UNIVERSITY OF DAR ES SALAAM

BUSINESS SCHOOL
BUSINESS LAW ASSIGNMENT

NAME; NKYA CUTHBERT V

REG; 2012-04-03702
COURSE; B-COM ACCOUNTING

QN; “The uncertainty regarding the moment of contract formation does not happen
in the environment of face to face communication or even in distance contracting
where an instantaneous method of communication is used. In this kind of
contracting, all parties are aware of contract conclusion and they do not face
problematic issues such as delay or failure of transmission which occur in non-
instantaneous communication.”
Discuss the validity of this statement with reference pitfalls
underlying postal communication of offer and acceptance in Tanzania and
suggest the possible reforms bearing in mind the recent development of
information communication technology.

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A contract is an agreement enforceable by law. Section 2(h) of the Law of Contract Act, 1872
defines a contract as an agreement enforceable by law. Section 2(e) defines agreement as “every
promise and every set of promises forming consideration for each other.” Section 2(b) defines
promise in these words: “When the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted.
A proposal when accepted becomes a promise.” From the above definition of promise, it
is obvious that an agreement is an accepted proposal. The two elements of an agreement are offer
and acceptance.
Acceptance, Under the Law of Contract Act, 2002 s.2 (1) (b) – Acceptance is defined as an
assent to the proposal by the person to whom it was made. Literary, the section states that “when
the person to whom the proposal is made signifies his assent thereto, the proposal is said to be
accepted, and a proposal, when accepted, becomes a promise”. For there to be a valid contract,
the offer has to be proved and it must be satisfied that the Offeree has accepted the offer. Once
the acceptance is made then it must be communicated to the involved parties. Communication of
acceptance may be made in various ways, like in writing or orally, but in general it has to be
communicated and communication must be made by a person authorized to make it.
Communication of acceptance as per Tanzanian Law of Contract Act, 2002
Sec. 4 (1 – 2) of The Tanzanian Contract Law, the Law of Contract Act 2002, stipulates that “The
communication of a proposal is complete when it comes to the knowledge of the person to whom
it is made. It further states that, the communication of an acceptance is complete –
a) 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;
b) As against the acceptor, when it comes to the knowledge of the proposer.
Therefore, the parties are bound at different times. Unlike the position under the Common Law
in which after the acceptor has put the acceptance into the mode of transmission both parties are
irrevocably bound. Thus under the law of contract Act, the rule is that where an acceptor posts
his letter of acceptance so that the letter is out of his power, then the proposer is bound but not
the acceptor himself. The acceptor is bound when his acceptance comes to the knowledge of the
proposer.
Offer or proposal, An offer or proposal is defined under s. 2(1)(a) of the Law of Contract Act
as a signification by one person to another of his willingness to do or abstain from doing
anything with a view of obtaining the assent of that other to such act or abstinence. A contract
therefore is an agreement and it comes into existence when one party makes an offer which the
other accepts, therefore a person making the offer or proposal is called the Offeror or proposer
and the person to whom it is made is called the Offeree or proposee.

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Instantaneous Communication, These are the other modes of communication of acceptance
brought by development of Information and Communication Technology (ICT), they are faster
modes of communication, such as telephones (land lines and mobile phones), face to face, fax,
telex and email. Such methods have made the globe look like one village, enabling instant
delivery of voice and data (text) communication. Thus these forms of communication do not fall
under the postal services. Acceptance by these methods is only valid when the message is
received and this makes it more certain on the issues of contract formation, conclusion as well as
absence of delays or failure in transmission which occurs in non-instantaneous modes where
both parties becomes irrevocably bound irrespective of receipt of acceptance.
Since the contract is governed by the place of acceptance of the offer, and acceptance takes place
at the place where it is received. Where acceptance is communicated by letter it is regarded as
received at the place of posting rather than at the place of actual receipt. This is because, once a
letter has been posted, the Post Office holds it on behalf of the addressee. Where telephone
communication is used the place of acceptance is the place where the recipient of the acceptance
is. That is the general rule for instantaneous communication. It would apply also to an acceptance
sent by telex, email and fax directly from the acceptor's office to the offeror's office.
Advantages of using instantaneous modes of communication,
1. Quick and immediate feedback, there is quick delivery of communication and the
feedback can be provided on spot upon the receipt of acceptance by Offeree, compared to
non-instantaneous where there is delays, also feedback is not certain until the receipt of
acceptance.
2. Environmental friendly, they do not involve items that pollute environment like the use of
motor vehicles for carrying letters which produce soot, lot of paper works which requires
raw materials from forest (cutting trees).
3. Less cost in terms of operation and delivery, since no costs of supervisions, no need to
use vehicles as well the deliverance does not need and intermediary person or an agent.
4. It is certain and clear, both parties are aware of contract terms, formation and conclusion
on the same day or on spot as it provide direct channel of communication. Example the
use of phone and fax.
5. User friendly and convenient, they do not involve complicated procedures to be followed,
things like stamps, and transport fees are not there, and thus it is convenient to everyone.
Postal communication of offer and acceptance, this is best known as “postal rule” whereby a
posted acceptance will be deemed to have been communicated when it has been posted
rather than when it is received. However, these strategies were developed in a world where
instantaneous communication was not possible. Presence of instantaneous modes of
communication of offer and acceptance in Tanzania has a great impact on communication of
offer and acceptance not only by making it more convenient and certain but also it is about to
replace the postal service as the use of these new modes is rapidly growing.

