Entores v Miles Far East Corporation [1955]
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Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3 is a landmark decision in English contract law, specifically addressing contract formation through instantaneous means of communication, such as telex. This case, heard in the Court of Appeal, provides valuable insights into the determination of the moment and place of acceptance in contracts facilitated by rapid communication methods.
Entores Ltd, a London-based trading company, communicated an offer for the purchase of copper cathodes to a company based in Amsterdam via telex. The Dutch company responded with an acceptance through telex. However, the contract was not fulfilled, leading Entores to seek damages from the owner of the Dutch company. The critical legal question emerged as to where the contract was formed—London or Amsterdam.
Denning LJ delivered the leading judgment, emphasising the inapplicability of the regular postal rule to instantaneous forms of communication like telex. In cases of contracts formed through telephone or telex, the acceptance is not complete when the offeror transmits the acceptance but rather when and where the acceptance message is received. Denning LJ employed hypothetical scenarios to illustrate his point. In the case of a phone call where the line goes dead before acceptance is heard, or a telex where the message is not received due to technical issues, the contract is not formed until a successful communication of acceptance occurs.
This case established that the traditional postal rule does not apply to contracts formed through instantaneous communication methods like telex. Unlike postal communication, where acceptance is complete upon posting, the acceptance in telex contracts is only complete upon receipt by the offeror. It also established that the place of contract formation is where the acceptance is received. In this case, since the acceptance was transmitted and received in London, the contract was deemed to have been formed in London.
The decision in Entores reflects a departure from the conventional understanding of contract formation, especially in the context of instantaneous communication. By establishing that the contract is formed where and when the acceptance is received, the ruling reinforces the notion of control and certainty in contractual relationships, deviating from a potential interpretation where the contract might be deemed formed at the sender's location.
Entores Ltd, a London-based trading company, communicated an offer for the purchase of copper cathodes to a company based in Amsterdam via telex. The Dutch company responded with an acceptance through telex. However, the contract was not fulfilled, leading Entores to seek damages from the owner of the Dutch company. The critical legal question emerged as to where the contract was formed—London or Amsterdam.
Denning LJ delivered the leading judgment, emphasising the inapplicability of the regular postal rule to instantaneous forms of communication like telex. In cases of contracts formed through telephone or telex, the acceptance is not complete when the offeror transmits the acceptance but rather when and where the acceptance message is received. Denning LJ employed hypothetical scenarios to illustrate his point. In the case of a phone call where the line goes dead before acceptance is heard, or a telex where the message is not received due to technical issues, the contract is not formed until a successful communication of acceptance occurs.
This case established that the traditional postal rule does not apply to contracts formed through instantaneous communication methods like telex. Unlike postal communication, where acceptance is complete upon posting, the acceptance in telex contracts is only complete upon receipt by the offeror. It also established that the place of contract formation is where the acceptance is received. In this case, since the acceptance was transmitted and received in London, the contract was deemed to have been formed in London.
The decision in Entores reflects a departure from the conventional understanding of contract formation, especially in the context of instantaneous communication. By establishing that the contract is formed where and when the acceptance is received, the ruling reinforces the notion of control and certainty in contractual relationships, deviating from a potential interpretation where the contract might be deemed formed at the sender's location.
