4/18/2016

AdamsvLindsell|ContractLawCase|LawTeacher

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Adams V Lindsell | Contract Law Case

The case of Adams v Lindsell (1818) 1 B & Ald 681 is taught to university law students when
studying offer and acceptance. It is often thought by students to have set a rather strange
precedent. However, this is because modern students are viewing Adams v Lindsell in a modern
context, rather than the somewhat different context of previous times. This piece will explain the
facts which occurred in Adams v Lindsell and what the court decided. It will then go on to describe
when the rule in Adams v Lindsell will be applicable.
The facts of Adams v Lindsell are that: the defendants wrote to the plaintiffs on 2 September,
offering to sell them some wool and requested that the plaintiffs reply in course of post'. The letter
which contained the offer was wrongly addressed and therefore the plaintiffs did not receive it
until 5 September. As a result of this delay, the letter of acceptance was not received until 9
September by the defendants, and this was two days later than the defendants would have
expected to receive it. Because of this, on 8 September the defendants had sold the wool to a third
person. The question for the court in Adams v Lindsell was therefore whether a contract of sale
had been entered into before 8 September when the wool was sold to the third party. If the
acceptance was effective when it arrived at the address or when the defendant saw it, then no
contract would have been made and the sale to the third party would amount to revocation of the
offer. However, the court held that the offer had been accepted as soon as the letter had been
posted. Thus, in Adams v Lindsell there was indeed a contract in existence before the sale of the
wool to the third party, even though the letter had not actually been received by the defendant. The
defendant was therefore liable in breach of contract.
The postal rule' in Adams v Lindsell has since been confirmed in Household Fire and Carriage
Accident Insurance Co v Grant (1879) 4 EX D 216 where the defendant applied for some shares in a
company. These were then allotted to him but he never received the letter of allotment. It was held
that a contract existed. More recently, Adams v Lindsell has been reinforced by Brinkibon Ltd v
Stahag Stahl and Stahlwarenhandelsgesellschaft GmbH [1983] 2 AC 34 where it was held that
acceptance is effective when it is placed in the control of the Post Office, ie. placed in a post box or
handed to an officer of the post.
There are several theories about the rule in Adams v Lindsell. One such theory is that the rule
prevents an offeree from accepting by post but then nullifying this acceptance by rejecting the
offer by a quicker means of communication. Another theory is that without the rule an offeree
would not be able to know for certain whether they had actually entered into a contract or not. It
can be seen that in all cases one of the parties is going to suffer hardship, and the rule in Adams v
Lindsell results in this party being the offeror rather than the offeree. This can perhaps be justified
because when an offeror chooses to start negotiations by post he takes the risk of delay and
accidents in the post. Furthermore, the offeror can avoid the rule in Adams v Lindsell by expressly
stipulating that he is not to be bound until actual receipt of the acceptance.

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AdamsvLindsell|ContractLawCase|LawTeacher

A further theory for the existence of the postal rule as adopted in Adams v Lindsell is that if the
offeror, either expressly or impliedly, indicates that postal acceptance is sufficient then they should
bear the consequences of the postal rule, as the defendant did in Adams v Lindsell. Moreover,
Adams v Lindsell could be considered support for the idea that the offeror should be considered as
making the offer all the time that the offer is in the post, and that therefore the agreement between
the two parties is complete at the moment that acceptance is posted.
In Adams v Lindsell itself it was suggested (at 683) that if the rule did not exist no contract could
ever be completed by the post. For if the [offerors] were not bound by their offer when accepted by
the [offerees] till the answer was received, then the [offerees] ought not to be bound till after they
had received the notification that the [offerors] had received their answer and assented to it. And
so it might go on ad infinitum.
One further reason for the existence of the rule in Adams v Lindsell is that the Post Office can be
considered to be the common agent of both parties, and therefore communication to this agent
immediately completes the contract. However, where the letter is not addressed then this will not
be enough. Therefore, mere delivery of the acceptance to the agent does not of itself complete a
contract for the purpose of the rule in Adams v Lindsell.
The Adams v Lindsell postal rule only applies when it is reasonable to use the post as a means of
communicating acceptance. So, an offer made in a letter sent by post could be accepted by post. Yet
at other times postal acceptance may be reasonable. For example in Henthorn v Fraser [1892] 2 Ch
27 it was held to be reasonable to post acceptance in response to an oral offer because the parties
lived some distance away from each other. However, Adams v Lindsell will not normally apply
where acceptance is made by post in response to an offer made by telex, email or telephone.
Furthermore, Adams v Lindsell will not apply if the acceptor knew that the postal service was at
that time disrupted.
Adams v Lindsell therefore has three consequences in English law. Firstly, a posted acceptance
prevails over a previously posted withdrawal of the offer which had not yet reached the offeree
when the acceptance was posted. Secondly, acceptance takes effect on posting even where it never
reaches the offeror or only does so after delay. Finally, the contract is taken to have been made at
the time of posting so as to take priority over another contract made after the original acceptance
was posted.

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