Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelsgesellschaft mbH

Last updated

Brinkibon Ltd v Stahag Stahl GmbH
CourtHouse of Lords
Full case nameBrinkibon Ltd v Stahag Stahl und Stahlwarenhandelsgesellschaft mbH
Citation(s)[1983] 2 AC 34
Court membership
Judge(s) sittingLord Wilberforce, Lord Fraser of Tullybelton, Lord Russell of Killowen, Lord Bridge of Harwich and Lord Brandon of Oakbrook
Keywords
Acceptance, communication

Brinkibon Ltd v Stahag Stahl GmbH [1983] 2 AC 34 is a landmark decision of the House of Lords on the formation of a contract using modern communication. The Lords largely accepted the earlier leading decision of Entores v Miles Far East Co. [1955] 2 QB 327 on acceptance via telex.

Contents

Facts

Brinkibon was a London company that bought steel from Stahag, a seller based in Austria. Brinkibon sent their acceptance to a Stahag offer by telex to Vienna. Brinkibon later wanted to issue a writ against Stahag and applied to serve an out of jurisdiction party. They would only be able to do so if the contract had been formed in England. [1]

The question at issue was where the contract was formed.

Judgment

The Judges decided that the contract was formed in Vienna. They accepted the principle in Entores v Miles Far East Co where in the case of instantaneous communication, which included telex, the formation generally occurs in the place where the acceptance is received. [2]

Lord Wilberforce, however, did not see the rule as applying in all circumstances:

.... it appears logical that this should be at the place where acceptance is communicated to the offeror....

... I would accept it as a general rule. Where the condition of simultaneity is met, and where it appears to be within the mutual intention of the parties that contractual exchanges should take place in this way, I think it a sound rule, but not necessarily a universal rule...

Since 1955 the use of Telex communication has been greatly expanded, and there are many variants on it. The senders and recipients may not be the principals to the contemplated contract. They may be servants or agents with limited authority. The message may not reach, or be intended to reach, the designated recipient immediately: messages may be sent out of office hours, or at night, with the intention, or on the assumption that they will be read at a later time. There may be some error or default at the recipient’s end which prevents receipt at the time contemplated and believed in by the sender. The message may have been sent and/or received through machines operated by third persons. And many other variants may occur. 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 judgement where the risks should lie.

Lord Brandon said the following.

Unquestionably, as a general proposition, when an offer is made, it is necessary in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified.’ And the postal rule is an exception based on ‘commercial expediency… more convenient, and makes on the whole for greater fairness, than the general rule itself would do.

See also

Related Research Articles

Chaffing and winnowing is a cryptographic technique to achieve confidentiality without using encryption when sending data over an insecure channel. The name is derived from agriculture: after grain has been harvested and threshed, it remains mixed together with inedible fibrous chaff. The chaff and grain are then separated by winnowing, and the chaff is discarded. The cryptographic technique was conceived by Ron Rivest and published in an on-line article on 18 March 1998. Although it bears similarities to both traditional encryption and steganography, it cannot be classified under either category.

<span class="mw-page-title-main">Meeting of the minds</span> Legal term

Meeting of the minds is a phrase in contract law used to describe the intentions of the parties forming the contract. In particular, it refers to the situation where there is a common understanding in the formation of the contract. Formation of a contract is initiated with a proposal or offer. This condition or element is considered a requirement to the formation of a contract in some jurisdictions.

<span class="mw-page-title-main">Posting rule</span> A mailed contract is accepted when the letter is posted

The posting rule is an exception to the general rule of contract law in common law countries that acceptance of an offer takes place when communicated. Under the posting rule, that acceptance takes effect when a letter is posted ; the post office will be the universal service provider, such as the UK's Royal Mail, the Australia Post, or the United States Postal Service. In plain English, the "meeting of the minds" necessary to contract formation occurs at the exact moment word of acceptance is sent via post by the person accepting it, rather than when that acceptance is received by the person who offered the contract.

<span class="mw-page-title-main">Offer and acceptance</span> Two components of agreement

Offer and acceptance are generally recognised as essential requirements for the formation of a contract, and analysis of their operation is a traditional approach in contract law. The offer and acceptance formula, developed in the 19th century, identifies a moment of formation when the parties are of one mind. This classical approach to contract formation has been modified by developments in the law of estoppel, misleading conduct, misrepresentation, unjust enrichment, and power of acceptance.

<span class="mw-page-title-main">Australian contract law</span>

The law of contract in Australia is similar to other Anglo-American common law jurisdictions.

