ARTICLES
ceptance has to be directly communicated and received. The distinction made in Entores perfectly illustrates the courts’ acknowledgement of how the rule will not apply in such situations. It was first established in the case of Entores where Denning LJ found that postal rule would not apply to instantaneous communications such as a telex machine. He made a clear distinction between instantaneous communications and communicating by post by virtue of the speed of the communication, where he expressed his opinions, “Communications by these means are virtually instantaneous and stand on a different footing.”18 The main reasoning behind his judgment relates to the idea of both parties having a consensus and for such communications, the offeree would have sufficient reason to know if his acceptance has been received as well as the offeror being able to send a request if any delay or error were to have occurred. Entores ushered a different era to the postal rule and set out rules that govern acceptance in instantaneous communications. This was important due to the changing landscape of companies where many started to adopt technology that affected the formation of contracts. Thus, the courts had to consider the exact time and place where the contract is formed when technology is used when the disputes came pouring in and establishing the rule of acceptance upon receipt of the offer made. The rule was further developed in the case of Brinkibon that was about the formation of a contract using telecommunication. The judges in the case followed precedent and applied the principle established in Entores but provided more opinions on the formation of contract via telecommunications. Lord Wilberforce in the leading judgment expressed that he agreed that it is a sound rule in the context of telecommunications but does not see the rule being applied in all circumstances.19 He specifically mentioned about many possible agents that could be involved or errors that could occur due to 18 19
Entores, 333-334 (per Lord Denning) Brinkibon at 42 ( per Lord Wilberforce)
these machines being operated by third persons and hence the inability to have a universal rule to cover all cases but “must be resolved by references to the intentions of the parties, by sound business practice and in some cases by a judgment where the risks should lie.”20 This provided a further development to acceptance in the modern context where Lord Wilberforce provided certain criteria that could be considered when deciding acceptance and a return to the idea of consensus through the intentions of the parties. In a recent case of Greenergy S A v Memphis Biofuels21, the question of contract formation through email was settled with the judgment that the acceptance took place where the email was received, which seems to infer that the postal rule would not apply in these situation. Apart from decisions from the English courts that provide some clarity on the application of the rule, the development of the rule in electronic communications is still important and a matter for future courts. Thomas v BPE Solicitors22 for example, highlighted that while there was no ‘straightforward’ answer as regards when an emailed acceptance is deemed effective, due consideration must be made to the intention of parties, sound business practice or in some cases a judgment of where the risks should lie.23 Modern Understanding of Electronic Communications Acceptance through electronic means was never meant to be a simple area of law to navigate given the lack of a universal rule. However, this uncertain area of law has received greater clarity with time. It has been discussed whether instantaneous communications such as emails are actually instant and looking at the speed of their delivery, which was mentioned by those in support of applying the rule in emails as it was a similar reason being stated in support for the
20 ibid. 21 Greenergy S A v Memphis Biofuels [2008] All ER (D) 15 22 Thomas v BPE Solicitors [2010] EWHC 306 (Ch) 23 ibid. at [90]
37