Legal Offer

The offer Peter had regarding the sale of his Royce car for £20,000 signified a bilateral offer. One party, the buyer, made an offer which once accepted by the other party, the seller, created a binding contract. One issue that arises is instantaneous communication because the buyer accepted the offer via telephone. Generally, instantaneous forms of communication do not fall under the mailbox rule and acceptance by these methods is, therefore, only valid when the message is received.

Peter informed Isobel about the offer and told her of the written confirmation he needed. Peter claimed he would continue only if he got a letter of acceptance by 11 a.m. the next day (Tuesday). (Adams v. Lindsell 1818) If the written confirmation is received and there was a condition added in the acceptance, this conditional acceptance would not be binding.

Acceptance was completed when Isobel forwarded a letter of acceptance. The binding contract formed at 9:00 a.m. on the Tuesday morning when Isobel posted a letter. (Byrne v. Van Tienhoven 1880) Due to the postal rule, if the buyer and purchaser decide to enter a contract using mail to deliver the contract, the offer enters the contract at the time that the acceptance letter was posted. Posting binds the Offeror, and when the acceptance comes to the knowledge of the Offeror, the Offeree becomes bound by the lawful elements of the contract.

If the Offeror decides he does not want to purchase the car before the letter reaches Isobel or the Offeree, he does have the right to do so. The purchasing party still has the right to withdraw an offer before the letter of offer has been delivered and accepted. It is immaterial whether the offer is expressed to be open for acceptance for a given time or not. The postal rule does not apply for withdrawing the offer, and communication will not be effective until the recipient receives the actual letter. Due to the withdrawal being effective at 8:30 am on Tuesday when Isobel received the letter, the Offeree should be informed of the revocation. In the case of revocation, this does not need to be made personally, as it can be performed by a third party which is known to both parties. (Dickinson v. Dodds 1876)

An offer can be withdrawn at any time before the seller has accepted it. It would be unfair to expect the buyer to wait indefinitely for an Offeree's response. (Routledge v. Grant 1828) In this case, acceptance was effective on Monday while the revocation was effective on Tuesday. Taking into account the acceptance the revocation does not affect the contract, and Peter is bound by the contract to sell a car to Isobel at 20,000 pounds.