Facts
- Henthorn v Fraser involved negotiations for the purchase of houses.
- Mr. Fraser, the defendant, gave Mr. Henthorn, the complainant, a written option to purchase property for £750, valid for 14 days.
- Before the 14 days expired, Mr. Fraser sent a letter revoking the offer to Mr. Henthorn.
- Before Mr. Henthorn received the revocation letter, he sent a letter accepting the offer to Mr. Fraser.
- The parties were in different towns, raising the issue of whether it was reasonable to use the post for acceptance.
- The dispute centered on whether a valid contract had been formed before the offer’s revocation, depending on when acceptance became effective.
Issues
- Whether the postal rule for acceptance applied to the communication between Mr. Henthorn and Mr. Fraser.
- Whether acceptance became effective upon posting the acceptance letter or upon its receipt by the offeror.
- Whether it was reasonable, in the circumstances, for acceptance to be conveyed by post.
Decision
- The Court of Appeal, led by Lord Herschell, held that a binding contract had been formed.
- The court found that, as the parties were in different towns, it was within both parties’ contemplation that acceptance could be sent by post.
- The postal rule applied, making the acceptance effective upon posting, regardless of when the revocation was received.
- The judgment clarified that the postal rule only applies where it is reasonable for the offeror to expect acceptance by post.
Legal Principles
- The postal rule states that acceptance is effective when properly posted, not when received, as first articulated in Adams v Lindsell and affirmed in Dunlop v Higgins.
- Henthorn v Fraser limits the postal rule's automatic application, requiring it to be reasonable to use post for acceptance.
- The reasonableness of the communication method depends on the context, notably the distance and manner of the offer.
- The case distinguishes between immediate and delayed modes of communication, restricting the postal rule to the latter when appropriate.
Conclusion
Henthorn v Fraser established that the postal rule regarding contract acceptance only applies when postal communication is a reasonable expectation for both parties, thereby restricting its automatic use and emphasizing the significance of context in determining the effectiveness of acceptance.