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The following are pitfalls underlying the postal communication of offer and acceptance in
Tanzania.
Inconvenience in transmission and delivery of communication to the Offeree, since the
underlying rule is that of the law of contract act whereby a posted acceptance will be deemed to
have been communicated when it has been posted rather than when it is received, this makes it
difficult and not suitable mode for both parties to know whether or not the communication was
successfully example in,
Bryne v. Van Tienhoven (1880) it was held that a contract is complete on posting letter of
acceptance even though the letter may not reach the Offeror (its destination).
Henthorn v. Fraser (1892) it was held that where circumstances are such that it must have been
within the contemplation of the parties that, according to the ordinary usage of mankind, the post
might be used as a means of communicating the acceptance of an offer, the acceptance is
complete as soon as it is posted.
Postal mode does not offer the wide chances for making negotiation between the parties to the
contract, and this sometimes makes both parties uncertain of contract and remain with doubt or
not providing feedback at all as seen in;
Household Fire and Accident Insurance Co. Ltd. v. Grant (1879) Here it was held that “ an
acceptance which only remains in the breast of the acceptor without being actually and by legal
implication communicated to the Offeror is no binding acceptance. But if the post be treated as
agent of both parties, then as soon as the letter of acceptance is delivered to the post office, the
contract is made as complete and final and absolutely binding as if the acceptor had put his letter
into the hands of a messenger sent by the Offeror himself as his agent to deliver by the offer and
to receive the acceptance.”
Postal mode serves only specific towns or cities; this makes it inaccessible to parties who are far
from postal offices. Basically postal offices in Tanzania are located to only big towns and most
of them are the ones constructed by colonial government, taking into consideration the growth
of population and economic activities these postal services are inadequate to cutter the needs of
users. Finally it results to time lags between when the mail was put into the mode of transmission
and the receipt of it by acceptor, thus causing the Offeror and Offeree to be legally bound in
different times, which cause uncertainty in awareness between the parties to the contract.
High costs, both costs of operating postal services, delivery and distribution are high. There is
need to have many workers, vehicles and other equipment’s to ensure the quick and immediate
delivery of letters like the use of electronic mail service (EMS) which is more quicker and
involves distribution of letters to customers door. The other side of cost is to the acceptor, if
he/she is far from post office has to incur costs to go to postal office if he/she uses the normal
postal service that requires individual collection of letters and parcels unlike the use of EMS
where the mail will be delivered to his residence.

