Why the Rules of Offer and Acceptance should be Changed

Abstract

I will be arguing that the rules of offer and acceptance in England and Wales should be changed for three main reasons: the mirror image rule does not reflect parties’ intentions, the postal rule is outdated and causes tension with the sanctity of contract and that the rules don’t reflect the reality of how agreements are reached.

Introduction

For a contract to be valid, there are five requirements. The first two of these requirements are offer and acceptance, followed by certainty, intention to create legal relations and finally, consideration. The two most controversial requirements are that of offer and acceptance, but to understand these controversies, we must first understand what they are. An offer is a clear statement, in which a party has the intention to be bound if it is accepted. Acceptance is the unqualified assent to the terms of an offer. These definitions may seem straightforward, but case law has proven that there are many contradictions and points of contention which led me to argue the rules on offer and acceptance should be changed. I will first highlight the three main reasons as to why this is the case and support my reasons with academic commentary and case law.

Reason 1 – Mirror image rule

The mirror image rule is defined by Ewan McKendrick as the requirement for parties to “find a clear and unequivocal offer which is matched by an equally clear and unequivocal acceptance”[1]. As a result, parties who modify terms of the original offer are engaging in a counteroffer, whereby the original offer is declined. This principle is portrayed by Hyde v Wrench[2], whereby the claimant made a counteroffer and later tried to claim that the original offer was still in place. Lord Langdale asserted that by providing new terms, the claimant “made an offer of his own” and thus “rejected the offer previously made”. This notion that offer and acceptance must mirror each other exactly, leads to contract formation being too rigid and not reflecting parties’ intentions. Contracts are drafted specifically with parties’ interests in mind, so when a rigid rule such as the mirror image rule, leads to contracts failing due to trivial differences between offer and acceptance, parties’ intentions are not being pursued. A critic may argue that this rule is necessary, as minor misunderstandings should be identified before a contract is signed and affects parties’ more severely later. However, contracts are often drafted by skilled legal professionals. If one small difference is present between the offer and acceptance, the assumption should be that the skilled legal professional intended it.

Reason 2 – Postal Rule

Shawn J. Bayern argues that offer and acceptance are outdated rules, that “fit poorly with modern contracting practice”.[3] The postal rule indicates that the modernisation of these rules is necessary, and the relevant case law being from the 19^th century further proves this. In Adams v Lindsell[4], Lord Ellenborough CJ dissects the question, ‘when is acceptance by post valid?’. The claimant received an offer from the defendant via post for the purchase of wool. He decided to post his letter of acceptance, but it was received days after the defendant sold the wool to someone else. The claimant sued for breach of contract, and Lord Ellenborough held that the contract was valid as the offer had been acceptance as soon as it was posted, despite it not being received. The rationale of this rule is outdated, however.

Lord Justice Thesiger argued in Household Fire Insurance[5] that the postal rule exists to ensure that the offeree’s willingness to be bound by the contract in posting their acceptance is honoured. I would argue that this benefits the offeree and puts the offeror at a disadvantage. As Peter J. Stevenson asserts, if the offeror is unaware that the acceptance has been made by the other party, it is illogical to bind them to the contract.[6] In Henthorn v Fraser[7],  the claimant sent acceptance via post to the defendant. Before the acceptance letter reached the defendant, the defendant had delivered a revocation letter. The claimant’s interests were protected, as the court ruled against the defendant. The offeror clearly did not wish to be bound by the contract, but the court viewed this as irrelevant. This creates fears regarding the sanctity of contract, as the defendant was not a party to the agreement willingly. To protect the sanctity of contract, I would therefore suggest that the postal rule either be amended to protect the offeror or be removed entirely.

Reason 3 – Rules of Offer and Acceptance are too Technical

Lord Wilberforce argues in The Eurymedon[8] that English law forces “the facts to fit uneasily into the marked slots of offer, acceptance…”[9], to have a more technical approach to contracts. It therefore fails to reflect the reality of how agreements are reached. The rule of offer and acceptance allows parties to identify when a contract becomes legally binding, to ensure certainty in the law. But modern contracts, especially in commercial spheres, involve a time-consuming back-and-forth of negotiations. This can make it difficult to identify when a contract has been formed, which is a major issue in commercial contracts, where time is of great importance. Lord Denning states that the “better way is to look at all the documents passing between the parties” to ascertain the moment where an agreement has been reached. Though some argue this can complicate and elongate court proceedings, it is important to do so to understand when the parties were legally bound. This is a modernised approach to the rigid framework of offer and acceptance.

Conclusion

To conclude, the rules of offer and acceptance are outdated and create problems in modern contract law, specifically in regard to the postal rule, mirror image rule and deciding when a contract has been formed. To combat this issue, I would suggest that statutory reform be introduced to update legislation and keep modern commercial contracts in mind. Contracts may have begun as a way to govern small transactions between farmers or labourers, but with most contracts now being between large corporations, reform is necessary to keep contract law up to date.

Bibliography

Cases:

Adams v Lindsell (1818) 1 B & Ald 681

Henthorn v Fraser [1892] 2 Ch 27

Household Fire Insurance v Grant (1879) 4 Ex D 217

Hyde v Wrench (1840) 3 Beav 334

The Eurymedon [1975] AC 154, 167

Books:

McKendrick Ewan, Contract Law (first published 1997, Macmillan Law Masters) 26

Online Journals:

Bayern Shawn J., ‘Offer and Acceptance in Modern Contract Law: A Needless Concept’ (2015) Cal. L. Rev. <https://ir.law.fsu.edu/articles/40> accessed 27 July 2025

Journal Articles:

Stevenson, Peter J., Going Postal: An Examination of the Postal Rule and its Modern-Day Relevance (May 9, 2010)

[1] Ewan McKendrick, Contract Law (first published 1997, Macmillan Law Masters) 26

[2] Hyde v Wrench (1840) 3 Beav 334

[3] Shawn J. Bayern, ‘Offer and Acceptance in Modern Contract Law: A Needless Concept’ (2015) Cal. L. Rev. <https://ir.law.fsu.edu/articles/40> accessed 27 July 2025

[4] Adams v Lindsell (1818) 1 B & Ald 681

[5] Household Fire Insurance v Grant (1879) 4 Ex D 217

[6] Peter J. Stevenson, Going Postal: An Examination of the Postal Rule and its Modern-Day Relevance (May 9, 2010)

[7] Henthorn v Fraser [1892] 2 Ch 27

[8] The Eurymedon [1975] AC 154, 167

[9] Lord Wilberforce The Eurymedon [1975] AC 154, 167