Brinkibon Ltd v Stahag Stahl und
Stahlwarenhandelsgesellschaft mbH
Brinkibon Ltd v Stahag Stahl GmbH [1983] 2 AC 34 is a leading decision of the
Brinkibon Ltd v Stahag Stahl
House of Lords on the formation of a contract using telecommunication. The Lords
GmbH
largely accepted the earlier leading decision of Entores v Miles Far East Co. [1955] 2
QB 327 on acceptance via telex. Court House of Lords
Full case Brinkibon Ltd v Stahag Stahl
name und
Stahlwarenhandelsgesellschaft
Contents mbH
Facts Citation(s) [1983] 2 AC 34
Judgment Keywords
See also Acceptance, communication
Notes
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.
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.
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
English contract law
Notes
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