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Question: 1. Explain the postal rule, the reasons for its creation and continued application.2. Given that legislation overrides the common law, what impact (if any) do the Electronic Transactions Act 1999 (Cth) and the Electronic Transactions Act 2000 (Vic) have on the postal rule of acceptance. 3. Should the postal rule apply to email and other forms of modern communication? Answer: Answer 1 It can be said that the postal rule of acceptance is one of the most controversial areas of contract law[1]. The postal rule of communication was developed in 1818 and its provisions have changed a lot over time. It is to be mentioned that the postal rule was developed solve the conflicts arising and doubts arising in communication and acceptance. Offer and acceptance are the fundamental provisions in contract formation. Offer and acceptance determine the duties of the parties and are the fundamental building block of a contract[2]. It is to be mentioned that the Postal rule of acceptance was developed as an exception to the general rules of offer and acceptance. It is to be mentioned that in general an offer can be revoked prior to its acceptance. However conflicts have often arisen about the time of the revocation of offer. It has often created a lot of confusion regarding whether the offer was accepted before or after it was revoked. Thus, to avoid this confusion the Postal rule was invented to solve the issue of communication of the offer between the offeror and offeree. The postal rule was created in the case Adam v Lindsell[3]. In this case the court was presented with the challenge of deciding the time of the contract formation. The court held in the aforementioned case that the contract was formed over the period of delivery of mail. Both parties of the aforementioned case had communicated by mail intending to form a contract. However, it can be stated that the mailing time lasts for days therefore the exact time of acceptance could not be decided. The problems faced by the court in deciding the exact time period of contract formation led to creation of the postal rule. The postal rule was reapplied in the case Henthorn v Fraser[4]. The postal rule states that an offer will be considered to be accepted once the communication of the acceptance of the offer has been posted. However the postal rule is applicable in circumstances where the parties have contemplated contract formation using post as the medium of communication as used ordinarily by mankind. It can be stated that in face to face interactions both parties can communicate instantaneously. However, in case of distant contracting instant communication of acceptance is not possible. Thus, in such situations parties to the contract cannot be expected to be possibly aware of the refusal of offer after acceptance of the offer has been posted. In such cases of distant contracting the postal rule is applicable. It can be stated that the postal rule has been re affirmed in the notable cases Household Fire Insurance v Grant[5]and in the relatively recent case Brinkibon Ltd v Stahag Stahl GmbH[6]. In the latter case it was held by the court that posting a letter of acceptance at the post office constitutes acceptance that is binding upon the parties to the contract. The court held that offeror and offeree must have understood and agreed to bear the risks associated with postal system while choosing the same as the means of communicating the offer. However as time has progressed the courts have been faced with the challenge of applying the postal rule in instantaneous communication. With advent of instantaneous methods of communication, the dispatch of receipt of a message constitutes valid communication. The receipt has made the aforementioned postal rule obsolete. The issue of the receipt of a message can only constitute valid communication of acceptance. In the notable case Entores Ltd v Miles Far East Corporation[7] various instances of when acceptance is communicated was illustrated by Lord Denning. It was stated by him a contract can only be expected to be formed once the news of acceptance is received by the offeror as opposed to the postal rule. In case of instantaneous communication the responsibility of communicating the acceptance of t he offer lies with offeree. However, it is assumed in case of instantaneous communication that the news of acceptance communicated to offeror during business hours is expected to be received. However as held in the remarkable case Brinkibon Ltd v Stahag Stahl[8] the responsibility lies with the offeror if he chooses to unman his machine through which the news of acceptance is communicated. Answer 2 Upon the recommendation of United Nations Commission on International Trade Law's Model Law on Electronic Commerce the Electronic Transaction Act[9] was created in the year 2000. It can be stated that the aforementioned Act was created as a strategic policy of the government of Australia to develop economic information. The Electronic Commerce Expert Group was established by the government of Australia to report the conflicts and issues relating to ecommerce. According to the report of the aforementioned expert group it can be said that the country of offeror initiating the offer will govern the contract to be formed if acceptance of such offer occurs at the offerors place of business. The Electronic Transactions Act[10] was formed in response of the aforementioned report. According to the aforementioned act it can be said that communication of acceptance of offer is said to take place if the person to whom the information of news of acceptance is given agrees consents to such information by the means of electronic communication. It is also to be mentioned that the time when the receipt of such electronic communication is issued is the time when electronic communication is expected to enter into the information system. This aforementioned statement puts emphasis on the current application of the postal rule in contracts entered into by email. The current postal rule applied in email contract states that acceptance is not constituted until the offeror gets into the system[11]. It can be stated that this legislation does not apply to facsimile and telex machines. It can be mentioned that the two of the aforementioned acts provide insight about application of the post al rule to instantaneous modes of communication. According to subsection 14(3) of the Electronic Transactions Act 1999(Cth) the time of receipt of an electric communication is noted once it reaches the information system as designated by the sender of the email. However it is to be mentioned that the aforementioned Act does not provide any clarification about