Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3
Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3
Background:
Entores Ltd, a London-based company, sent an offer by telex (an early form of electronic communication) to Miles Far East Corporation, a company in Amsterdam.
The offer was accepted by telex from Amsterdam back to London.
A dispute arose because the contract was allegedly breached, and the question was where and when the contract was formed for jurisdiction and other legal purposes.
Key Legal Issues:
When is acceptance effective in a contract concluded by instantaneous communication methods (like telex)?
Where is the contract deemed to be formed?
What are the rules regarding communication of acceptance for contract formation?
Court’s Decision and Reasoning:
1. Instantaneous Communication and Acceptance:
The Court of Appeal held that contracts formed by instantaneous communication (like telex, telephone, or fax) are concluded at the place where acceptance is received.
This contrasts with the "postal rule" where acceptance is effective once posted.
2. Rejection of Postal Rule for Instantaneous Communications:
The postal rule says acceptance is complete when the letter is posted, regardless of when it is received.
The Court held this rule does not apply to instantaneous communications because acceptance must be actually received to be effective.
3. Where Contract Is Formed:
Since Entores sent the offer from London, and the acceptance was sent by telex from Amsterdam to London, the contract was formed in London when the acceptance was received.
If the acceptance had not been received due to technical failure, there would be no contract.
Legal Significance:
This case established the principle that for instantaneous communication, acceptance is effective only when and where it is received.
It clarified the distinction between acceptance by post (postal rule) and by instantaneous means.
This principle is crucial in modern contract law, especially with the rise of emails, faxes, and other electronic communications.
Related Legal Principles:
Postal Rule: Acceptance is effective when posted (not when received), applicable to non-instantaneous communications.
Instantaneous Communications Rule: Acceptance is effective when received.
This distinction helps determine jurisdiction, timing of contract formation, and risk allocation.
Summary Table:
| Aspect | Explanation |
|---|---|
| Case Name | Entores Ltd v Miles Far East Corporation (1955) |
| Legal Issue | When and where is acceptance effective in instantaneous communication? |
| Held | Acceptance effective only when and where received |
| Postal Rule Applicability | Postal rule does not apply to instantaneous communications |
| Significance | Established modern approach to acceptance and contract formation in electronic communications |
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