Legal Principles and Key Points
- In the case of Household Fire Insurance v Grant 1879 4 EX D 216 concerning company law, the appellant appealed against a decision finding him to be a shareholder in the respondent’s company.
- Where it is expressly or impliedly authorized by the contractual parties that acceptance of an offer could be posted, the contract was sound upon posting the acceptance. This is irrelevant as to whether the delivery was delayed.
- The “postal rule” was developed.
Facts of the Case:
- Grant (G) appealed against a decision finding him to be a shareholder in the respondent company (H).
- G had applied for shares in H and a letter was sent alerting him of this.
- G never received the letter.
- H then went into liquidation and the liquidator sought to recover funds by asking G for the shares.
- G denied being a shareholder of H
- G argued that for him to be a shareholder, the shares should have been communicated to him and a letter posted and not received did not amount to acceptance or ‘communication’.
Issues in Household Fire Insurance v Grant 1879 4 EX D 216
- When was acceptance to a contract if the offeree was never aware of the acceptance.
- Did a letter posted constitute communication and acceptance.
Held by Court of Appeal
- Held by Baggallay and Thesiger, L.JJ., Bramwell, L.J., dissenting, that the defendant was a shareholder.
Baggallay and Thesiger, L.JJ.,
- G was a shareholder.
- The application for shares in H by post held no distinction in terms of acceptance by a delay in delivery by the Post Office and its failure to deliver at all.
- The decision although occasionally inconvenient, it was impossible to adjust conflicting rights of the parties such that the consequences following a mistake on the part of a mutual agent, being the Post Office in this case, were borne equally by all the parties.
Bramwell, L.J., dissenting
“It seems to me that the correct way to deal with those expressions is to refer them to the subject-matter, and not to consider them as laying down such a proposition as the plaintiffs have contended for, but that when the post may be used between the parties it must be subject to those delays which are unavoidable.” It would appear, then, that all the judges in the Court of Exchequer treated the case of Dunlop v Higgins as one decided upon its special circumstances, and as not enunciating any general principle beyond what was necessary for dealing with such circumstances. “ p.231
This case brought contract law the ‘postal rule’ still in acceptance and use today. As a staple of contract law, it seems somewhat outdated and unmodernised through case law and the questions should be asked how fair or relevant it is today.