Receipt Rule CASES
In English law, the receipt rule governs communication of acceptance in contractual agreements, stating that acceptance becomes effective only when received and understood by the offeror.
Definition and Principles
Unlike the postal rule, the receipt rule applies to instantaneous communication methods, such as telephone, email, or telex, making acceptance valid at the moment it reaches the offeror.
Key Cases
- Entores Ltd v Miles Far East Corporation (1955): Established that acceptance by instantaneous communication is effective only upon receipt.
- The Brimnes (1974): Clarified that receipt occurs when a message arrives during normal business hours, even if the recipient does not actually read it immediately.
Practical Implications
The receipt rule requires careful consideration of timing and method of communication, ensuring clarity around contractual acceptance and avoiding disputes.
Importance
Understanding the receipt rule is crucial for managing expectations in commercial negotiations, ensuring parties clearly understand when contractual obligations arise.
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An English company sent an offer by telex to Holland; the acceptance was telexed back to London. The court held that for instantaneous communications, a contract is formed where and when acceptance is received, establishing London as the place of contract. Facts The plaintiffs, Entores Ltd., were an English company based in London. The defendants, Miles Far East Corporation, were an American corporation with agents in Amsterdam, Holland. The plaintiffs in London made an offer by Telex to the defendants’ agents in Amsterdam for the purchase of a quantity of copper cathodes. The defendants’ agents in Amsterdam sent a Telex
Facts The appellants (the shipowners, Tenax Steamship Co) chartered their vessel, ‘The Brimnes’, to the respondents (the charterers) under a time charterparty. The agreement required the charterers to pay hire in advance. The charterers were persistently late with their payments. A clause in the charterparty entitled the shipowners to withdraw the vessel from service ‘in default of payment’. Frustrated by another late payment, the shipowners instructed their bank to refuse the payment if it arrived and sent a notice of withdrawal by Telex to the charterers. The Telex message was sent and printed on the charterers’ machine in London at
