With much of business and commercial operations being online in this day and age, it may seem strange to consider the effects of making contracts by post. However it is important to know the consequences of the Postal Acceptance Rule as it can have significant impacts on whether you must carry out a potential contract that you wish you could cancel.
What Is It?
The rule means that when a contract is accepted by post, sending the letter creates the contract. The post office receiving the letter forms the contract, rather than you receiving their acceptance. This is an exception to a major principle that covers other contracts that you engage in; that acceptance actually has to be communicated. Critically, this only applies to post, and not other forms of non face-to-face communication such as email or texts.
If you’re unsure of whether you made an offer and thus have an offer or merely an agreement, you can read about the difference between a contract and agreement here.
Why Does It Matter?
Chiefly, the rule means that a contract could bind you without your knowledge. As long as they have sent their acceptance before you cancel your offer, then a contract has formed. Moreover, there is not a similar rule if you wish to cancel the offer of a contract by post. A revocation, or cancellation of the contract must actually be told to the relevant person/party.
How to Exclude It
There are several ways to exclude the postal acceptance rule from impacting upon your contracts. A provision that requires acceptance to be communicated is the easiest way to do this. You will have the ability to revoke offers with no fear of being liable to someone whose mail hasn’t arrived yet.
Another way to exclude the postal acceptance rule is if mail is not a relevant way of acceptance. Of course, this leaves you subject to legal interpretation. So it is recommended that you exclude the rule through the use of a clause in the contract.
Conclusion
It is essential you consider the postal acceptance rule when you perform contracts by post. The postal acceptance rule can get you into trouble if you fail to account for this in your contracts. If you’re not sure if the postal acceptance rule applies to a contract that you made, you can get in touch with a contract lawyer here.
Unsure where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace
