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February 9, 2025 at 02:59 PM
*ADAM V LINDSELL*
CITATION: ADAM V LINDSELL(1818) 1B & ALD 681; 106 ER 250
AREA OF LAW: Contract Law
JUDGES: Lord Ellen borough CJ, Bayley J, Abbott J, Holroyd J.
*FACTS OF CASE*
1. On September 2,1817, Lindsell & Co wool dealers from St. Ives, sent a letter to Adams & Co. in BromsGrove offering to sell them wool.
2. They asked for a reply via post.
3. The letter was incorrectly addressed and didn't reach Adams until September 5th.
4. Adams replied immediately, posting the acceptance on the same day.
5. Meanwhile, not having heard back Lindsell sold the wool to another buyer on September 8th.
6. Adams' acceptance reached Lindsell on September 9th.
*LEGAL ARGUMENT*
1. Lindsell argued that no contract was formed because they hadn't received Adams' acceptance before selling to another party.
2. Adams contended that the contract was complete when they mailed their acceptance.
*REASONING OF THE COURT*
1. The Court considered that if the contract wasn't formed until the acceptance was received, it would result in an infinite loop of communication.
2. They reasoned that the Offeror (Lindsell) implicitly authorized the post office as their agent to receive their acceptance.
*IMPLICATIONS*
1. This Case created an exception to the general rule that acceptance must be communicated to be effective.
2. It aimed to provide certainty in commercial transactions conducted by post.
*LATER DEVELOPMENT*
1. The rule has been applied to other forms of communication such as telegrams.
2. However, it generally doesn't apply to instantaneous forms of communication like telephone or email.
*CRITICISMS*
Some Legal scholars argue that the rule can lead to unfair results, as the offerer (Lindsell) might be bound to a contract without knowing it.
*COURT'S RULING*
The Court ruled in favor of the plaintiff, Adams. The key elements of the ruling were:
1. Contract Formation: The Court held that the contract was formed at the moment Adams posted their letter of acceptance, not when Lindsell received it.
2: Postal Rule: This decision established what became known as the "postal rule" or "mailbox rule" in contract law. Which is that an offer is accepted by post, the parties to the agreement are legally bound as soon as the letter accepting the offer is posted, regardless of whether the letter is later received by the offerer or not.
3. Specific Judgement: The Court found that Lindsell was bound by the contract with Adams, despite having sold the wool to another party before receiving Adams' response.
4. Reasoning: The Court reasoned that if an offer is made by post, implying that acceptance can be sent by post, then the contract is complete as soon as the acceptance is posted.
5. Implications: The Ruling meant that Lindsell was in breach of contract for selling the wool to another buyer, as a valid contract at already been formed with Adam when the acceptance was mailed.
6. Damages: As a result Adam was entitled to damages for breach of contract.
This ruling was significant because it established a clear principle for determining cases where parties are communicating at a distance. It provided certainty in commercial transactions conducted by posts which is crucial for businesses at the time.
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