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

📌 Facts

The claimant, Entores Ltd, was a company based in London. Negotiations took place with representatives of Miles Far East Corporation in Amsterdam regarding the purchase of copper cathodes.

The parties communicated using a telex, a machine capable of transmitting written messages almost instantaneously between countries. An offer was made and subsequently accepted through telex communications between Amsterdam and London.

When a dispute later arose, Entores wished to bring proceedings in England. To do so, it needed to establish that the contract had been formed in England.

This raised an important question:

Was the contract formed in Amsterdam when the acceptance message was sent, or in London when the acceptance message was received?

The answer would determine where the contract was made and whether the English courts had jurisdiction.

📌 Issue

The central issue was therefore whether the postal rule applied to instantaneous communications such as telex messages.

Under the postal rule established in Adams v Lindsell (1818), acceptance becomes effective when a letter is posted, even if it has not yet been received.

Miles Far East Corporation argued that acceptance should be effective when transmitted from Amsterdam.

Entores argued that acceptance should only become effective once it reached London and was received by the offeror.

📌 Decision

Acceptance Must be Communicated

The Court of Appeal held that the postal rule does not apply to instantaneous communications.

Instead:

A contract formed through an instantaneous communication method is create when and where the acceptance is received by the offeror.

Since the acceptance was received in London, the contract was made in London. Accordingly, the English courts had jurisdiction.

Lord Denning famously gave an explanation for this decision:

"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."

Lord Denning therefore reasoned that the same principle should apply to telephone and telex communications. He therefore concluded that instantaneous communications should be governed by the ordinary rule of acceptance. That is, acceptance must be communicated to the offeror.

Postal Rule

This contrasts with the postal rule, which exists as a special exception. Lord Denning stated:

"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."

Consequently, the rule about instantaneous communications between the parties is different from the rule about the post:

Postal Rule	Entores Rule
Applies to traditional postal communications	Applies to instantaneous communications
Acceptance effective when posted	Acceptance effective when received
Risk of delay falls on offeror	Risk generally remains until communication reaches offeror
Example: letter	Example: telephone or telex

You can read more on the postal rule here.

Lord Denning's Estoppel Argument

Although the main decision concerned when acceptance takes effect, Lord Denning also discussed an important qualification to the receipt rule.

In an important obiter statement, Denning suggested that where non-receipt results from the offeror's fault, the offeror may be estopped from denying receipt. For example, if an acceptance is transmitted to a telex machine but cannot be read because the machine lacks paper or ink, the offeror cannot take advantage of that failure to escape contractual liability.

The rationale is straightforward:

A party should not be allowed to benefit from their own wrongdoing or negligence.

Consequently, while the general rule established in Entores is that acceptance is effective only when received, the courts may prevent an offeror from denying receipt where their own conduct caused the communication failure.

For more information, you can read about the legal doctrine of estoppel here.

📌 Analysis

Emails

Although email and internet communication did not exist in 1955, the reasoning in Entores has influenced later cases involving modern technology. Today, the decision remains one of the starting points for analysing electronic communications in contract law. However, it is important to note up front that it will ultimately depend on all the surrounding facts.

A useful modern authority is Thomas v BPE Solicitors [2010]. The High Court suggested that where email is used in business communications, receipt may occur when the email arrives in the recipient's inbox and is available to be read, rather than when it is actually opened. This reflects the Entores principle that a communication should generally be effective once it has reached the recipient's sphere of control.

However, as noted above, it will ultimately depend on all the surrounding facts. For example, Lord Wilberforce in Brinkibon Ltd v Stahag Stahl GmbH [1983] stated:

"No universal rule can cover all such cases: they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgment where the risks should lie."

In Thomas v BPE Solicitors, the email amounted to an acceptance of the offer in question, it was received at the time of actual receipt at 18:00 on a Friday evening, despite the fact that the solicitor recipient had already left the office. In coming to this conclusion, the judge referred to the fact that the solicitors involved in the transaction were constantly communicating by email, and had been operating on the assumption that the deal would be concluded on the Friday in question.

Consequently, when applying the offer and acceptance analysis to a contract formed by email communications, no definite statutory or common law rules have been formulated to deal with the question of the precise time that an offer is accepted where acceptance is by email.

Further Reading

• Offer and Acceptance Revision Sheet

• What is the Postal Rule and How Does it Apply?

• What is Estoppel in Contract Law?

• Adams v Lindsell Case Summary