Henthorn v Fraser [1892] 2 Ch 27

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

1. Whether the postal rule for acceptance applied to the communication between Mr. Henthorn and Mr. Fraser.
2. Whether acceptance became effective upon posting the acceptance letter or upon its receipt by the offeror.
3. 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.