Postal acceptance rule not dead yet

The first year law student’s favourite, the postal acceptance rule, might be thought to have been a-dying in the age of email, but it came up for discussion in Carmarthen Developments Ltd v Pennington [2008] CSOH 139, opinion issued 24 September 2008.

The issue was, in simple terms, whether the rule applied to a notice exercising an option to purchase land.  Lord Hodge ruled that it did not.  Notice of the exercise of an option contained in a pre-existing contract was not an acceptance.  Lord Hodge observed that “While an option contract is very similar in effect to a unilateral promise to keep an offer open for acceptance for a specified period, the exercise of an option is not the acceptance of an offer but the exercise of a contractual right conferred by the option agreement” (para 14).  A good exam question quotation.  Discuss.