November 18, 2010

Postal rule: sooooo yesterday…

Thou shalt not wait any longer, Kim's blog is back with all the news and comments on European contract law you've been so desperately craving for.

As I promised at the end of my last entry, this week I want to give my personal perspective on the postal rule and how this rule should refurbished to remain relevant in our present day contractual trade relations.

The postal rule is a Common law principle established by the 1818 English case Adams v. Lindsell which states that a contract, which has to consist of a valid offer an acceptance, and good consideration but that will be treated another time, will come into force at the moment the letter containing the acceptance was posted by the offeree. This is the dispatch theory.

This rule is slightly off these days because only an infinitely small amount of trade transactions in Europe are still conducted in a traditional way by post and without having explicitly excluded the application of the postal rule.

On the other hand, for a common European contract law to work, it would still have to be taken into account and compared to the systems in place in other places such as in continental Europe.

France and Germany, civil jurisdictions, generally don't follow this rule, German law for example states that a contract is concluded as soon as the acceptance reaches it's addressee according to §130 of the BGB, the so-called reception theory.

French Law then again adopts largely the position of English law due to the case L'Aigle/Comase, according to which the dispatch theory has to be applied.

After having presented with the main aspects of the postal rule, I will continue next time and start to explain how this principle can become problematic and even antiquated in the times of growing internet trade within the EU.

So we shall meet a week!


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