Table of Contents
Type: Coursework | Subject: Contract Law | Level: Undergraduate | Word Count: ~2,400 words
This model coursework was produced by an Essays UK specialist as reference material for learning purposes only. For support in this field, see our law writing experts.
Overview: This sample works through a commercial sale-of-goods problem question, applying the IRAC method to the rules on offer, acceptance, the postal rule and revocation. It shows how authorities such as Adams v Lindsell, Byrne v Van Tienhoven and Holwell Securities v Hughes determine whether, and precisely when, a contract is formed when letters cross in the post.
The formation of a legally binding contract under English law depends on four essential ingredients: a valid offer, an unqualified acceptance of that offer, consideration, and an intention to create legal relations. In commercial dealings conducted at a distance, the first two ingredients tend to generate the most frequent disputes, because the parties rarely sign a single document at a single moment. Instead, agreement is assembled from a sequence of letters, emails and telephone calls, and the court must decide whether, and exactly when, a consensus was reached. The precise moment of formation matters a great deal, because it fixes the point at which neither party can withdraw without being in breach.
This model coursework answers a typical undergraduate problem question by applying the IRAC method (Issue, Rule, Application and Conclusion) to a commercial sale-of-goods scenario. It considers whether a firm offer was made, whether a later reply destroyed that offer, whether the postal rule operated to conclude the agreement, and whether a purported revocation was communicated in time to prevent a contract arising. The analysis is intended purely as reference material, to illustrate how the leading authorities are organised and applied; it is not a substitute for a student’s own supervised research.
The following facts are hypothetical and are supplied only to frame the legal analysis:
The questions for analysis are therefore whether Northgate made a binding offer, whether Calder’s enquiry affected that offer, whether and when Calder’s acceptance became effective, and whether Northgate’s revocation defeated the agreement.
An offer is an expression of willingness to contract on specified terms, made with the intention that it will become binding as soon as it is accepted by the person to whom it is addressed. It must be distinguished from an invitation to treat, which is merely an invitation to others to make offers. The courts apply an objective test, asking how a reasonable person in the position of the recipient would have understood the communication, rather than inquiring into the subjective state of mind of the person who made it.
The distinction is well established. In Partridge v Crittenden (1968), an advertisement was held to be an invitation to treat rather than an offer, and in Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953) the display of priced goods on a shelf was similarly treated as an invitation to treat. A bare statement of the lowest price a seller would accept is also not an offer, as Harvey v Facey (1893) demonstrates. By contrast, where the language is sufficiently definite and indicates a readiness to be bound, it will be construed as an offer, as the famous ruling in Carlill v Carbolic Smoke Ball Co (1893) shows, and as the comparison between Storer v Manchester City Council (1974) and Gibson v Manchester City Council (1979) confirms.
Applying these principles, Northgate’s letter of 1 April identifies the goods (200 structural steel beams), fixes a precise price (£90,000), and specifies a deadline for acceptance. It is addressed to a particular recipient and uses the language of commitment. A reasonable recipient would understand that Northgate intended to be bound upon acceptance. The communication is therefore a firm offer, not an invitation to treat.
Acceptance must correspond exactly with the terms of the offer. Where an offeree responds by varying those terms, the response operates as a counter-offer, which rejects and destroys the original offer so that it can no longer be accepted. This is the effect of Hyde v Wrench (1840), in which a prospective purchaser who replied with a different price was later unable to accept the seller’s original terms, because his counter-offer had extinguished them.
A crucial qualification, however, is that a mere request for information does not amount to a counter-offer and leaves the original offer intact. In Stevenson, Jaques & Co v McLean (1880), the offeree’s enquiry about whether delivery could be spread over a period was held to be nothing more than an inquiry, so that the offer remained open for acceptance. The court distinguished between an attempt to introduce new terms, which rejects the offer, and a request for clarification, which does not.
Calder’s letter of 6 April asked only whether Northgate “would be willing to deliver the beams in two separate consignments”. This is materially identical to the enquiry in Stevenson v McLean. It does not purport to vary the price, quantity or any other term; it merely seeks information about how performance might be arranged. It is therefore a request for information rather than a counter-offer. Consequently, the offer of 1 April survived Calder’s reply and remained capable of acceptance.
As a general rule, an acceptance has no legal effect until it is actually communicated to the offeror. This principle was affirmed in Entores Ltd v Miles Far East Corporation (1955), where Denning LJ explained that an acceptance sent by an instantaneous method of communication is complete only when and where it is received. The rationale is that the offeror should not be bound without knowing that agreement has been reached.
The postal rule is a long-standing exception to this requirement. Established in Adams v Lindsell (1818), it provides that where acceptance by post is contemplated, the acceptance is complete as soon as the letter is properly posted, not when it is received. The rule was extended in Household Fire and Carriage Accident Insurance Co v Grant (1879), where the court held that a contract was concluded even though the letter of acceptance never arrived at all. The justification offered for the rule includes the idea that the offeror, by choosing or inviting the post as a medium, impliedly assumes the risk of delay, and that the Post Office can be regarded as the common agent of both parties for the purpose of receiving the communication.
The postal rule does not apply automatically to every case. It operates only where it was reasonable, in all the circumstances, for the offeree to use the post as a means of reply. In Henthorn v Fraser (1892) the court held that the rule applied where the parties lived at a distance and it was within their contemplation that the post might be used. The rule also requires the letter to be properly stamped, addressed and posted.
