Court: Court of Appeal of England and Wales
Area of Law: Contract Law, Postal Rule, Offer and Acceptance, Specific Performance
The case of Henthorn v Fraser [1892] 2 Ch 27 deals with the application of the postal rule in the formation of contracts under English law. The postal rule, which is a principle of contract law, dictates that acceptance of an offer is deemed effective when it is posted, rather than when it is received. This rule was applied in Henthorn v Fraser, and the case helped further define the boundaries of when postal acceptance can be deemed valid.
The primary issue in this case was whether the offer made by Mr Fraser to Mr Henthorn was validly revoked before Mr Henthorn had posted his acceptance. The Court of Appeal ruled that the acceptance was valid despite the revocation of the offer being sent earlier, affirming the applicability of the postal rule.
Facts of tHenthorn v Fraser
The facts of Henthorn v Fraser are straightforward yet pivotal in understanding the application of the postal rule.
- Mr Fraser (the defendant) and Mr Henthorn (the claimant) were situated in different towns—Mr Fraser was in Liverpool, while Mr Henthorn was in Birkenhead. They were negotiating the purchase of some houses.
- On a particular day, Mr Fraser handed Mr Henthorn a note, offering him the option to buy the houses for £750, and the offer was valid for 14 days.
- On the next day, Mr Fraser changed his mind and decided to withdraw the offer. He sent a letter of revocation by post to Mr Henthorn.
- However, Mr Henthorn responded to the offer by post with an unconditional acceptance, which was sent before Mr Fraser’s revocation letter had reached him.
- The revocation letter did not reach Mr Henthorn until 5 p.m. on the day it was sent, whereas Mr Henthorn’s acceptance had already been posted.
- Mr Fraser did not receive the acceptance until the next morning, after his office had closed, and at that time, the revocation letter was opened.
The core issue was whether the acceptance by post was valid given that the offer had been revoked before the acceptance was received.
Issues
The primary issue in Henthorn v Fraser was whether the revocation of the offer was effective before the claimant had posted his acceptance. Specifically, the court needed to determine if the acceptance, which was posted before the revocation letter had arrived, was valid under the postal rule.
The second issue was whether the postal rule applied when the parties were situated in different towns, which would reasonably involve the use of post as a mode of communication for both the offer and acceptance.
Henthorn v Fraser Judgement
The Court of Appeal held that the contract between the parties was valid and that Mr Henthorn was entitled to specific performance of the contract. The court’s judgement was rooted in the principle of the postal rule and the surrounding circumstances of the case.
Lord Herschell gave the leading judgement, stating that where the circumstances were such that it must have been within the contemplation of the parties that the post could be used as a means of communicating the acceptance of an offer, then the acceptance is complete when it is posted. In other words, if both parties could reasonably expect to communicate by post, then an acceptance is valid as soon as it is posted, irrespective of when it is received.
Lord Herschell’s reasoning was supported by the fact that the offer and the acceptance were both communicated through post, and the parties were in different towns, making the use of post a reasonable method of communication.
The court found that the revocation letter was not effective because it was not received by Mr Henthorn before the acceptance had been posted. The revocation of an offer, the court reasoned, only becomes effective when it is received by the offeree. Therefore, Mr Henthorn’s acceptance was valid and the contract was binding.
As a result, the Court of Appeal ordered specific performance, compelling Mr Fraser to sell the property to Mr Henthorn at the agreed price of £750.
Conclusion
Henthorn v Fraser [1892] 2 Ch 27 is a fundamental case in English contract law, especially in relation to the postal rule. The Court of Appeal upheld the principle that an acceptance is valid as soon as it is posted, provided it is reasonable to expect that post would be used as a means of communication.
This case clarified the application of the postal rule, distinguishing it from revocation, which is not effective until received. The court’s decision reinforced the validity of contracts formed by post, especially when the parties are located in different towns, and ensured that the offeror’s revocation is only binding once it reaches the offeree.
