Introduction
Today's world of technology it is like an electronic world without borders. Globalization and international trade has become very much convenient with the modern computer technology. The interactive networks like Internet connects and link's everyone in any part of the world.
Technology forms the infrastructure of business operations as the world on commerce places greater reliance on technology. The advance of the technology challenges to today's law and introduces greater difficulty in constructing an adequate framework for e-commerce.
Contract in ecommerce is either through website or email. No matter how an electronic contract is created, the basic principles of offer and acceptance will always apply. An offer must be made which must then be unconditionally accepted. It was not clear whether postal rule was applied in email as The Electronic Communications Act 2000[1] failed to address the important issue of whether the postal rule applies to electronic mail. It is an arguable area and will be discussed in detail below. The overview of the postal acceptance rule and a description of email will be discussed and compared.
In 1818, there were many different views about the application of postal rule in contract formation like email. The rationale of the application of this rule will be discussed and argued in the context of email as email is not an instantaneous method of communication and will be seen if postal rule can be applied to it. In United Kingdom there is no case law suggesting the extension of postal rule to email acceptance. There is no settled case to suggest when an acceptance, communicated electronically, will be treated binding, although it is thought that the receipt rule will apply.
The case of Adams v Lindsell[2] established the first postal rule acceptance when the court had to decide the moment of contract formation by post. The court found that the parties did not know the exact time when communicating acceptance by post. The parties were not aware of the communication as postal communication is subject to delay. This was led to a formulation of the rule as it created many problems. This rule as accepted in the common law legal systems is: "Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted"[3]. The uncertainty regarding the moment of contract formation does not happen in the environment of direct communication or even in distance contracting where an instantaneous method of communication is used. In this kind of contracting, all parties are aware of contract conclusion and they do not face problematic issues such as delay or failure of transmission which occur in non-instantaneous communications. In contrast, the case of Adams v Lindsell[4], adopted the rule to avoid "the extraordinary and mischievous" consequences which could follow if it were held that an offer might be revoked at any time until the offeree was in the position of "accepting it had been actually received"[5].
Another reason has been suggested for the validity of this rule, is that the offeror must be considered as having made the offer throughout the whole time that his offer is in the post, and that therefore, the agreement between the parties is complete as soon as the acceptance is posted[6]. (Henthorn V. Fraser [1892] 2 Ch.27, 31). This idea depends on the assumption that the offer creates a power that binds both parties and that an acceptance is an exercise of that power. Consequently, the offeror has, in the beginning, full power to determine the acts that are to constitute acceptance. However, after the offeror makes that determination, the legal consequences are out of his hands because an offer has then become effective and the offeree has an advantage over the offeror in the contract formation process. The offeree may need additional time to decide whether or not to accept the offer and during that time, may need to spend money and effort in reaching to a decision. It can be argued that if contracting by email is similar to contracting by post then there will be no any problem in applying the postal rule in email acceptance.
The Postal Acceptance Rule and Email Acceptances
Several authors express the view that email and other methods of online contracting are instantaneous communications and that the general acceptance rule should apply to their acceptances. In fact, this argument may be true in respect to website acceptances since there is no actual space in time between the sending and the acceptance of the offer. Transmission of email messages are different than that happen in website contracting as we will examine in the following.
How is E-mail Transmitted?
A user who has an email account can draft a message that he is going to send without having a connection to the internet. After the user creates this message on the sender's computer the first stage of the e-mail's journey starts when he opens the connection to the internet server provider (ISP). The second stage occurs at the moment the sender actually presses the send button, which, so long as the network is not busy and the receiver's email address has been correctly entered, transmits it along the international network of computers until it reaches the intended receiver's ISP. From the ISP the email enters the internet where it may bounce from a minimum of one computer to many millions, before reaching the ISP of the receiver. The recipient will then be able to retrieve the message by logging onto their ISP and downloading the message.
In fact, the e-mail's journey, while travelling through the internet, may involve travelling across the world even though the person receiving the message is in the next building. This journey takes a moment, until the recipient receives the email message. This fact does not differ even, if the internet service provider for the offeree is the same as for the offeror, as would be the case if they are members in the corporation or the university email network. This is because the transmission of email through the network depends entirely on the viability of the ISP for the offeree or the offeror. The speed of email messages depends, in these cases, on whether one or more of these service providers are busy with millions of applications from other internet users. Considerable delays may occur in email communication between when a message is sent and when it is received by the recipient. These delays result from the complex path over which the email is sent. This explains why, on occasion, an email takes a longer time than usual to reach the recipient. Thus, it can be said that email is not an instantaneous form of communication, because as explained above, there can be gap in time between dispatch and delivery.
