Entores Ltd v Miles Far East Corporation [1955] 2 QB 327 establishes that for instantaneous communications, an acceptance is effective only when it is communicated to the offeror — not when it is sent.

Facts of the Case

The plaintiffs, a London company, made an offer by telex to the defendants in Amsterdam, who sent their acceptance back by telex. The dispute turned on whether the English courts had jurisdiction, which depended on where the contract was made.

Legal Principle and Ruling

The Court of Appeal held the contract was formed when the acceptance was received by the plaintiffs in London. For instantaneous communications (telex, telephone, face-to-face), acceptance is effective only on receipt. The contract was therefore made in London, and the English courts had jurisdiction.

Judicial Reasoning (Denning LJ)

Denning LJ reasoned that the rule for instantaneous communications must differ from the postal rule, offering several analogies:

  • Oral communication: if an offer is shouted across a river but the reply is drowned out by an aircraft, there is no contract until the acceptance is shouted back and heard.
  • Telephone: if the line goes “dead” mid-acceptance, the parties are not bound until the caller gets through again.
  • Fault and estoppel: if the recipient is at fault for the failure (e.g. their telex ink fails and they do not ask for the message to be repeated), they may be estopped from denying receipt; but if no one is at fault and the message is not received, there is no contract.

Discussion and Commentary

  • Exception to the postal rule: the postal rule (Adams v Lindsell) is an exception based on commercial expediency; near-instantaneous telex follows the general rule of receipt.
  • Approval by the House of Lords: the principles were approved in Brinkibon Ltd v Stahag Stahl, confirming the contract is made where and when the acceptance is received.
  • Modern application: the “receipt rule” is generally applied to faxes, emails, and messaging, with acceptance treated as communicated when it reaches the recipient’s system, provided it arrives during normal business hours.