Household Fire and Carriage Accident Insurance Co v Grant (1879) Facts: o Grant applied for shares in the Household Fire and Carriage Accident Insurance Company. The company allotted the shares to the D, and duly addressed to him, posting a letter containing the notice of allotment. The letter was lost in the post and he never received the acceptance. Later the company went bankrupt, and asked Grant for the outstanding payments on the shares, which he refused saying there is no binding contract. The liquidator sued. Issue: o Whether Grant’s offer for shares had been validly accepted, and was he legally bound to pay? Decision: o There is a valid contract, the postal acceptance rule is effective even if the letter never arrives, Grant is a share holder o It is mischievous to put the offeree liable by an accident in the post o The acceptor, in posting the letter, has, as suggested in Brodgen v Directors of Metropolitan Ry Co , “put it out of his control and done an extraneous act which clenches the matter, and show beyond all doubt that each side is bound” o The offeror may always make the formation of the contract which he proposes dependent upon the actual communication to himself of the
acceptance. If the contract is to be concluded on when the acceptance reach the offeror, there would be an open door for delays and fraud (as in despite the fact that the offeree posted, the offeror received the acceptance, he can throw it away and said, oh, I have never received that, there is no contract); for the acceptor would never be safe in acting upon his acceptance until he had received notice that his letter of acceptance had reached the destination o Bramwell LJ dissenting: o If there is any such general rule to the communication of the acceptance of offers, it is equally applicable to all communications that may be made by post. E.g. if a man is in habit of sending checks and banknotes to his banker by post, and posts a letter containing checks and banknotes, which never reaches, is the banker liable? o It may be said that holding a contrary rule to the acceptor is harsh, but this is so to the offeror o If one said “your answer by post is only to bind if it reaches me”, then the letter accepting the offer must reach the offeror to bind him right? o So the offeror does not have a right to use silence as acceptance, but can ask the offeree to use a specific kind of communication as specified? Holwell Securities v Hughes (1974) Facts: o The D issued a grant to sell a property in Webley. It contained a clause stipulating that there must be a notice in writing within 6 months in order to exercise the option. The C sent a letter, but was lost in the mail and never received by the D. P sued for a specific performance, dismissed and appealed Issue: o P argued that the postal acceptance rule was invoked, so there is a binding contract o Is there a binding contract between the D and the P? meaning, Is the acceptance through letter which has never received by the D, valid?