Brinkibon v Stahag Stahl und Stahlwarenhandels GmbH
House of Lords
Citations: [1983] 2 AC 34; [1982] 2 WLR 264; [1982] 1 All ER 293; [1982] 1 Lloyd’s Rep 217; [1982] Com LR 72; [1982] ECC 322.
Facts
The parties were in negotiations over the sale of steel bars. The sellers, an Austrian company, sent the buyers, an English company, a finalised set of terms. The buyers accepted those terms using telex (an electronic network which sent messages to be printed by the user’s telex machine).
The sellers did not delivery, and the buyers wanted to sue for breach of contract. Since the sellers were a foreign company, the buyers needed the court’s permission to serve the claim outside of the jurisdiction. To get that permission, they needed to show that the contract was formed within the UK. This would only be the case if acceptance took place in the UK.
Issue(s)
- When and where does acceptance of a contract by telex take place?
Decision
The House of Lords ruled against the buyers. The acceptance had taken place at the time and in the place where the offeror received the telex. Since that was in Austria, the contract was not formed in the UK.
This Case is Authority For…
Acceptance of an offer by instantaneous means of communication happens at the place and time it is received by the offeror. The postal rule does not apply to instantaneous methods of communication.
Other
The Lords stated that it was inappropriate to create a universal rule in all instantaneous communications cases; exceptions might exist. For example, Lord Wilberforce speculated that the rules might be different if the telex was sent outside of office hours or was intended to be read by the recipient at a later date. In all cases, the touchstone should be the objective intentions of the parties in the circumstances of the case.
Lord Brandon of Oakenbrook discussed the justification for the postal rule. He noted that the postal rule is an exception to the general rule that acceptance must be actually communicated to the offeror. It was justified, he argued, by the need for ‘commercial expediency’ and ‘fairness’ in cases where there is a substantial delay between one party sending the acceptance and the other party receiving it. Lord Brandon concluded that this justification had no application to instantaneous methods of communication.
