Challenged but not defeated by technology: why the postal rule should apply to contracts formed by email

An entrenched general principle of contract law is that commercially aware parties may enter into legally binding agreements in whichever way, and subject to such terms, as they chose. Contracts may be formed using any medium sufficient to display the legal requirements for the formation of a binding contract; thus a binding agreement may be evidenced in writing, verbally, or implied from the conduct of the parties. It is now also firmly established that contracts can be entered into by electronic means using on-line forms of communication via the Internet. Because the domain of the Internet flows indiscriminately across international boundaries, jurisdictional problems arise when contractual disputes arise. Therefore determination of the time and place of formation of an electronic contract is essential. The crucial determinant of contract formation is acceptance of an offer, therefore acceptance – whether by the customer accepting the merchant’s offer, or the merchant accepting the customer’s offer will dictate the time and place the contract is made. As to whether the postal rule applies to on-line communication has not been judicially established, nor is there legislative guidance; but it has been the subject of considerable academic consideration, both for and against. It is argued in this article that whilst the structure and mechanisms of the Internet and email technology raise unique issues when determining contract formation, there are sound theoretical and practical reasons for applying the postal rule to acceptances sent by email. The existing law and practical issues will be discussed, and it will be seen how, when applied to electronic transactions, the traditional legal principles are challenged, but not defeated, by technology.