Explain the postal rule, the reasons for its creation and continued application.
Postal rules provide a leading exception in context of the rules regarding the date of offer or acceptance under the contract law. Through the postal rules, the problems regarding distant communications are ruled out. Since the inception of postal rules back in 1818, these have changed a lot and have developed further owing to the creation of modern communications. In businesses, long distance communications are common and these cannot be avoided[1]. Through the postal rules, the issues relating to remote communications was resolved. Though, the postal rules still continue to be somewhat controversial and confusing. This is particularly due to the highly developed information technology communications, which raises a question on applicability of postal rules on modern communications.
In the following parts, the history of postal rules has been traced in addition to its present standing. This is done in addition to the clash between supremacy of the postal rules and the two legislations of Electronic Transactions Act, 1999[2] and the Electronic Transactions Act, 2000[3]. This would help in presenting a thorough analysis of postal rules based in common law and the present statutory law of Australia.
Under the contract law, the two most crucial elements are the offer and acceptance. In order for a contract to have legal validity, there is a need for these two elements being present. The postal rules were brought out as being an exception to the general rule of date of acceptance and offer. Under the general rule of date of acceptance and offer, the offer could be revoked or withdrawn any moment before the acceptance is given[4]. Often, conflicts are raised on whether a particular offer has been revoked or accepted. This problematic issue between the offeree and offeror is solved through the postal rules. The distant communications raise particular issues. The mailings and posts are usually referred to as the snail mail as they could take a long duration in reaching the recipient. This becomes problematic in revocation and formation of contracts. The offerors could not know when these two took place[5].
Through the case of Adam v Lindsell[6], the postal rules were born. In this case, the court had to decide on the period of contract creation through mail. The two parties of this case had communicated through post where the exact time of acceptance could not be determined. This was due to the fact that mailings usually lasted for a number of days and a number of parties were not having the knowledge of the communication at that very moment[7]. This caused a number of issues and resulted in postal rules being formed. Based on this case and the case of Henthorn v Fraser[8], the postal rules provide that in such cases where it is within the contemplation of parties that based on the ordinary usage of mankind, the post could be used as a manner of communicating the offer, the acceptance is to be deemed as completed upon the same being posted[9].
When it comes to the one-on-one situations, the business parties can communicate where the questions are raised. In the environment of indirect business or distant contracting, the instantaneous mode of communicating is not available. When such a situation is raised, the business parties seldom hold the knowledge of refusal of contract or that of its acceptance. Thus, the postal rules help in solving the problematic issues, for instance in cases of delayed communications. Postal rules basically dictated that the date of communication is the date of posting the communication mail. So, the communicating party was not required to wait for the receipt of such communication. This helped in eradicating the issue of delay in communication, as in such cases where the postal rules were deemed as a valid mode of acceptance and where the parties accepted to get a mail for reply, the date of acceptance or the relevant communication would be the date of receipt[10].
The Electronic Transactions Act, 1999 was the act which was brought back on 15th March, 2000 and this was a strategic policy of the Australian Government for developing the information economic. The government of the nation particularly formed the electronic commerce expert group for establishing the report for issues regarding the ecommerce, where the Model Law on Electronic Commerce given by the United Nations Commission on International Trade Law was applied[11]. As per the ecommerce expert group of the Attorney General, the nation conducting business used contracts and for acceptance to take place, the place of parties had to be clearly provided. The Electronic Transactions Act, 2000 was a response to this report. As per this legislation, the electronic communication date and time of receipt in addition to the place of communication could be descried based on the sending location and time of the party. Basically, the postal rules were applied in this act. However, this legislation was not applied on facsimile or telex machines[12].
