Holwell Securities Ltd v Hughes
Court of Appeal
Citations: [1974] 1 WLR 155; [1974] 1 All ER 161; (1973) 26 P & CR 544; (1973) 117 SJ 912; [1974] CLY 3955.
Facts
The defendant granted the claimant an option to purchase their property. To exercise the option, the claimant had to provide the defendant notice in writing. A year later, the claimant’s solicitor sent written notice exercising the option by post. The letter never arrived. The claimant later called the defendant and told them about the notice they had sent in the post.
The claimant sued for specific performance of the option. The defendant argued that since they had never received the notice, the claimant had not exercised their option. Since then, the period for exercising the option had expired.
The claimants responded that the postal rule applied to this case. This would meant that the notice was effectively communicated to the defendant the moment it was posted. Alternatively, the claimant argued that they had given written notice when they told the defendant about the letter over the telephone.
Issue(s)
- Does the postal rule apply in this situation?
Decision
The Court of Appeal held in favour of the defendant. The postal rule did not apply because the terms of the option, properly construed, required actual communication in writing to the defendant. s.196 of the Law of Property Act 1925 also indicated that notices to purchase land must be actually delivered to the seller’s residence to be valid. Orally informing the defendant about a written notice is not the same as serving written notice. Therefore, the claimant’s telephone call was not valid notice.
This Case is Authority For…
The postal rule does not apply where this would be inconsistent with what the offer requires. This will be the case where the offer specifies that the acceptance must reach the offeror.
Other
The fact that the telephone call was not a valid exercise of the option indicates that where the offer demands that acceptance be executed by a particular method, acceptance by other methods is invalid. However, there are cases indicating that where the defendant chose the method for a particular purpose which can be fulfilled just as well by another method, acceptance by that method is valid: Tinn v Hoffman (1873) 29 LT 271.
For example, take a defendant who asks for an offer to be accepted by fax because they want a written record and instantaneous communication. Presumably an acceptance by email would be valid since it achieves these purposes. An acceptance by phone, by contrast, would be invalid.
Lawton LJ also commented that the court might not apply the postal rule if it would lead to ‘manifest inconvenience and absurdity’.
