The Household Fire and Carriage Accident Insurance Company (Limited) v Grant (1878–79) LR 4 Ex D 216 is an English contract law case concerning the "postal rule".
Mr Grant applied for shares in the Household Fire and Carriage Accident Insurance Company.
Later the company went bankrupt, and asked Mr Grant for the outstanding payments on the shares, which he refused saying there was no binding contract.
The question was whether Mr Grant's offer for shares had been validly accepted and as such whether he was legally bound to pay.
Thesiger LJ for the majority held that there was a valid contract, because the rule for the post is that acceptance is effective even if the letter never arrives.
Once someone posts acceptance, he argued, there is a meeting of minds, and by doing that decisive act a contract should come into effect.
The acceptor, in posting the letter, has, to use the language of Lord Blackburn, in Brogden v Directors of Metropolitan Ry Co,[1] “put it out of his control and done an extraneous act which clenches the matter, and shews beyond all doubt that each side in bound.” How then can a casualty in the post, whether resulting in delay, which in commercial transactions is often as bad as no delivery, or in non-delivery, unbind the parties or unmake the contract?
There is no doubt that the implication of a complete, final, and absolutely binding contract being formed, as soon as the acceptance of an offer is posted, may in some cases lead to inconvenience and hardship.
At the same time I am not prepared to admit that the implication in question will lead to any great or general inconvenience or hardship.
An offerer, if he chooses, may always make the formation of the contract which he proposes dependent upon the actual communication to himself of the acceptance.
Upon balance of conveniences and inconveniences it seems to me, applying with slight alterations the language of the Supreme Court of the United States in Tayloe v Merchants Fire Insurance Co., more consistent with the acts and declarations of the parties in this case to consider the contract complete and absolutely binding on the transmission of the notice of allotment through the post, as the medium of communication that the parties themselves contemplated, instead of postponing its completion until the notice had been received by the defendant.
Upon principle, therefore, as well as authority, I think that the judgment of Lopes, J., was right and should be affirmed, and that this appeal should therefore be dismissed.Bramwell LJ gave a spirited dissent, concluding that acceptance should only be effective once it arrives (but see also an apropos 1974 case, The Brimnes).
The question in this case is not whether the post office was a proper medium of communication from the plaintiffs to the defendant.
Meanwhile I wish to mention some elementary propositions which, if carefully borne in mind, will assist in the determination of this case: First.
That if there is a difference where the acceptance is by a letter sent through the post which does not reach the offerer, it must be by virtue of some general rule or some particular agreement of the parties.
As, for instance, there might be an agreement that the acceptance of the proposal may be by sending the article offered by the proposer to be bought, or hanging out a flag or sign to be seen by the offerer as he goes by, or leaving a letter at a certain place, or any other agreed mode, and in the same way there might be an agreement that dropping a letter in a post pillar box or other place of reception should suffice.
The question then is, is posting a letter which is never received a communication to the person addressed, or an equivalent, or something which dispenses with it?
The lease might be such as not to require a deed, could a subsequent lessee be ejected by the would-be acceptor of the offer because he had posted a letter?
It is said that a contrary rule would be hard on the would-be acceptor, who may have made his arrangements on the footing that the bargain was concluded.
That a letter honestly but mistakenly written and posted must bind the writer if hours before its arrival he informed the person addressed that it was coming, but was wrong and recalled; suppose a false but honest character given, and the mistake found out after the letter posted, and notice that it was wrong given to the person addressed.
Further, it seems admitted that if the proposer said, “unless I hear from you by return of post the offer is withdrawn,” that the letter accepting it must reach him to bind him.
As to the authorities, I shall not re-examine those in existence before the British and American Telegraph Co. v. Colson But I wish to say a word as to Dunlop v Higgins;[3] the whole difficulty has arisen from some expressions in that case.
Now Mr. Finlay shewed very clearly that the Lord Justice Clerk decided nothing inconsistent with the judgment in the British and American Telegraph Co v Colson[6] Since the last case there have been two before Vice-Chanceller Malins, in the earlier of which he thought it “reasonable,” and followed it.
In the other, because the Lord Justices had in Harris' Case[7] thrown cold water on it, he appears to have thought it not reasonable.
The difficulty has arisen from a mistake as to what was decided in Dunlop v Higgins,[8] and from supposing that because there is a right to have recourse to the post as a means of communication, that right is attended with some peculiar consequences, and also from supposing that because if the letter reaches it binds from the time of posting, it also binds though it never reaches.
I believe the latter will be obviated only by the rule being made nugatory by every prudent man saying, “your answer by post is only to bind if it reaches me.” But the question is not to be decided on these considerations.