Ratio Decidendi
Where acceptance is sent by post, the contract is formed at the moment the letter of acceptance is posted, even if it never reaches the offeror. This is the 'postal rule'.
Facts
The defendants wrote to the plaintiffs offering to sell wool, requesting a reply 'in course of post'. Due to the defendants misdirecting their letter, the offer arrived late. The plaintiffs posted their acceptance the same day they received the offer, but by the time it arrived, the defendants had sold the wool to a third party.
Judgment Summary
The court held that a contract was formed when the letter of acceptance was posted. If it were otherwise, no contract by post could ever be completed, as the parties would need to confirm receipt of each communication ad infinitum.
Key Quotes
"If that were so, no contract could ever be completed by the post. For if the defendants were not bound by their offer when accepted by the plaintiffs till the answer was received, then the plaintiffs ought not to be bound till after they had received the notification that the defendants had received their answer and assented to it."
— The Court
Subsequent Treatment
Origin of the postal rule. Qualified in Holwell Securities v Hughes [1974] where the offer stipulated actual communication of acceptance.