That is, for a contract to exist there should be an offer made by the offeror and this should be accepted by the offeree and this amounts to an acceptance. This acceptance must be communicated to the offeror and a contract might be concluded when the offeree receives the acceptance. Once again, it should be noted that these transactions are conducted through an electronic portal and are facilitated through the use of emails. This is called the receipt rule and is the general rule.
Because of the different and new nature of e-commerce, the described rule above is not applicable to traditional contracts created and facilitated through the post. Traditionally, for these types of contracts the postal rule applies. As opposed to the general law practice in the e-commerce world, the postal rule provides that an acceptance is active and a contract is concluded from the moment the offeree drops the acceptance in the letter box. This is applied even if the acceptance letter is delayed or failed to reach the other party. The postal rule is held to apply only to acceptances in the case of Adams v Lindsell (book).
Even if some rules are already practiced in the e-commerce, there are still disputes which tackle the applicability of the receipt rule and the possible usage of the postal rule. Considering the almost similar nature of posts and emails, there have been suggestions and arguments supporting the usage of the postal rule to internet transactions. In line with this, this essay aims to give an analysis on the applicability of postal rule to e-commerce. In so doing, the essay will limit itself to consider the issue of whether the postal rule should extend to contracts created by electronic communications.
To give light to the situation, it is extremely necessary to explore the rationale behind the creation of the postal rule. In contract law, as mentioned above, the general rule is that acceptance must be communicated to the offeror in order to conclude a contract. This has been illustrated by Lord Denning in the case of Entores Ltd v Miles Far East Corp:
"Suppose, for instance, that I shout an offer to a man across a river ... but I do not hear his reply because it is drowned by an aircraft flying overhead. There is no contract at that moment. If he wishes to make a contract, he must wait until the aircraft is gone and then shout back his acceptance so that I can hear what he says."
However, the exception to this rule emerged in 1918 with the creation of the postal rule. It should be noted that back in those days, the main method of communication is the post. This method is extremely slow and delays were very common. One of the main reasons for the existence of the rule is to ensure certainty in contract formation. One might argue that if the postal service did not carry much importance in those days then the creation of the postal rule would have been insignificant.
Since delay is a common feature of the postal service, this meant that if the receipt rule applied, the offeree would not know if his acceptance is received, i.e. whether a binding contract is created. One alternative to the postal rule might