Under the commonwealth Electronic Transactions Act, section 14 provides that the time of dispatch is the time when the electronic communication leaves the information system of the originator[13]. The time of receipt is provided under section 14A of this act which provides that the time of receipt of electronic communication is the time on which the electronic communication becomes capable of being retrieved by the addressee[14]. Section 14B provides the place of dispatch and the place of receipt. This is the place on which the originator or the addressee has their place of business[15]. Where these are matched with the postal rules, the postal rules dictate that the date of the communication is the date on which the letter covering the communication is posted. A crucial aspect of this is that in a clash between the common law and the legislation, these two acts would prevail.
In the modern era, communications are sent more than often through digital means and a leading one in this regard is email. With the information technology developing, the distances between the individuals are getting reduced on daily basis. The communications can easily be made by individuals through different modes like the telephone, emails, online chats, messages through applications, and the like. A number of professionals express the views which they hold through the use of emails or the other online methods which are instantaneous communications. Based on this, there is an applicability of general acceptance rules here. The website acceptance is dependent upon the space ad actual time of sending and the acceptance of such contract. An example of this can be found in email communications which are deemed as different in comparison to website contracting[16].
When it comes to the email contracts, the legislative establishments were absent in determining the revocation or acceptance of the offer. When the information was transmitted through emails, it was deemed to be sent when the offering party gets online and presses on the icon. The offeree could get the message when the same was sent successfully or where they got a failed delivery notice in their mailbox. The internet or computers could take lot longer than minutes to respond. In context of the timing issues in electronic transactions, the emails could not be deemed as similar to contracting made through the websites, which is an example of instantaneous method of communication in general[17].
As there are a number of failure situations and delays in messages being sent and received through emails, the instantaneous communications were not present between the parties. This required the postal rules to be applied to the email contracts. But there was an absence on the requisite legislations to decide on the status or timings of the emails. The website acceptances could be clear on general rules and the same being applied on it. This resulted in the postal rules to be developed and applied on the email communications in order to benefit all the parties. With the technology developing at fast pace, the instant communication methods could bring an end to the postal rules[18].
With the passage of time, the courts have a crucial issue and this is to decide upon whether the postal rules can be extended on the modern communications, particularly the instantaneous communications. With the progress of the electronic methods, the dispatch and the receipt of message often coincide and any kind of law which dealt with the delay in the two communications, particularly the postal rules, would become obsolete or even useless. It has already been proved that the telephonic conversations are given the same status as is given to the communication taking place between two individuals in same room, resulting in the applicability of receipt rules. This means that the communication has to be received by the offeror before the contract can be made and this differs from the postal rules as the receipt had to be acknowledged by the offeror. Though, there are cases where the dispatch does not result automatically in the communication of acceptance[19].
In Entores Ltd v Miles Far East Corporation[20], telex was brought before the court which led to Lord Denning giving a number of examples of acceptance being communicated. This led to him concluding that the rule of instantaneous communication amidst the parties differed from the rules regarding post. The contract could only be completed when the same was received by the offering party and upon the receipt of acceptance a contract was made. Thus, the responsibility here was with the offering party for communicating the acceptance in an effective manner before a contract is completed.
Unlike postal rules, this is not the case as the law does not favour the consumer but adopts a practical approach and makes sense of the parties being aware of their position. This is due to the fact that the postal rules do not give the acknowledgement but the instantaneous communications do. One cannot make an assumption that the acceptance message which is sent in the normal business hours through instantaneous communications is reasonably received. A problem is raised when this method is used but the message is not instantaneous. It is practical to adopt the approach that all messages could be sent at all times. This begs the need of laws pertaining to instantaneous communications to be more fair and concise in comparison to postal rules[21].
There is one more practical problem in this regard. Where postal rules are applied on electronic communications of present day like whatsapp or Facebook messenger, it would become difficult to determine the exact time and location of such messages and the exact moment on which the contract was formed. This is due to parties claiming the lack of intention and the issues like request for information supply for information and the other concepts revolving around offer and acceptance becoming jumbled up.