<i>Entores Ltd v Miles Far East Corp</i> Landmark 1955 English court decision

Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3 is a landmark English Court of Appeal decision in contract law relating to the moment of acceptance of a contract agreed over telex. Denning LJ found that the regular postal rule did not apply for instantaneous means of communications such as a telex. Instead, acceptance occurs when and where the message of acceptance is received.

<i>Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd</i> 1977 Court of Appeal case involving contract formation and standard forms

Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1977] EWCA Civ 9 is a leading English contract law case. It concerns the problem found among some large businesses, with each side attempting to get their preferred standard form agreements to be the basis for a contract.

<i>Adams v Lindsell</i> 1818 English contract law case which introduced the postal rule

Adams v Lindsell(1818) 1 B & Ald 681, is an English contract case regarded as the first case towards the establishment of the "postal rule" for acceptance of an offer. Ordinarily, any form of acceptance must be communicated expressly to an offeror; however, it was found that where a letter of acceptance is posted, an offer is accepted "in course of post".

<i>Rose & Frank Co v JR Crompton & Bros Ltd</i>

Rose & Frank Co v JR Crompton & Bros Ltd [1924] is a leading decision on English contract law, regarding the intention to create legal relations in commercial arrangements. In the Court of Appeal, Atkin LJ delivered an important dissenting judgment which was upheld by the House of Lords.

<i>Brogden v Metropolitan Rly Co</i>

Brogden v Metropolitan Railway Company (1876–77) L.R. 2 App. Cas. 666 is an English contract law case which established that a contract can be formed by the conduct of the parties.

<i>R v Clarke</i> Judgement of the High Court of Australia

R v Clarke, is court case decided by the High Court of Australia in the law of contract.

In re Imperial Land Company of Marseilles, ex parte Harris (1872) Law Rep. 7 Ch. App. 587, also known as Harris's case, is an English contract law case. It reconfirmed the postal rule of Adams v Lindsell (1818).

Vitol SA v. Norelf Ltd,The Santa Clara [1996] A.C. 800; [1996] 3 W.L.R. 105; [1996] 3 All E.R. 193, is an English contract law case about the effect of non-performance in accepting a contracting partner's repudiatory breach of contract.

Wolf and Wolf v Forfar Potato Co is a leading case in Scots contract law. It deals with offer and acceptance, more specifically with the effects a counter offer has on the existence of a contract.

The Household Fire and Carriage Accident Insurance Company (Limited) v Grant (1878–79) LR 4 Ex D 216 is an English contract law case, which concerns the "postal rule". It contains an important dissenting judgment by Bramwell LJ, who wished to dispose of it.

<i>Blackpool & Fylde Aero Club v Blackpool BC</i>

Blackpool & Fylde Aero Club v Blackpool Borough Council [1990] EWCA Civ 13 is a leading English contract law case on the issue of offer and acceptance in relation to an invitation to tender. In it the Court of Appeal of England and Wales decided that tenders and requests for tenders are accompanied by a collateral contract implying that the requestor will give due consideration to any timely bid.

Tenax Steamship Co v Owners of the Motor Vessel Brimnes [1974] EWCA Civ 15 is an English contract law case on agreement. It decided that communication of withdrawal of an offer by telex is effective when it could be read, rather than when it is in fact read.

<i>Westdeutsche Landesbank Girozentrale v Islington LBC</i> English legal case

Westdeutsche Landesbank Girozentrale v Islington LBC[1996] UKHL 12, [1996] AC 669 is a leading English trusts law case concerning the circumstances under which a resulting trust arises. It held that such a trust must be intended, or must be able to be presumed to have been intended. In the view of the majority of the House of Lords, presumed intention to reflect what is conscionable underlies all resulting and constructive trusts.

<span class="mw-page-title-main">Power of acceptance</span> Concept in contract law

Power of acceptance is a concept of contract law. It refers to the power vested in the offeree by the offeror through the offer being made. It is used to determine whether the acceptance of an offer is valid.

References

  1. ↑ Yin, Kenneth (2020). Contract law : cases and materials. Simon Kozlina, Kelly Green, Luca Siliquini-Cinelli, Emmanuel T. Laryea, Lisa Spagnolo, Cambridge University Press. Port Melbourne, VIC. p. 146. ISBN   978-1-108-43527-7. OCLC   1202287334.{{cite book}}: CS1 maint: location missing publisher (link)
  2. ↑ McKendrick, Ewan (2020). Contract law : text, cases and materials (9 ed.). Oxford. p. 95. ISBN   978-0-19-885529-3. OCLC   1151988415.{{cite book}}: CS1 maint: location missing publisher (link)
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.