Question

Where the proposal and acceptance is through letters, the contract is made at the place where

• A. The acceptance is received
• B. The letter of acceptance is posted
• C. Both the above answers
• D. None of the above

Hint:

For contracts by post, remember the "postal rule": Communication of acceptance is complete and the contract is formed at the place and time the letter of acceptance is posted by the acceptor. This is an exception to the general rule that acceptance must be communicated to the offeror.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This question deals with the formation of a contract by post, specifically determining the place where the contract is concluded. This is governed by the "postal rule" or "mailbox rule" of contract law.
Step 2: Detailed Explanation:
According to Section 4 of the Indian Contract Act, 1872:
"The communication of an acceptance is complete,—
\textit{as against the proposer}, when it is put in a course of transmission to him, so as to be out of the power of the acceptor;
\textit{as against the acceptor}, when it comes to the knowledge of the proposer."
This means that the moment the acceptor posts the letter of acceptance, the contract is concluded as far as the proposer is concerned. The proposer becomes bound at this point.
The legal fiction is that the post office acts as the agent of the proposer. Therefore, delivering the acceptance to the post office is considered as delivering it to the proposer.
Consequently, the place of contract is the place where the acceptance is posted. The time of contract is the time when the letter of acceptance is posted.
The leading case on this is \textit{Adams v. Lindsell}.