The following is legal advice of the Acorn Computers (A) company’s legal position concerning the contractual problem with B supermarkets.
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It is a general rule that when an offer is made as was done by B supermarkets, the contract becomes binding the moment an acceptance is made by the offeree. In this regard, the acceptance is deemed effective the moment it is received by the offeror. For this to hold, the offeror should specify that acceptance takes effect when it is received in writing (O’Sullivan and Jonathan 8). However, in this case, B supermarkets did not give such a condition. On the contrary, they instructed the acceptance to be mailed within fourteen days. As a result, the postal rule which is an exception to the general rule applies.
According to the postal rule, acceptance is deemed to have taken effect the moment a reply is properly posted and stamped. The postal rule supersedes the general rule whenever the reply should be communicated by post. It should be noted that the contract will still be binding even when the letter is delayed. However, it does not hold when the actions of the offeree cause the delay (O’Sullivan and Jonathan 12).
In Adams v Lindsell (1818), an offer was made to sell wool by the defendant and required that acceptance be communicated through the post. The plaintiff did reply through the post in time, but the letter was delayed. The defendant sold the wool to another person assuming the plaintiff had no interest in the offer. The court held that the contract was biding since the plaintiff replied and the date of acceptance was taken to be the date when the letter was posted.
In Re London v Northern Bank (1990), it was held that acceptance takes place when a letter is posted. In this regard, the day when a letter of acceptance bearing the correct address is deposited in the post box is taken to be the day of acceptance.
It should be noted that the offeror has the authority to revoke an offer before the offer is accepted. In addition to a letter, the postal rule also recognizes telex and faxes as modes of communication (O’Sullivan and Jonathan 356). However, in the case of revocation, the communication takes effect when it is received by the offeree, and not when it is posted. Moreover, if the communication arrives outside working hours or when the machine is not on, it will take effect the next working day (O’Sullivan and Jonathan 357).
In Henthorn v Fraser (1892), the defendant revoked the offer before receiving acceptance from the plaintiff. The Court of Appeal held that since the acceptance had been posted before the revoke was received, the revoke was ineffective and the contract was legally binding.
It is important to note that the offer by C to B cannot revoke the initial offer of B because that is a different offer from a different entity. For an offer to qualify as a counter-offer, it must be from the offeree. In this case, A had accepted the offer by the time the revoke from B was received. Consequently, the contract is still legally binding and A can sue B for breaching the contract.
O’Sullivan, Janet and Jonathan Hilliard. The Law of Contract. Oxford: Oxford University Press, 2011. Print.