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The law of obligationsSyllabus BContract LawOffer and AcceptancePostal Rule

ACCA · Question 04 · The law of obligations

Section A

NovaTech Ltd offers to sell a batch of quantum processors to Q-Compute Plc. Q-Compute accepts the offer by posting a letter on Tuesday. On Wednesday, NovaTech sends an email revoking the offer. The email is received immediately but Q-Compute's letter of acceptance does not arrive until Thursday. What is the legal status of the contract?

Answer options:

A.

No contract was formed because the revocation was communicated before the acceptance was received.

B.

A binding contract was formed on Tuesday when the letter of acceptance was posted.

C.

A binding contract was formed on Thursday when the letter was received.

D.

No contract was formed because email is a faster method of communication than post.

How to approach this question

Apply the postal rule of acceptance and the rule for revocation of an offer.

Full Answer

B.A binding contract was formed on Tuesday when the letter of acceptance was posted.✓ Correct
The postal rule states that acceptance is effective as soon as the letter is validly posted (Tuesday). Revocation of an offer must be communicated to the offeree to be effective. Since the contract was already formed on Tuesday, the revocation on Wednesday is invalid.

Common mistakes

Believing that a faster revocation can 'catch up' with a posted acceptance. Once posted, the contract is formed.
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