Thoughts on offer and acceptance — should the postal rule apply in electronic commerce?

*this article is not legal advice and is for information purposes only

I don’t think that the postal rule should apply to contracts made by e-mail or contracts that are made by a website, and instead, the receipt rule should apply to these types of electronic contracts. Scholars such as Murray, Walker, and Gloag argue that the postal rule should apply to emails while the receipt rule should apply to click-wrap agreements. [1] I am of a position that there should be no distinction between the two forms of contracts and that the receipt rule should apply to electronic communications. (I also believe that the receipt rule can be altered by express provisions in click-wrap agreements such as in the case with Amazon and other similar sites). Applying the receipt rule would be more appropriate for communications via instantaneous means and would be in line with established case law.

The postal rule is outdated and was created to provide certainty in contracts during a time when there were delays in delivery due to the nature of the communications system. [2]. Unlike in the past, the use of software makes it easy to determine when an email was sent and when it was received. [4]Determining that acceptance of a contract takes effect when the offeree receives, it would provide certainty that a contract is formed.[5] It is now possible for a receipt acknowledgment email that provides for the advantage that the offeror and offeree know a contract has been formed. [6] Furthermore, I believe that for uniformity purposes in interpreting Article 10 of the UN Convention to emails, acceptance by the offeree should occur when it is received and retrieved within a reasonable time. [7] The receipt rule should also apply to the formation of a clickwrap agreements as they are almost equivalent to a face-to-face interaction that happens instantaneously.[3]

The postal rule was outlined in the case Adams v Lindsell, and it was established that for contracts via the post, the acceptance is deemed effective upon posting. [8] Common law has demonstrated “a strong reluctance to extend the postal rule to other modern forms of communication.” [9] In Entores case, it was held that the postal rule does not apply to instantaneous communications via telex, instead the contract is formed at the time and place where it’s received. [10]The case Korbetis similarly held that sending an acceptance to the wrong fax number did not constitute acceptance of the contract, and the parties could not be bound to a contract when this occurs. [11] Applying the receipt rule to electronic transactions, “would be convenient and harmonious” and in line with current case law. [12]

[1] Faye Fangfei Wang, “E-confidence: Offer and acceptance in online contracting,” (2008) International Review of Law Computers & Technology 22:3

[2] — [7] Ibid

[8] Adams v Lindsell (1818) 1 B & Ald 681.

[9] D Rowland, U Kohl and A Charlesworth (2016) Information Technology Law Ch 6

[10] Entores Ltd v Miles Far East Corp [1955] 2 QB 327

[11] Korbetis [2005] EWHC 1345 (QB)

[12] Supra 1