Henthorn v Fraser 26 Mar 1892 [1892] 2 Ch 27, CA Case Info

An offer to sell property was made in person. The buyer, who lived in another town, accepted by post. Before the acceptance arrived, the seller posted a revocation. The court held a binding contract was formed when the acceptance was posted.

Facts

On 7 July 1891, the defendants gave the claimant, Mr Henthorn, a note offering him the option to purchase certain houses for £750, with the offer to remain open for fourteen days. The claimant resided in Birkenhead, while the offer was made at the defendants’ office in Liverpool. The next day, 8 July, the defendants posted a letter between 12 and 1 PM withdrawing the offer. This letter of revocation was delivered to the claimant’s address at 5:30 PM. However, at 3:50 PM on the same day, before receiving the revocation, the claimant had posted a letter unconditionally accepting the offer. The claimant’s acceptance letter was delivered to the defendants’ office at 8:30 PM, after business hours, and was read the following morning. The claimant sought specific performance of the contract, which was granted by the Vice-Chancellor. The defendants appealed to the Court of Appeal.

Issues

The central legal issue was whether a binding contract had been formed. This depended on two key questions: first, when did the acceptance of the offer become effective? And second, was the offer effectively revoked before the acceptance took place? The case specifically required the court to determine if the postal acceptance rule applied even when the offer itself was not made by post.

Judgment

The Court of Appeal dismissed the appeal, affirming the decision for specific performance. The judges held that a binding contract was concluded at the moment the claimant posted his letter of acceptance.

Lord Herschell’s Reasoning

Lord Herschell clarified the scope of the postal acceptance rule. He distinguished it from situations where parties are negotiating in each other’s presence. He held that the rule applies where using the post is a reasonable and contemplated method of communication between the parties. He stated the principle as follows:

Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.

Given that the claimant lived in a different town from the defendants, it was reasonable to infer that he would use the post to communicate his acceptance. Therefore, the contract was formed at 3:50 PM on 8 July when the acceptance was posted. In contrast, a revocation of an offer is only effective upon communication to the offeree. Since the letter of revocation did not arrive until 5:30 PM, it was too late to prevent the formation of the contract.

Lindley L.J.’s Reasoning

Lindley L.J. concurred, stating a revocation ‘is of no effect until it is brought to the mind of the person to whom the offer is made’. He cited Byrne & Co. v Leon Van Tienhoven & Co. to support the principle that an uncommunicated revocation is not a revocation at all. He agreed that given the parties’ locations, posting the acceptance was an ordinary and reasonable way of accepting the offer, thus the contract was complete upon posting.

Kay L.J.’s Reasoning

Kay L.J. also concurred, though he expressed some hesitation about the ‘fiction’ of the post office being the agent of both parties. He preferred to ground the rule in the implied authorisation of the offeror. He concluded:

Posting an acceptance of an offer may be sufficient where it can be fairly inferred from the circumstances of the case that the acceptance might be sent by post.

He agreed that the circumstances (parties living in different towns) justified such an inference. The acceptance was therefore complete at 3:50 PM, well before the revocation was communicated at 5:30 PM.

Implications

Henthorn v Fraser is a landmark decision in contract law that significantly developed the postal acceptance rule. It broadened the rule’s application beyond cases where the offer was made by post, establishing a new test based on whether it was reasonable in the circumstances for the acceptance to be sent by post. The case also firmly established the asymmetry between acceptance and revocation in non-instantaneous communications: acceptance is effective upon posting (dispatch), while revocation is only effective upon receipt (communication). This principle provides certainty for the offeree and remains a fundamental element of the law of contract formation.

Verdict: The appeal was dismissed; the original order for specific performance in favour of the claimant was affirmed.

Source: Henthorn v Fraser 26 Mar 1892 [1892] 2 Ch 27, CA Case Info