Contract Law

Adams v. Lindsell

(1818) 1 B & Ald 681

Facts

Lindsell wrote to Adams offering to sell a quantity of wool.
The letter stated that Adams should reply “in course of post.”
Lindsell incorrectly addressed the offer letter.
Because of the incorrect address, the letter reached Adams later than expected.
Adams accepted the offer immediately upon receiving it and posted the acceptance.
Before Lindsell received that acceptance, he assumed Adams was not interested and sold the wool to another person.
When Adams’ acceptance eventually arrived, the goods had already been sold.
Adams sued for breach of contract.
Lindsell argued that no contract existed until the acceptance was actually received.

Whether acceptance by post becomes effective when it is posted or only when it reaches the offeror.
Whether Lindsell could sell the goods before receiving Adams’ acceptance.

Where the post is an expressly or impliedly authorised means of communication, acceptance is complete when the acceptance letter is properly posted.
This is known as the postal rule.
The rule is an exception to the general principle that acceptance must be communicated to the offeror.
The postal rule applies where the circumstances show that the parties contemplated use of the post.

Lindsell initiated the transaction by sending the offer through the post.
The offer also requested a reply “in course of post.”
Therefore, the post was the authorised and expected method of acceptance.
Adams accepted promptly after receiving the delayed offer.
The delay was caused by Lindsell’s own mistake in addressing the original letter.
The Court reasoned that if acceptance were effective only on receipt, uncertainty would continue indefinitely.
The offeree would not know whether the acceptance had arrived.
The offeror might then argue that the contract remained incomplete despite the offeree having dispatched an acceptance through the authorised method.
To avoid this continuing chain of uncertainty, the Court treated posting as the point of acceptance.
Once Adams posted the letter, the contract was complete.
Lindsell’s later sale to another purchaser therefore amounted to breach.
The fact that Lindsell had not yet received the acceptance did not prevent formation of the contract.
The risk of postal delay or loss was placed on the offeror where the offeror had invited acceptance through the post.
However, the rule is not universal.
It will not apply where:
the offer requires actual receipt;
use of post is unreasonable;
the acceptance is incorrectly addressed or improperly posted; or
instantaneous communication is used.

The Court held that Adams’ acceptance became effective when he posted the letter.
A binding contract existed before Lindsell sold the wool to another person.
Lindsell was therefore liable for breach.
Use this case for: where postal acceptance is contemplated, acceptance is complete on posting rather than receipt.