Opinion - Legal
Comment
by Peter
Horne
Acceptance of
contracts
In my son’s article in
issue 49 (Electronic Acceptance), he appears to leave a possibility that acceptance
by e-mail could take place when sent – analogous with the postal rule. As I would disagree with such a contention,
this led me to address the possible means of acceptance of contracts at the
beginning of the third millennium.
The so called ‘postal
rule’ only applies to the post (telegraph/telegram are on actual receipt) when
it is reasonably anticipated that acceptance will be by post. The general rule is that acceptance must be
received; the postal rule is an anomaly.
The postal rule can be traced
back to Adams - Lindsell in 1818 (when
post was carried by horse and stagecoach – the universal ‘penny post’ was
introduced in 1840). The reason for the rule is unclear, the favourite appears
to be that the post office acts as agent for the parties – which cannot
be so: the post office only receives the package, it has no knowledge of the
contents. It is my opinion that the ‘postal rule’ will disappear, probably at
the latest when the Royal Mail faces full competition. As the rule does not appear to extend to
commercial carriers, I suggest that it is incongruous that acceptance may
depend on the carrier used. As it stands, if you send an acceptance by second
class post on a Monday, it may not actually be received until Wednesday; but,
due to the rule, it could have been ‘received’ on the Monday (at the moment of
posting), whereas the same letter, hand-delivered on the Tuesday, would be
received on the Tuesday! A withdrawal
on the Tuesday (before receipt of the hand delivery) would be effective if the
acceptance was being delivered by hand but would not be effective if sent by
post!
I consider that, in the
near future, all modes of acceptance will be subject to the same rule – actual
or presumed receipt.
In this respect, it may
be worth considering the likely presumption of receipt (i.e. when actual
receipt is not proven):
1.
First
class post – two working days
2.
Second
class post – three working days
3.
Postal
methods which include a guaranteed delivery (including DX) – as guarantee
4.
Fax –
at time of sending
5.
E-mail
– Same (or next) working day dependent upon time of sending
This assumes that the
mode selected has been ‘approved’ by the offeror either expressly in the offer
(in which case the mode will be only as specified) or impliedly by reference
either in the offer or (probably) in a covering letter.
Interesting
observations
In case it has passed
anyone’s notice, the Late Payment of Commercial Debts
(Interest) Act applies to all commercial contracts entered into after 7
August 2002. This Act has been the subject
of several statutory instruments (SIs), gradually extending its scope and
setting the rate of interest – currently 8% above base rate (i.e. 12%). The Act and all of the SIs can be viewed and
downloaded for free on the Stationery Office web site: http://www.legislation.hmso.gov.uk/
This should now resolve
problems as to whether there is a power to award interest (e.g. adjudication
under the Scheme for Construction Contracts). Any attempt to avoid the Act will
be void unless there is a ‘substantial’ remedy available under the contract. We
have yet to see what a ‘substantial’ remedy is. An added advantage of claiming
interest under the Act is that a fixed sum of additional compensation is also
available.
Apportionment of
costs
The Arbitration Act
(and other contractual rules) provide that ‘costs follow the event’?. What is ‘the event’ is often argued at
length by counsel at all levels. Various studies have indicated that
arbitrators have a widely differing opinion as to the application of ‘the
event’. The Arbrix Construction Group has carried out an in depth study which,
hopefully, will become generally available in due course. My own suggestion
(which is compatible with the study) is that we should apply the same methods
of characterisation as we are currently using in adjudication to distinguish
between disputes and issues. The method
and required skills are precisely the same but the result is not identical – a
single dispute may include more than one event.
Evidence or new
dispute?
Whether evidence which
is adduced in support of a particular contention forms a new dispute, which is
outside the adjudicator’s jurisdiction, or is admissible evidence is the latest
and, possibly, the most controversial topic to arise. In the latest case of Nuttall -v- Carter,
a new programme was introduced during the adjudication – it had not been in
existence prior to the notice of adjudication.
While this programme sought to prove the same length of extended time as
previous applications, the reasons were not precisely the same. The court found
that the programme had introduced a new dispute, which had not crystallised
prior to commencement and was therefore outside the jurisdiction of the
adjudicator. This is a matter which has arisen (although not subject to
examination by the court) and will continue to arise. I suggest that this
should be examined by looking at the issue, not the entire dispute. A matter
which tends to prove the dispute may be inadmissible if it does not confine
itself to the issue. For example, evidence that a delay was caused by late
provision of information would be inadmissible if the original contention was
that the delay was caused by additional work, even though for the same period
of time. Of course, as adjudication is a matter of contract, the parties may
agree otherwise (it has happened but don’t hold your breath)
Peter Horne