what should ideally constitute the designation of the information system. It is not clarified whether opening of the email or merely receiving it in their server constitutes valid time of receipt[12]. Where there is no system designated, the time of receipt of information by the receiver would be considered to be the time when he notices it as stated in section 14 of the aforementioned act. However, the explanatory memorandum as given in the Electronic Transactions Act 2000 (Vic), states that communication must be read by the receiver of the information before it is considered to be received. However, choosing to ignore or not read a message already received in the receivers mailbox will be considered to be received. Thus it can be said that the aforementioned acts continue to guide the application of the postal rule in online business and email contracts. Answer 3 It is to be said that with the recent development in Information Technology, the problem of distance in communication has been greatly reduced. People nowadays can communicate with each other freely and in unhindered manner through various methods. However, the most popular and widely used method of formal communication is email. It can be said that with the advent of the new development in the Information Technology and wide usage of emails the application of the postal rule to email contracts has become a challenge to the courts[13]. It is to be mentioned that email communication is different from website contracting. Acceptance in website contracting is constituted in the actual time of sending and accepting the offer. However in case of communication by emails, there is no legislation which clearly determines acceptance and revocation of offer. It is to be stated that while transmitting information through emails, a message is considered to be delivered when the offeror gets onli ne and reads the message. The offeree in such a case may or may not receive a notification regarding the delivery of the message. Servers and computers of the receiver may take several minutes to receive the message or to respond. It is to be mentioned that timing issues in case of electronic communication vary between website contracting, which is generally considered to be a method of instantaneous communication and contracting through emails[14]. There are many problems which are encountered while communicating through emails. There are many instances when the emails of the senders do not get delivered or get delayed in the process of delivery. It can be mentioned that delivery of emails solely does not constitute valid communication of acceptance as the recipient can be unaware of receiving such email. There is no guarantee that the receiver will access the email upon its successful delivery and read it. The summation of these problems can be expected to be solved by the extension of the postal rule to apply in electronic communication. However, in case of Nunin Holdings v Tullarmarine Estate[15], it was held by the court that the postal acceptance rule would not apply to communication of information by email. The decision was reached by the court on the basis that email is a virtual and instantaneous mode of communication and therefore the postal rule should not be applied to it as it does not apply to other modes of instantaneous communication. The court stated that it has to follow the precedents from cases Entores Ltd v Miles Far East Corp[16], Asher v Goldman Sachs Co [17]and Reese Bros Plastics v Hamon-Sobelco Australia Pty Ltd[18] as decided earlier which dealt with instantaneous modes of communication. Therefore it can be said that as postal rule does apply to communication by email, acceptance would be constituted once the email has been received rather sent. It is to be mentioned that contracts entered into on the internet are similar to the face to face transactions. Any advertisement for sale of any good or commodity on the internet is considered to be an invitation to treat. Whenever, the customer places the order from such invitation to treat and provides the seller with the credentials of payment modes it constitutes an offer. If the website displays confirmation of such order and issues a virtual receipt valid acceptance is constituted and the issuance of the virtual receipt constitutes valid communication of acceptance as held in the case Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd[19]. It can be said that the receipt rule therefore applies in internet contracting and not the postal rule. However, it has been argued by some that the email is not a direct instantaneous method of communication as there is no direct link between the devices of the parties. Email messages are independent and there is no simultaneous end-to-end traffic path between the sender and the receiver. Therefore the postal rule should apply to email contracts. Thus to conclude, it can be said that postal rule is not completely outdated and still can be applied to modern forms of non instantaneous methods f communication. However, it is not approved by the court and it is not applied to methods of instantaneous communication. However, it can be said that there are no legislative measures which provide clarification of application of postal rule in different scenarios and emails and modern communication stay unaffected by the postal rule. Bibliography Adam v Lindsell [1818] B Ald 681 Asher v Goldman Sachs Co [1991] 1 QB 129 and Reese Bros Plastics Brinkibon Ltd v Stahag Stahl Brinkibon Ltd v Stahag Stahl GmbH[1983] 2 AC 34 Brinkibon Ltd v Stahag StahlGmbH [1983] 2 AC 34 Entores Ltd v Miles Far East Corp (1955) 2 QBD 327 Entores Ltd v Miles Far East Corporation[1955] EWCA Civ 3 Graw, Parker, Whitford, Sangkuhl and Do, Understanding Business Law 7th ed LexisNexis Butterworths, 2015 Hamon-Sobelco Australia Pty Ltd (1988) 5 BPR 11-106 Henthorn v Fraser[1892] 2 Ch 27 Household Fire Insurance v Grant[1879] 4 Ex D 216 Lipton P, Herzberg A and Welsh, M, Understanding Company Law, 18th edition 2016 McKendrick, Ewan.Contract law: text, cases, and materials. Oxford University Press (UK), 2014. 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Harris, J. Hargovan, A. Adams, M. Australian Corporate Law LexisNexis Butterworths 5th edition, 2015. [12] Graw, Parker, Whitford, Sangkuhl and Do, Understanding Business Law 7th ed LexisNexis Butterworths, 2015 [13] Seddon, N; Bigwood, R; Ellinghaus, M, Cheshire Fifoot Law of Contract, 2012 10th Australian Edition LexisNexis. Sweeney, OReilly Coleman, 2013, Law in Commerce, 5th Ed., LexisNexis [14] Lipton P, Herzberg A and Welsh, M, Understanding Company Law, 18th edition 2016 [15] [1994] 1 VR 74 [16] (1955) 2 QBD 327 [17] [1991] 1 QB 129 [18] (1988) 5 BPR 11-106 [19] [1953] EWCA Civ 6