Formation of contract — SQE1 Contract question
A worked single-best-answer question on formation of contract, with why each wrong option is wrong — the way SQE1 traps candidates.
On 2 June Teresa, a motorcycle dealer, posted a letter to Callum offering to sell him a vintage motorcycle for £12,000. The letter said nothing about how Callum should accept. Callum received the letter on 4 June and at 10 am on 5 June posted a properly stamped and addressed letter of acceptance. At 2 pm on 5 June Teresa emailed Callum withdrawing her offer, and Callum read the email immediately. Callum's letter reached Teresa on 7 June.
Which of the following best describes the legal position?
- AThere is no contract, because an email withdrawal takes effect instantly and overrides an acceptance still in the post.
- BThere is no contract, because an acceptance is effective only when it reaches the offeror, which was after the withdrawal.
- CA contract was concluded, but only on 7 June when Teresa received the letter of acceptance.
- DA contract was concluded at 10 am on 5 June when Callum posted his acceptance, so Teresa's later withdrawal was ineffective.
- EA contract was concluded only if Teresa had expressly authorised acceptance by post.
Show answer and reasoning
Rule: A properly posted acceptance takes effect on posting where use of the post is reasonable, whereas revocation of an offer takes effect only on receipt.
- A Revocation takes effect only on receipt, but a posted acceptance is effective on posting, which happened first. (wrong rule)
- B The postal rule displaces the receipt rule where use of the post is reasonable, as it is when the offer was made by post. (wrong rule)
- C Under the postal rule acceptance is complete on posting, not on delivery. (wrong rule)
- E The postal rule applies where it is reasonable to use the post, which it is when the offer itself was sent by post (Henthorn v Fraser); express authorisation is not required. (wrong rule)
Source: Adams v Lindsell (1818) 1 B & Ald 681; Byrne & Co v Van Tienhoven (1880) 5 CPD 344; Henthorn v Fraser [1892] 2 Ch 27