In the present scenario, the parties were already negotiating by post: the offer itself was sent by letter, and Calder’s earlier enquiry was posted. It was therefore plainly reasonable and within the parties’ contemplation for Calder to accept by post, so the conditions in Henthorn v Fraser are satisfied. Calder posted an unqualified acceptance on 11 April. Under Adams v Lindsell, the acceptance was complete at that moment. The subsequent delay, which meant the letter did not arrive until 15 April, is immaterial: Household Fire v Grant confirms that a delayed or even lost acceptance does not defeat a contract once the postal rule applies.
The rule can be excluded by the terms of the offer. In Holwell Securities Ltd v Hughes (1974), an option that required acceptance to be made “by notice in writing” to the offeror was held to displace the postal rule, because the wording required the notice actually to reach the offeror. The Court of Appeal added that the rule would not be applied where doing so would produce a manifest inconvenience or absurdity. On the facts given, Northgate’s offer contained no such stipulation; it simply stated a deadline. The postal rule therefore operated, and the acceptance was effective on posting. (The position would differ if the offer had required written notice to be received, as discussed below.)
An offeror is generally free to revoke an offer at any time before it has been accepted. This is so even where the offeror has promised to keep the offer open, unless that promise is supported by separate consideration in the form of an option. In Routledge v Grant (1828), a promise to hold an offer open for a fixed period was held not to bind the offeror, who could still withdraw within that period. Northgate’s statement that its offer would “remain open until 20 April” is therefore not binding in itself, because Calder gave nothing in exchange for it.
Crucially, however, a revocation is only effective when it is actually communicated to and received by the offeree; the postal rule does not apply to revocations. This was decided in Byrne & Co v Leon Van Tienhoven & Co (1880), a case closely analogous to the present facts. There, a posted revocation was held to be ineffective because, by the time it reached the offeree, the offeree had already posted an acceptance. A revocation may also be communicated through a reliable third party rather than by the offeror personally, as Dickinson v Dodds (1876) shows, but it must in every case actually reach the offeree.
Applying these rules to the timeline, Northgate posted its revocation on 10 April, but it did not reach Calder until 12 April. The revocation could not take effect before that date. Calder, however, had already posted an effective acceptance on 11 April, which, by virtue of the postal rule, concluded the contract at that moment. The revocation therefore arrived too late. As in Byrne v Van Tienhoven, the letters crossed in the post, and the acceptance prevailed. A binding contract for the sale of 200 beams at £90,000 was formed on 11 April, and Northgate’s purported withdrawal was of no legal effect.
The outcome depends heavily on the postal rule, so it is instructive to consider how the analysis would change if the facts were slightly different. Had Northgate’s offer stipulated that acceptance must be “received in writing” at its office, Holwell Securities v Hughes indicates that the postal rule would be displaced, and Calder’s acceptance would take effect only on receipt, which was 15 April. By that date Northgate’s revocation had already been received (12 April), so no contract would have arisen.
Equally, had Calder accepted by an instantaneous method, such as email, the postal rule would not apply at all. The general rule in Entores, confirmed for modern technology in Brinkibon Ltd v Stahag Stahl (1983), is that instantaneous acceptances take effect on receipt. In Thomas v BPE Solicitors (2010), the court accepted that an email is not necessarily received the instant it is sent, and that where it arrives outside ordinary business hours it may be treated as communicated only when it would reasonably be expected to be read. The academic commentary on electronic contracting reinforces that the timing of receipt is the key question for such communications. On the alternative facts, an email acceptance sent during business hours on 11 April would still have been effective that day, so a contract would have been formed before the revocation was received; but the reasoning would rest on receipt rather than posting.
| Authority | Principle | Application to the Scenario |
|---|---|---|
| Adams v Lindsell (1818) | Postal acceptance is complete on posting. | Calder’s acceptance took effect on 11 April when posted. |
| Household Fire v Grant (1879) | The postal rule binds even if the letter is delayed or lost. | The delay until 15 April does not prevent formation. |
| Henthorn v Fraser (1892) | The rule applies where post is a reasonable means of reply. | The parties were already negotiating by post. |
| Holwell Securities v Hughes (1974) | The rule is displaced by terms requiring actual notice. | If written receipt had been required, no contract would arise. |
| Byrne v Van Tienhoven (1880) | Revocation is effective only on receipt; the postal rule does not apply to it. | The revocation received on 12 April came too late. |
| Hyde v Wrench (1840) | A counter-offer destroys the original offer. | Not engaged; Calder made no counter-offer. |
| Stevenson v McLean (1880) | A request for information does not destroy the offer. | Calder’s delivery enquiry left the offer intact. |
| Entores v Miles Far East (1955) | Instantaneous acceptances take effect on receipt. | Relevant to the email alternative in Issue 5. |
On the facts as given, each element of a binding agreement is present. Northgate’s letter of 1 April was a firm offer rather than an invitation to treat, because it was definite as to parties, price, quantity and duration. Calder’s enquiry of 6 April was a request for information in the mould of Stevenson v McLean, and so left the offer intact rather than destroying it as a counter-offer would under Hyde v Wrench. Because the parties were conducting their dealings by post, the postal rule in Adams v Lindsell applied, and Calder’s acceptance was complete when posted on 11 April, notwithstanding its late arrival. Northgate’s revocation, posted on 10 April but not received until 12 April, could not take effect under Byrne v Van Tienhoven until after acceptance had already concluded the contract. A binding contract for the sale of 200 beams at £90,000 was therefore formed on 11 April, and Northgate is in breach by refusing to deliver. The analysis also shows how finely the result turns on the method of communication: a stipulation for actual written notice, or acceptance by email, would have engaged the receipt rule and could have produced the opposite outcome.
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