There are two ways to reject an offer: communicating a rejection to the offerer and counteroffering the offerer. When rejecting the offer, the offeree simply has to let the offerer know they don't want to take the offer. This destroys the offer. Only the offeree, not the offerer, can complete this process.
For example, say Joe said he'd sell his car to Susan. Susan wanted more information on the car before accepting, and instead of providing that, Joe sold his car to Bob. Susan decides to accept the offer before the deadline, but finds Joe has already sold the car.
Susan has the right to sue Joe because she never rejected the offer. To see how this works in a real case, look at Stevenson v. McLean made an offer to sell Stevenson some iron. Stevenson sent a telegram to McLean asking if he could pay for the iron over a two-month span.
McLean never responded to the telegram and instead sold the iron to another party. Unaware, Stevenson accepted the iron offer before the deadline, but because McLean had already sold the iron, he could not deliver it. Stevenson sued McLean because he never rejected the offer. The other way to reject an offer is through a counteroffer. The offeree will provide new terms to the offerer, which eliminate the terms of the old offer.
Although it is the post and e-mail which are focussed upon, the analysis would apply to all methods of communication.
A number of justifications for the postal rule have been put forward in the past which have long been recognised to be fatally flawed and dismissed accordingly. These include the meeting of minds, 1 the idea of the post office as an agent, 2 the notion that the offeror chose the method of communication and anyway could have stated that the postal rule was not to apply, 3 that it is necessary to avoid an endless chain of correspondence, 4 and that it is the better rule evidentially.
Birkett LJ took the line, again without explanation, that at ,. In Brinkibon Lord Wilberforce said that the situation was clear where contracts are formed, orally, or in writing, inter praesentes : the general rule requiring communication of acceptance applied. He asked at :. This was not a matter of establishing that factually telex satisfied any such test, but of deciding to treat telex as in the same category as communications which did.
It is hardly surprising that it has proved difficult to determine the classification of e-mail as instantaneous or not. However, the judgment of Parker LJ, in Entores , is more helpful, as it does indicate a concern with the bases of the postal rule.
Although making comments similar to those of the other judges at , he also identified reasons for the postal rule. These matters were similarly referred by Lord Wilberforce in Brinkibon at As has been indicated, the revocation issue, and economic efficiency, need to be addressed in relation to the underlying bases of the postal rule. However, there is one further aspect of the postal rule which will need to be considered.
Its effect is to put the risk of a non-fault based loss or delay of the acceptance on the offeror, and also, of course, where it is fault of the offeror.
Risk of loss or delay is only placed on the offeree, through non-application of the postal rule, where it is due to the fault of the offeree. In Entores and Brinkibon the courts recognised that in not applying a dispatch rule to telex, they were also changing the risk allocation, and were certainly not concerned about doing so in relation to the non-fault based loss or delay eg Denning LJ in Entores, at , and Lord Fraser in Brinkibon at The non-fault based risk allocation could have been seen as a function of the postal rule, and it must also be addressed further.
The time between dispatch and receipt of an acceptance cannot simply be equated with speed of travel of a communication. Art I. Other examples could be given in relation to firewalls and spam filters, for example, which may even give rise to questions of non-receipt Article 10 2 , UN Convention on the Use of Electronic Communications in International Contracts, Explanatory Notes, para Space does not permit their discussion, but what is needed here is the recognition that the time between dispatch and receipt cannot simply be equated with how quickly a message travels.
There could be instantaneous travel, without instantaneity between dispatch and receipt. The revocation issue should now be addressed as a basis of the postal rule, and offers are generally revocable at common law, even if it has been stated that they will remain open for a set time.
The need for consideration is seen to stand in the way of irrevocability Routledge v Grant ER , and revocability is significant in relation to the postal rule. He said that he had been at The significance of the potential for revocation in this context is emphasised by its treatment under other systems Nussbaum , , Macneil , The need to limit revocability is at the forefront of the comments on s63 of the US Restatement 2d Contracts, which adopts the mailbox rule, which also stems from Adams v Lindsell , and largely equates with the postal rule, making a mailed acceptance effective on mailing.
Under French Law, there is protection against revocation, through irrevocability, or damages for delictual fault on it occurring Bell et al , MacQueen and Thompson comment, in relation to the use of the postal rule in Scotland, that it would not be needed to protect against revocation, if the German or French approach was adopted MacQueen and Thompson , 2.
