Entores v Miles Far East Corporation

Legal Case Summary

Entores v Miles Far East Corp [1955] 2 QB 327

Contract – Acceptance – Postal Rule – Damages – Instantaneous communication

Facts

The complainants, Entores, were a company that was based in London. They had sent an offer to purchase 100 tons of copper cathodes to the defendants, Miles Far East Corp. Their company was based in Amsterdam and this offer was communicated by Telex, a form of instantaneous communication. The Dutch company sent an acceptance of this offer by Telex to the complainants. When the contract was not fulfilled, the complainants tried to sue the defendants for damages.

Issues

In order to decide whether the action for damages should arise in English or Dutch law, the court had to decide the moment of acceptance of the contract. If it was when the contract acceptance was sent, damages would be dealt with under Dutch law. If acceptance was when it was received, then it would be under English law.

Decision/Outcome

The court held that the contract and damages were to be decided by English law. It was stated that the postal rule did not apply for instantaneous communications. Since Telex was a form of instant messaging, the normal postal rule of acceptance would not apply and instead, acceptance would be when the message by Telex was received. Thus, the contract was created in London. This general principle on acceptance was held to apply to all forms of instantaneous communication methods. Acceptance via these forms of communication had to be clear before any contract is created.