Holwell Securities Ltd. v Hughes, [1974] 1 WLR 155, [1974] 1 All ER 161

Appellant: Holwell Securities Ltd.

Respondent: Thomas Hilaire Hughes

Year: 1974

Court: Court of Appeal of England and Wales

Judges: Russel, Buckley, and Lawton LJJ

Country: United Kingdom

Facts

Hughes granted Holwell a six month option to purchase a property, and stated that the option had to be exercised “by notice in writing to the intended vendor”. Before the six months were up, Holwell’s lawyer wrote to Hughes’ lawyer stating that his client was exercising his option. The letter also included a cheque for the deposit, which was not accepted. Holwell’s lawyer sent a copy of the letter to Hughes by mail, but it was never delivered. Hughes refused to sell the property and Holwell sued for breach. Hughes was successful at the lower court and Holwell appealed.

Issue

1. Does the postal rule always apply?

Decision

Appeal dismissed.

Reasons

If the postal rule applies, then there is clearly a contract as the agent of Holwell mailed the acceptance. Here the judges say that although the parties intended to use the post as the means to communicate acceptance, they have not displaced the general rule of acceptance – that it requires communication. The use of the words “notice in writing” meant that Hughes required actual notice of acceptance. The postal rule does not apply when the terms of a contract point to the necessity of actual communication, even if the post is the desired medium of communication. The recipient does not actually have to read or understand the acceptance; it must just arrive and be seen by the offeror.

Ratio

The postal rule does not apply in situations where a notification of acceptance has been specified.