Entores Ltd v Miles Far East Corporation
| Entores Ltd v Miles Far East Corp | |
|---|---|
 |
|
| Court | Court of Appeal of England and Wales |
| Decided | 17 May 1955 |
| Citation(s) | [1955] EWCA Civ 3, [1955] 2 QB 327 |
| Case opinions | |
| Denning LJ, Birkett LJ, Parker LJ | |
| Court membership | |
| Judge(s) sitting | Denning LJ, Birkett LJ, Parker LJ |
| Keywords | |
| telex, acceptance, communication, postal "rule" | |
Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3 is a landmark English Court of Appeal decision in contract law on the moment of acceptance of a contract over telex. Denning LJ found that the regular postal rule did not apply for instantaneous means of communications such as a telex. Instead, acceptance occurs where the message of acceptance is read.
Entores was a London-based trading company that sent an offer by telex for the purchase of copper cathodes from a company based in Amsterdam. The Dutch company sent an acceptance by telex. The contract was not fulfilled and so Entores attempted to sue the owner of the Dutch company for damages. The controlling company, Entores, was based in the UK and under English law Entores could only bring the action in the UK (serve notice of writ outside the jurisdiction) if it could prove that the contract was formed within the jurisdiction, i.e. in London rather than Amsterdam.
Denning LJ, delivered the leading judgment. He said that the postal rule could not apply to instantaneous communications, such as telephone or telex: if a phoneline "went dead" just before the offeree said "yes", it would be absurd to assume that the contract was formed and the parties would not have to call each other back. The same applied to telex. Since the contract was therefore only formed when and where the telex was received, the place of formation was London.
When a contract is made by post it is clear law throughout the common law countries that the acceptance is complete as soon as the letter is put into the post box, and that is the place where the contract is made. But there is no clear rule about contracts made by telephone or by Telex. Communications by these means are virtually instantaneous and stand on a different footing.
The problem can only be solved by going in stages. Let me first consider a case where two people make a contract by word of mouth in the presence of one another. Suppose, for instance, that I shout an offer to a man across a river or a courtyard but I do not hear his reply because it is drowned by an aircraft flying overhead. There is no contract at that moment. If he wishes to make a contract, he must wait till the aircraft is gone and then shout back his acceptance so that I can hear what he says. Not until I have his answer am I bound. I do not agree with the observations of Hill J in Newcomb v De Roos.
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