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Infrastructure faults, postal services use roads, railways and other modes of transport to deliver
their services, in Tanzania the nature of transportation is poor and not suitable for services that
requires immediate delivery and quick feedback like postal services. This pitfall results to failure
or sometime delays in communication of offer and acceptance leading to uncertainty in contracts.
Complicated postal procedures, when posting mails via postal offices one has to pass through
postal rules and regulations which are complex and sometime not understandable, for instance
one has to find a stamp, writing addresses, signatures, envelopes and each has a way of
attempting that once not done as required the mail won’t be sent or if sent not received to the
person intended. Sometimes these letters are received late due to poor/ incorrect addressing as
seen in case of,
Adam v. Lindsell (1818) the defendants wrote to the plaintiffs on 2 September, offering to sell
them some wool and requested that the plaintiffs reply ‘in course of post'. The letter which
contained the offer was wrongly addressed and therefore the plaintiffs did not receive it until 5
September. As a result of this delay, the letter of acceptance was not received until 9 September
by the defendants, and this was two days later than the defendants would have expected to
receive it. Because of this, on 8 September the defendants had sold the wool to a third person.
The question for the court in Adams v Lindsell was therefore whether a contract of sale had been
entered into before 8 September when the wool was sold to the third party.
If the acceptance was effective when it arrived at the address or when the defendant saw it, then
no contract would have been made and the sale to the third party would amount to revocation of
the offer. However, the court held that the offer had been accepted as soon as the letter had been
posted. Thus, in Adams v Lindsell there was indeed a contract in existence before the sale of the
wool to the third party, even though the letter had not actually been received by the defendant, in
this case it was held that where acceptance is communicated by post a contract arises on the date
when the letter of acceptance is posted.
From the above pitfalls some possible reforms can be suggested taking into consideration the
recent development in information and communication technology in Tanzania, they are as
follow;
Adoption of new modes of communication which are more efficient and effective than the postal
mode, since the communication of offer and acceptance needs quick and immediate feedback, it
is more certain to use electronic mail service EMS that is offered by postal office and absorption
of new instantaneous modes like emails, faxes and telegrams which are more convenient and
certain. The electronic mail service (EMS) costs should be reduced to be affordable by users.
Improvement of infrastructures and construction of more post offices, given the development of
information and communication technology there is immediate need to improve roads and
increase channels of delivering mails to all regions, districts, and villages. This is bringing the
post office services close to users/public to enable timely collection and receipt of mails and
overcome the delay and information lost.

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The use of information communication technology personnel ICT’S to develop or design a
system that will enable tracking of mails whether or not received to addressee, systems like
barcodes and system notifier will be usefully. This will reduce the delays and uncertainty on
communicated information’s.
Increasing public awareness of the postal procedures that one has to abide and fill when using
postal services like sending mails, the use of electronic mail service and others. This should be
done through advertisements, public lectures and conducting seminars. By doing so the public
will be aware of post service procedures and there won’t be any blames from users on not
knowing before.
Clear investigation of mails and parcels, there should someone who will be checking and
reminding customers about important things to follow on addressing mails and parcels, like
asking them if they have properly wrote the recipient addresses, names, cities and other
requirements. This will ensure the correct posting also reduce the probability of acceptance not
reaching the acceptor.
Improving customer services, post office should improve their services by offering special
advices to customers who want to post important documents like that of offer and acceptance.
They might offer the email, fax and other instantaneous modes to those customers and telling
them how advantageous, and quick they are for such specific task. This will attract more
customers and makes the post office more flexible in adopting or changing with technological
changes, recently called the era of digital world.
Improvement in mails distribution system, post office should establish o close supervision and
interval checking of mails that remains long time without being collected by the recipients, then
taking corrective actions like informing senders that their mails are not collected by addressee.
This would be possible if there was a register book for senders to willingly fill their names and
contacts so that they will be informed incase the mails won’t be collected or something unusual
happens. This makes it more certain to both parties on the terms of contract and its conclusion as
far as there is good link between them provided by post office.

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Recommendation,
Having seen the above pitfalls, I recommend the amendment of postal acceptance rule/
mailbox rule, which is currently applied as;
If the offer is accepted by post, the contract comes into existence at the moment
that the acceptance was posted. Posting binds the Offeror, and when the acceptance comes to the
knowledge of the Offeror, the Offeree becomes bound by the terms of the contract. This rule only
applies when both parties have openly thought to use post as a means of acceptance.
The Common Law position is that both the Offeror and Offeree become irrevocably
bound when the acceptance letter is posted in due course. The phrase “in due course” means that
the letter must be properly addressed, adequately stamped, and posted. In case the letter gets lost
while in transit, the parties continue to be bound by the terms of the contract. Thus both law of
contract act and common law has elements of uncertainties regarding postal acceptance rule.
For quite a while, post has been regarded as the main form of written communication in
Tanzania, the postal rule has been in use for the time when other written communication methods
such as phone, fax and email, have not been in existence, this rule excludes contracts involving
land, letters incorrectly addressed and instantaneous modes of communication, therefore there is
a need to change the postal rule to make it more flexible to adopt the instantaneous modes of
communication of offer and acceptance, also making it free from uncertainty, for instance by
ensuring that both parties should be bound only after the receipt of acceptance by acceptor and
there must be a clear notification to the Offeror by Offeree upon the receipt, this should be done
within a time limit let say not more than 7 days after the acceptance has been sent.

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Reference;
Law of contract Act (CAP.345 Revised Edition 2002)
Nicholas Nditi 2009, General principles of contract law in East Africa DUP.
www.lawteacher.net/service/law-essay-writting-service.php