Entores ltd v miles far east corporation

1. Entores Ltd v Miles Far
East Corporation
Presented by
Ashutosh
Sharma

2. introduction
Date - 17th May 1955.
Place - Room 392, Royal Courts of Justice, and 2,
N new Square, Lincoln's Inn. London,W.C.2.
Between - ENTORES LIMITED -v- MILES FAR EAST CORPORATION
BAIL II Citation Number - [1955] EWCA Civ 3
appeared on behalf of the Appellants - MR GERALD GARDINER, Q.C. and MR S.B.R. COOKE
(Defendants)
appeared on behalf of the Respondents - MR MAURICE LYELL, Q.C. and MR DENNIS LLOYD
(Plaintiffs)

3. Facts
Entores was a London-based trading company that sent an
offer by telex for the purchase of copper cathodes from a
company based in Amsterdam. The Dutch company sent an
acceptance by telex. The contract was not fulfilled and so
Entores attempted to sue the owner of the Dutch company
for damages. The controlling company, Miles Far East Corp,
was based in the US and under English law Entores could only
bring the action in the US (serve notice of writ outside the
jurisdiction) if it could prove that the contract was formed
within the jurisdiction, i.e. in London rather than Amsterdam.

4. Explanation
A series of telex messages were sent between Entores Ltd, an
English company, and Miles Far East Corporation, a Dutch
company. Miles Far East Corporation made an offer to supply
cathodes to Entores Ltd. Entores Ltd made a counter offer to
buy cathodes from Miles Far East Corporation at a price of
£239 10s a ton. The offer was accepted by Miles Far East
Corporation sending a Telex from Holland. The issue before
the court was 'Where was the contract made?'. This was
important because Entores Ltd wished to sue Miles Far East
Corporation in the English courts but could only do so if the
contract was made in England and not in Holland.

5. Rule
Acceptance on receipt of notice principle. However, it was
ruled that it would make no sense for an instantaneous reply
to an offer to be deemed to be accepted at the place of
origination of acceptance, because this would conflict with
the law as regards acceptance by telephone, etc.
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.
BUT
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

6. Judgment
Denning LJ, delivering the leading judgment.
He said that the postal rule could not apply to
instantaneous communications, such as
telephone or telex:
if a phone line "went dead" just before the
offeree said "yes", it would be absurd to assume that the
contract was formed and the parties would not have to call
each other back. The same applied to telex. Since the contract
was therefore only formed when and where the telex was
received, the place of formation was London.

7. conclusion
The contract is only complete when the acceptance is
received by the offeror”.
An agreement made in one country and amended in another
should not be regarded as having been made in the second
country.
The acceptance was deemed to have been made in London,
when the telex was read
In instantaneous communication (unlike in the mail), the
contract is complete the moment the acceptance is
RECEIVED and at the place where the acceptance is received.