This conclusion was recently pointed out in Singapore, in the judgment of Rajah JC during the case of Chwee Kin Keong v Digilandmall.com Pte Ltd[7],( [2005]SGCA 2 ) "… unlike a fax or a telephone call, it is not instantaneous. Emails are processed through servers, routers and internet service providers. Different protocols may result in messages arriving in an incomprehensible form. Arrival can also be immaterial unless a recipient accesses the email, but in this respect email does not really differ from mail that has not been opened."[8] If email contracting can be considered as a non-instantaneous communication, the courts then argue that at which point of time it should be considered to have been sent. Examining the nature of dispatch is an essential point for the courts if they want to apply the postal rule in the context of email. Usually, an acceptance is considered as having been sent at the time the acceptance went out of the possession of the offeree and into the possession of the third party allowed to receive it. The third party, of course, is neither an agent of the offeree nor of the offeror, but in the situation of email, it is the ISP. Even though the offeree's server is not under the offeree's control, it is considered a provider for the internet service to the offeree and likewise, it is not agent to the offeree, as it is an independent entity.
In transmission of the acceptance through email, the message is considered to be out of the offeree's position at the time the offeree connects to the internet and presses the 'send' button. The offeree may receive acknowledgement that the message is successfully sent , otherwise the offeree will receive a message in his mail box system, indicating a failed delivery notice of an email which has not been successfully transmitted. There are times when a computer freezes upon sending a message, the offeree should at that time resend the email, because the message may not have been sent or may have been altered when it was frozen.
Application of the Postal Acceptance Rule to E-mail Acceptances
The first reason for extending the application of postal acceptance rule to email contracts is the absence of any legislative establishment regarding determining the conclusion of email acceptances. There are two examples of legislation, English law and the other in the USA, in respect to the US uniform laws. In general, even though the electronic commerce legislation, in the UK and the US, do not aim to provide substantial changes to the rules of contract formation, particularly regarding email contracting, they do provide clarification of the contracting process, especially in contracting through websites[9]. (Arts 9,10, 11 of the Ecommerce Directive 2000). The US laws are active in determining the time and place of dispatch and receipt of electronic messaging. UCITA stand for "Uniform Computer Information Transactions Act". UCITA is a draft state law for contracts relating to software and other forms of computer information. The National Conference of Commissioners on Uniform State Laws (NCCUSL) drafted this model law.
Taking the Model Law (UNICTRAL) approach as a main source, US legislation relating to this discussion reject the application of the postal acceptance rule for electronic transactions and adopt the general, for the acceptance to be effective. The reasons for this are firstly, in the US, the application of the general rule depends on whether the method of communication is instantaneous or "substantially instantaneous as two-way communication". Secondly, US laws, especially the UETA.UETA clarifies the moment when a message is considered as having been received by the recipient and when it could be accessible in order to be received. The UETA contains a section entitled 'Time and Place of Sending and Receipt', which states that an electronic record is deemed to be sent when it is properly addressed or directed to another recipient, is in a form capable of being read by the other parties' system and when it is out of the control of the sender but however, it does not establish when the acceptance becomes effective and the contract is formed.
Additionally, subsection 15(b) of the UETA[10], states that 'an electronic record is deemed received when it enters an information processing system designated by the recipient for receiving such messages, and it is in a form capable of being processed by that system.[11]' See Arts 9, 10, 11 of the Ecommerce Directive 2000[12], which is uniform commercial code for software licenses and other computer information transactions, goes further, with detailed provisions to indicate explicitly the application of the general rule in contracting by electronic means. Article 215[13] of the Act provides for electronic messages to be in effect at the time of receipt, regardless of whether any individual is aware of that receipt. Receipt is defined as: "In the case of an electronic notice… coming into existence in an information processing system or at an address in that system in a form capable of being processed by or perceived from a system of that type by a recipient, if the recipient uses, or otherwise has designated or holds out, that place or system for receipt of notices of the kind to be given and the sender does not know that the notice cannot be accessed from that place"[14]. (See UCITA Art. 102(A) (52)) In this Act, under the section entitled "Offer and Acceptance in General", S.203 (4)[15], it states that "if an offer in an electronic message evokes an electronic message accepting the offer, a contract is formed, when an electronic acceptance is received". This means that UCITA considers that the general rule should apply to electronic transactions, even if the recipient is not aware of its receipt.
