Entores Ltd v Miles Far East Corporation
Court of Appeal
Citations: [1955] 2 QB 327; [1955] 3 WLR 48; [1955] 2 All ER 493; [1955] 1 Lloyd’s Rep 511; (1955) 99 SJ 384; [1955] CLY 441.
Facts
The claimant was a London-based company. They contacted the defendant’s agents in the Netherlands by Telex and offered to buy a number of copper cathodes. The defendant’s agents responded by Telex accepting the offer.
The claimant later alleged that the defendant had breached the contract. They sought permission from the English courts to serve their claim out of the jurisdiction. To get permission, they had to show that the contract was formed in London. The defendant claimed that the postal rule applied to this case. If so, this meant that their acceptance was valid the moment it was sent in the Netherlands. Accordingly, the contract was formed in the Netherlands.
Issue(s)
- When did the defendant’s acceptance complete the contract?
Decision
The Court of Appeal held in favour of the claimant. This was not a case where the postal rule applied. The defendant had to actually communicate their acceptance to the claimant. Since the claimant was in London when they received the acceptance, the contract was formed in London. The court therefore granted permission to serve outside the jurisdiction.
This Case is Authority For…
The postal rule only applies to letters sent by traditional post. The normal rule is that the offeree must actually communicate their acceptance to the offeror. This normal rule applies in cases involving instantaneous forms of communication like Telex.
Parker LJ noted that there is an exception to the rule that acceptances must be communicated to the offeror where the offeror has waived the need for communication. This, he said, is common in unilateral offer cases. In those cases, the offeror usually waives the need for communication in favour of the offeree performing some task.
Other
Denning LJ explained that if parties negotiate in person or by phone, and something happens such that the offeror cannot hear the acceptance (eg a plane flies by or the phone line goes dead), that acceptance does not count as being communicated. As such, there is no contract. However, he speculated that if it is the offeror’s own fault that he does not perceive the acceptance, then the acceptance is communicated and there is a contract.
So, for example, if the offeree sent an acceptance by fax and it is recorded on the machine, the defendant cannot say that there is no contract just because his fax machine had no ink and did not print the message out.
The rule is likely that an acceptance must be communicated to the offeror in a form which he is capable of perceiving or accessing. If this is done, then it does not matter that the offeror never gets around to perceiving or accessing it.
