• In the case of Entorres v Miles Far East Corp [1955] 2 QB 327 a new acceptance policy is introduced for instantaneous communications, distinguishing the postal acceptance rule from the latter.
  • The postal rule established in Adams v Lindsell (1818) 1 B & Ald 681, declared that acceptance of a contract by post is effective upon posting the acceptance, not when the letter is received.
  • Acceptance of a contract by way of instantaneous communications is effective, once the acceptance is received by the offeror. Additionally, whatever country your acceptance letter is sent to is the country’s laws that govern the contract law.

Facts of the Case

  • The claimant (c), Mr. Entorres, sent a telex message from England to the defendant (D), Miles Far East, in Holland (Netherlands) for the purchase of 100 tons of cathodes. The defendant sent back a telex message from holland to London accepting the offer made by the claimant.

Issues in Entorres v Miles Far East Corp [1955] 2 QB 327

  • The issue the court faced was establishing at what point the contract came into existence.
    • If the acceptance was effective when the telex was sent, then the contract was made in Holland, and Dutch law would govern it.
    • However, if acceptance took place when the telex was received, in London by the claimant, then the contract would be governed by English law.

Held by the Court of Appeal

  • The High Court has jurisdiction.
  • To construct an effective acceptance the acceptance would need to be communicated to the offeree, thus the contract had been formed when the acceptance of the terms was received by the offeror, Mr. Entorres, in London and not when it was sent in Amsterdam.

Lord Justice Denning

  • The rule for instantaneous communications.
  • The general rule applies to instantaneous communication, whereby a contract s made where and when the acceptance is received by the offeror
  • EX. If the parties were shouting across a river and the offeror does not hear the reply due to noise caused by sirens, for instance, there is no contract.
  • If the parties were communicating by telephone and the line goes dead in the midst of a reply accepting the contract, then there’s no contract
  • Exceptions to the rules.
  • Where a fault arises on the part of the offeror for not receiving the message =, a contract is nonetheless formed if the offeree is under the reasonable belief that the message was received by the offeror.
  • If the offeror did not hear the offeree’s acceptance properly over the phone but does not ask the offeree to repeat what was said, a contract is formed.
  • Where there is no fault, and the offeree simply believes that a contract has been formed, in actuality no valid contract is formed.