At the English legislation level, there is no indication of treatment of conclusion of contract or timing issues as there is in the UETA or the UCITA. The Regulations of Electronic Commerce 2002[16] do not have any article indicating when a message is considered as having either been sent or received. These Regulations brought the majority of the provisions of the Directive into force on 21st August 2002. The Electronic Commerce Directive requires member states to establish a somewhat more complicated rule that departs from the UETA and the UNCITRAL, Article 11[17] provides: Member states shall ensure, except when otherwise agreed by parties who are not consumers, that in cases where the recipient of the service places his order through technological means, the following principles apply: the service provider has to acknowledge the receipt and they are deemed to be received when the parties to whom they are addressed are able to access them.
Unlike UETA, the Regulations do however, focus on accessibility and the contracting process on the website, rather than analyze in depth, the general and vague concept "able to access". This is because the Regulations aim to provide transparency by requiring information to be supplied.
It can be said that this explanation is illustrative of the trend in the two countries to consider online contracting, especially contracting through websites, as an example of an instantaneous method of contracting and thus apply the general rule to this type of contracting in determining the moment of contract conclusion.
This is not the case with respect to electronic mail, where there is no explicit provision that indicates the nature of such contracting. It can be inferred however, from the general provisions regarding timing issues in electronic transactions, that email will not receive the same treatment as websites. UNICITRAL Model Law provided assistance over email acceptance which is not yet been adopted by English and European Law. Even there are no cases concerning the timing issue of acceptance in electronic commerce in United Kingdom
The second important reason for applying the postal rule is that it avoids any business uncertainty regarding the timing of email contracts. In fact, applying the postal rule will avoid such uncertainty and create a definite time regarding to email contract conclusion.
In addition, email is subject to delay as it is considered as a non-instantaneous method of communication. Email is also known as digital way of post system. There are many possible way for an email to be delayed as there can be hacking, failure of network or incorrect email address. The offeror therefore should take the risk of non- delivery of the email. However, there were also similar issues of delay in telex. Likewise with email, the mere possibility of delays, incorrect addresses or technological failures may not be sufficient to create a universal rule that an email acceptance is effective at a time other than communication.
Generally, courts tend to apply the general rule in cases where there is an instantaneous method of communication, such as the telephone or the EDI or where they are virtually instantaneous and direct, such as telex. (Entores Ltd. v Miles Far East Corporation [1955] 2 QB 327)[18] This approach is clear in the courts' decisions that hold that acceptances sent via telex are only effective upon their receipt by the offeror and a similar, albeit obiter, statement in relation to facsimile communications was made by Lord Gill in the case of Merrick Homes v Duff[19]. When there are difficulties in the transmission, such as technical delay or human error, the situation is not very clear, even in the case of instantaneous communications. The House of Lords hesitated to apply the general rule where there is a delay or error in the transmission. For example, in Brinkibon Ltd v Stahag Stahl and Stahlwarenhandel GmbH[20], the court held that "Some error or default at the recipient's end which prevents receipt at the time contemplated and believed in by the sender. No universal rule can cover all such cases; they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases a judgment where the risks should lie."
The above conclusion has been taken in the US, especially regarding telex acceptances, because there may be some delays in receiving the acceptance, the telex appears to be treated in the same manner as regular mail.( See generally In re Marin Motor Oil Inc., 740 F. 2d 220,227-229(3d Cir.1984)[21].
The last reason returns to the contention that applying the general rule to email acceptances will complicate the situation, as there are numerous identifiable points along the communications network at which a communication may be considered received by the addressee. It has showed that some commentators assume that the email is considered to be received at the time when it enters the offeror's ISP, while others consider that even if the mail is not logged into, it is received at the time the email entered the mailbox of the offeror, Whenever this time is, the essential point is determining the exact point of time the offeror could access the message and download it to his computer system.
In conclusion, there is always delay in delivery in the application of postal rule. Thus, every time an offeror expects an acceptance by post, he will always have to wait for a certain period of time. Thus, delay in delivery still happens in email and the possibility of non-delivery, especially if the sender does not know whether the message is received. Email is effectively instantaneous, but it is unreliable that it overrules the fact that it is instantaneous.
It can also be said that, as the world of technology is improving the delays in email will reduce and it will seem to be more convenient any reliable therefore it can even be instantaneous mode of communication. However, having examined the basis of the development of the postal rule and applying the reasoning above, the logical conclusion would be the postal rule should be limited and not extended to cover email would seem logical.