Conclusion
To bring the discussion to its conclusion, the preceding parts highlighted the various aspects revolving around postal rules. The discussion not only highlighted what exactly postal rules are but also traced back its history. Established back in 1800s, the postal rules provide the rule that the date of communication is the date on which such communication is mailed or posted. With the advancement of information technology, and the communications like emails, the crux of postal rules was applied on the email communications and this led to the advent of the commonwealth and Victorian legislations of Electronic Transaction Act. In these legislations, the provisions were covered for the exact time and location of electronic communication being sent. Even though these are aligned with postal rules, in situations of clash between the two, the legislation prevails. However, the application of postal rules to the modern communications is difficult task due to the swift nature of these communications being exchanged. And for this purpose, pertinent legislation would be needed.
Articles/ Books/ Journals
Andrews N, Contract Law (Cambridge University Press, 2nd ed, 2015)
Cartwright J, Contract Law: An Introduction to the English Law of Contract for the Civil Lawyer (Bloomsbury Publishing, 3rd ed, 2016)
Fitzpatrick JF, Symes CF, Veljanovski A and Parker D, Business and Corporations Law (Lexis Nexis Butterworths, 3rd ed, 2017)
Gibson A and Fraser D, Business Law (Pearson Higher Education AU, 2013)
Graw S, An Introduction to the Law of Contract (Thomson Reuters, 7th ed, 2011)
Henkin DM, The Postal Age: The Emergence of Modern Communications in Nineteenth-Century America (University of Chicago Press, 2008)
Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
Lipton P, Herzberg A, and Welsh M, Understanding Company Law (Thomson Reuters, 18th ed, 2016)
Mann RJ, Warren E and Westbrook JL, Comprehensive Commercial Law: 2017 Statutory Supplement (Wolters Kluwer Law & Business, 2017)
Poole J, Casebook on Contract Law (Oxford University Press, 2016)
Stone R and Devenney J, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)
Wakeman I, Gudes E and Jense CD, Trust Management V: 5th IFIP WG 11.11 International Conference, IFIPTM 2011, Copenhagen, Denmark, June 29 – July 1, 2011, Proceedings (Springer Science & Business Media, 2011
Adam v Lindsell [1818] B & Ald 681
Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3
Henthorn v Fraser [1892] 2 Ch 2
Electronic Transactions Act, 1999 (Cth)
Electronic Transactions Act, 2000 (Vic
Jeffrey Frederick Fitzpatrick, Christopher F. Symes, Angelo Veljanovski and David Parker, Business and Corporations Law (Lexis Nexis Butterworths, 3rd ed, 2017)
Electronic Transactions Act, 1999 (Cth)
Electronic Transactions Act, 2000 (Vic)
Neil Andrews, Contract Law (Cambridge University Press, 2nd ed, 2015)
Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)
[1818] B & Ald 681
Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
1892] 2 Ch 27
Phillip Lipton, Abe Herzberg, and Michelle Welsh, Understanding Company Law (Thomson Reuters, 18th ed, 2016)
Stephen Graw, An Introduction to the Law of Contract (Thomson Reuters, 7th ed, 2011)
Ian Wakeman, Ehud Gudes and Christian Damsgaard Jense, Trust Management V: 5th IFIP WG 11.11 International Conference, IFIPTM 2011, Copenhagen, Denmark, June 29 – July 1, 2011, Proceedings (Springer Science & Business Media, 2011)
Ronald J. Mann, Elizabeth Warren and Jay Lawrence Westbrook, Comprehensive Commercial Law: 2017 Statutory Supplement (Wolters Kluwer Law & Business, 2017)
Electronic Transactions Act 1999, s14
Electronic Transactions Act 1999, s14A
Electronic Transactions Act 1999, s14B
Jill Poole, Casebook on Contract Law (Oxford University Press, 2016)
Richard Stone and James Devenney, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)
John Cartwright, Contract Law: An Introduction to the English Law of Contract for the Civil Lawyer (Bloomsbury Publishing, 3rd ed, 2016)
David M. Henkin, The Postal Age: The Emergence of Modern Communications in Nineteenth-Century America (University of Chicago Press, 2008)
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