Under both, although the acceptance will not be effective until received by the offeror, an offer cannot be revoked once the offeree has dispatched an acceptance. Similarly, the Scottish Law Commission has proposed that Scots law should not continue to use the postal rule, but that a revocation should not be effective if it reaches the offeree after dispatch of an acceptance Scots Law Com , 3.
At least to the extent of a need to deal with the revocation issue, there is an explanation of the postal rule. That does not, however, answer the question of whether a dispatch rule should be extended to an e-mailed acceptance.
Even though e-mail is not literally instantaneous, and can, on occasion, take longer than normal to arrive, the speed with which it generally travels means that the opportunities for the revocation issue to arise are considerably diminished from those which occurred when post was used, and that is so even when account is taken of the difference between speed of travel and the time between dispatch and receipt.
These issues must be returned to below, and an overall view taken on the postal rule, and its extension to e-mail, after consideration of whether there are further explanations, which justify its impact beyond the revocation issue. As we have seen, the risk of an acceptance being lost, or delayed, without the fault of either party, falls on the offeror under the postal rule. It is the allocation of that non-fault risk to the offeror, which should, primarily, be considered here, and, as has been indicated, it could be seen as a function of the rule.
Despite the long established risk allocation under the postal rule, that is not extraordinary. He gave examples, including at :. If the letters were effective on posting, this avenue of escape was denied to them Gardner , In Scotland, although the basic postal rule was adopted, it may not be carried to its logical conclusion, in relation to a lost acceptance.
Of course these concerns are about a lost acceptance, but whether an acceptance is lost or delayed, there may be serious problems. Comment b states. There is a recognition of the need to deal with the revocation issue, but the same cannot be said of the appropriateness of the impact of the mailbox rule in relation to a lost, or delayed, acceptance. In addition, under s63 b , the mailbox rule does not apply to acceptance of options, and the consideration provided for the option will have dealt with the revocation issue, and indeed revocation in general, but it leaves the risk of loss or delay of the acceptance on the offeree.
The judges in Entores and Brinkibon were quite right not to be concerned that not applying the postal rule to telexes would leave the offeree to deal with non-fault based, loss, or delay, of the acceptance.
The impact of the postal rule in relation to non-fault based lost, or delayed, acceptances is not a function of the rule, but an undesirable side effect. This will be further emphasised in considering the postal rule from the perspective of economic efficiency, and the question of who is best placed to deal with the risk of loss or delay.
However, this would be to miss the point that Posner is making a statement at a more general level, and, under the postal rule, both parties can perform as quickly as possible.
As far as it goes, the argument is clear: the postal rule is economically efficient because it allows performance to commence as soon as possible. However, the postal rule may be seen as economically inefficient because it results in the risks of loss, or delay, not being placed on the party best able to minimise them:. It is the offeree who can send an acceptance in a way which involves least risk of it being delayed, or going astray and, as it is offeree who knows that the acceptance has been dispatched, it is he, or she, who is best situated to check on its arrival, and there are now multiple, cheap, fast means of doing so.
The offeror would not want to seem overeager to contract, or to worry too much to be a good contracting partner. Loss, or delay, will cause problems, putting the non-fault risk of either occurring, on the offeree, would minimise them. When the issue of economic efficiency and the postal rule is considered, the entire impact of the rule cannot be seen as economically efficient; a weighing, or balancing, exercise is in question. However, as has been indicated, the perceived benefit of performance being able to commence as soon as possible under the postal rule, comes from the idea that the rule makes it safe for the offeree to perform as soon as the acceptance is dispatched.
Revocation of offer is used by the offering party to formally cancel the offer before the other party has accepted it. The offering party must communicate the revocation to the other party before they accept the offer, but once the revocation has been communicated the offer it pertains to is no longer considered valid and cannot legally be accepted. Revocation goes into effect as soon as it has been communicated to the relevant party. A core ruling defining revocation of offers was established by Payne v.
This case established that neither party is bound to an agreement until an offer has been made by one and formally accepted by the other. If an offer has been made, the offering party has a right to withdraw it up to formal acceptance by the offeree. Revocation basically serves as formal, legally verifiable notice that a withdrawal was made, and it's valid so long as it is communicated to the offeree before they accept. The case of Byrne v. Van Tienhoven supports this by establishing that the withdrawal of an offer by telegram is only valid if the telegram is received before the offer is accepted.
The case of Dickinson v. Dodds further establishes that the party making the offer can communicate the revocation through a third party.
The case of Routledge v.
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