “in the course of post.”
  • Due to an addressing error, the offer letter did not reach Adams until 5 September.
  • Adams posted a letter of acceptance the same day he received the offer.
  • Lindsell received the acceptance on 9 September, but had already sold the wool to another party on 8 September, believing Adams was not interested.
  • Adams brought an action for breach of contract, arguing that a binding contract had formed upon posting the acceptance.
  • The dispute centered on whether acceptance took effect upon posting or only upon receipt by the offeror.

Issues

  1. At what precise moment is a contract formed when acceptance is communicated by post?
  2. Does a contract bind the parties at the moment the acceptance letter is posted, or only when it is received by the offeror?
  3. What exceptions or limitations, if any, apply to the use of postal acceptance in contract formation?

Decision

  • The court, per Lord Ellenborough, found for Adams, holding that a binding contract was formed when the acceptance letter was posted.
  • The sale of the wool to a third party by Lindsell constituted a breach of contract, as the contract with Adams was already complete upon posting.
  • The court reasoned that requiring actual receipt of acceptance would lead to practical difficulties and uncertainty, potentially requiring infinite notifications between parties.

Legal Principles

  • The postal rule is an exception to the general rule that acceptance must be received to be effective; under this rule, acceptance by post takes effect upon posting.
  • The use of post must be reasonable under the circumstances, often implied where the offer itself is sent by post.
  • The postal rule does not apply when the offeror stipulates that actual notice or a specific method of acceptance is required.
  • The rule allocates the risk of postal delays or loss to the offeror who chooses postal communication.
  • Later cases—such as Dunlop v Higgins and Henthorn v Fraser—affirmed and refined the scope and application of the postal rule.
  • The postal rule does not apply to instantaneous means of communication (e.g., telephone, telex, email); for these, acceptance is effective upon receipt.

Conclusion

Adams v Lindsell established the foundational postal rule in contract law, holding that acceptance is effective upon posting when use of the post is reasonable. This rule, while adapted and limited in later cases and less influential in the digital era, continues to provide a framework balancing certainty for the offeree and practical realities of communication in contract formation.

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