On Monday, 13 January 2014, Ada wrote to Ben saying, “Please sell me your vintage BNW car for $80,000”. On Tuesday, 14 January 2014, Ben replied by leaving a message on Ada’s voicemail, “Sure, provided you pay by cash”. Ben then changed his mind and he posted a letter to Ada which read, “I have reconsidered the matter. I am no longer able to sell you my BNW”. This letter arrived on Thursday, 16 January 2014, before Ada checked her voicemail.
1) Advise Ada and Ben.
There is no contract between Ada and Ben. This is because initially Ben leaves a message on Ada’s voicemail to accept the offer. However, Ben changes his mind and posts the letter to Ada on the same day, but the letter arrived before Ada checked her voicemail. Although the voicemail was sent earlier than the letter, acceptance can only be made with actual communication and notification to the offeror. Besides, according to the postal rule, the acceptance is deemed to be competed when the properly stamped and addressed letter of acceptance is posted, and not when it is delivered to the offerors’ address, or received by them, or brought to their notice, or read by them.1 This rule, laid down in Adam v. Lindsell in 1818. It explained that if the defendants were not bound by their offer when accepted by the plaintiffs till the answer was received, then the plaintiffs ought not to be bound till after they had received the notification that the defendants had received their answer and assented to it.2 In this case, the contract be only be made unless Ada checks her voicemail before the letter arrived. Therefore, Ada does not have any legal claim against Ben.
2) What difference, if any, would it make if:
a) Ben’s letter had never arrived;
There is no contract between Ada and Ben if Ada never checks her voicemail. This is because the postal rule does not apply to situations where the acceptance of an offer is communicated by any instantaneous methods such as telex, telephone and fax. The rule with regard to acceptance by such methods is that the contract is complete only when the acceptance is received by the offeror.3 Therefore, the contract only takes effect when it is received and read by Ada.
On the other hand, there is a binding contract between Ada and Ben if Ada has knowledge of the acceptance by Ben. The contract comes into existence as soon as Ada checks the voicemail. With reference to the case of Entores Ltd v. Miles Far East Corporation in 1955, the plaintiff in London sent a telex to the defendant in Amsterdam offering to buy goods from the defendant. The defendant sent a telex in return to the plaintiff accepting the offer. Therefore, a contract was made between the parties when the defendant’s acceptance was accepted by the plaintiff.4
b) Because of a fault on Ada’s voicemail system, Ben’s message had not been recorded; There is no contract between Ben and Ada. This is because Ben’s message has not been recorded, so Ada does not receive and read the message. Since there cannot be acceptance of an offer without the knowledge of it, acceptance must be communicated to the offer, and mere inactivity or silence on the offeree does not create a contract as well. The rule laid down in Felthouse v. Bindley that mere inactivity or silence cannot amount to an acceptance is correct in 1862.
The plaintiff offered to buy a horse from his nephew, John, who was going to sell it by auction. John intended to accept his uncle’s offer and advised the auctioneer to reserve the horse for his uncle. However, the nephew did not send his acceptance to the plaintiff and finally the horse was sold by the auctioneer by mistake. However, since John had not communicated his acceptance to the plaintiff, there was no contract between them.5
In the case of Ada and Ben, Ben also sends a letter to reject the Ada’s offer after he has changed his mind. The rejection of an offer by the offeree kills the offer. The offer comes to an end. It can no longer be accepted by the offeree.6 Therefore, a contract cannot come into existence.
c) On Sunday, 12 January, Ben had asked Ada if she wanted to buy his BNW? There is an invitation to treat if Ben has asked Ada to buy his BNW. It is not an offer because Ben just invites offer rather than making one. Where Ada accepts the terms of the invitation, she makes an offer but there is still no contract. Ben is still free to accept or reject the offer. With reference to the case of HKSAR v. Wan Hon Sik in 2001, the display of pirated video discs on the shelves of the shop was just an invitation to treat. A customer who selected the goods from shelves and took them to the casher’s desk only made an offer. There was no sale at that point. The contract was not completed until the owner of the shop accepted the offer.7 Therefore, an invitation to treat is different from an offer.
In the case of Ada and Ben, since Ada makes an offer which can be accepted or rejected by Ben. No contract has been concluded between them because Ben rejects the offer by sending a letter that is arrived before Ada checks her voicemail.