I can ask for one other thing, which is for leave to appeal to the House of Lords. LORD JUSTICE RUSSELL: Will you both take the decision on that point of two of us? P had a contract with D whereby he had the option to purchase land, “exercisable by notice in writing” to D. P’s solicitors sent a letter to D requesting to buy land but this was never received. It was lost in the mail and was never received b⦠The option agreement was one to which section 196 of the Law of Property Act, 1925, applied: see subsection (5); which is in these terms: “The provisions of this section shall extend to notices required to be served by any instrument affecting property executed or coming into operation after the commencement of this Act unless a contrary intention appears”. Lawton LJ: Aside from where a contract’s wording denies it, the postal acceptance rule should also not apply in cases of manifest absurdity e.g. (Q) Not the exact words? The agreement said that the option could be exercised by notice in writing addressed to the vendor at any time within 6 months from that date. This claim was originally dismissed by the court. Is it enough? The defendant’s evidence was as follows: “(Q) Did you then, as a result of that, ring Messrs Bulcraig & Davis? CA dismissed P’s claim for specific action on the grounds that the clause required that notice be given, and that in this case notice had NOT been given (even though this was through no fault of P). Oxbridge Notes uses cookies for login, tax evidence, digital piracy prevention, business intelligence, and advertising purposes, as explained in our An offer is usually defined as an indication of the offerorâs willingness to enter into a contract with the party to the offeree upon the acceptance of terms. I turn now to what I have called the roundabout path to the same result. It follows that an acceptance can be defined as an agreement to the terms of tha⦠If Mr Macpherson’s submissions are well-founded, a letter sent by ordinary post the evening before the option expired would have amounted to an exercise of it; but a registered letter posted at the same time and arriving in the ordinary course of post, which would be after the expiration of the option, would not have been an exercise. Appeal from â Holwell Securities Ltd v Hughes CA (Bailii, EWCA Civ 5, 1 WLR 155, 1 All ER 161) An option was to be exercised âby notice in writingâ before a certain date. Order: Appeal dismissed with costs. Holwell Securities Ltd v Hughes [1974] 1 WLR 155 Facts: D issued a grant to sell a property to P, containing clause stipulating option must be exercised by notice in writing to the Intending Vendor within six months; P sent letter exercising the option, within the time limit, it ⦠The Short Oxford English Dictionary gives as the primary meanings of the word: “Intimation, information, intelligence, warning,… formal intimation or warning of something”. Holwell Securities Ltd v Hughes [1974] âPost Officeâ by David Gilmour Blythe. Lastly, the rule is easily displaced, for example, it may be excluded by the offeror either expressly or impliedly. It is not disputed that the plaintiffs’ solicitors’ letter dated 14th April addressed to the defendant at his residence and place of work, the house which was the subject of the option to purchase, was posted by ordinary post in a proper way, enclosing a copy of the letter of the same date delivered by hand to the defendant’s solicitors. It suffices I think at this stage to refer to Henthorn v. Fraser (1892 2 Chancery, 27). A notice in writing had to be given to exercise the option. Jack Kinsella. (A) Yes. It is not disputed that the language of the letter and enclosure would have constituted notice of exercise of the option had they reached the defendant. Written by Oxford & Cambridge prize-winning graduates, Includes copious adademic commentary in summary form, Concise structure relating cases and statutes into an easy-to-remember whole. Now in this case, the “notice in writing” was to be one “to the Intending Vendor”. MR MACPHERSON: Yes. Clause 2 of the agreement provided: 'THE said option shall be exercisable by notice in writing to Hughes ⦠It is the law in the first place that prima facie acceptance of an offer must be communicated to the offeror. It is not disputed that the letter and enclosure somehow went astray and never reached the house nor the defendant. Those are the two reasons. The answer to this problem can be reached by two paths: the short one and the roundabout one. I do not see why it is not. The issue in the appeal concerned whether the postal rule applied and if there were any exceptions to this rule. Hughes was successful at the lower court and Holwell appealed. Case summary last updated at 03/01/2020 14:26 by the You will probably find it useful to prepare a brief âcase noteâ on each; i.e. For suppose an exercise of the option by a registered letter which went astray, and suppose it to have been posted on the last option day: this section would deem the notice to have been given too late. Hughes refused to sell the property and Holwell sued for breach. most relevant to the Holwell Securities Ltd v Hughes case in particular, your apparent emphasis in what you first refer to as "the facts" of that case seems inadvertently misleading or at the least too incomplete. Holwell's lawyer sent a copy of the letter to Hughes by mail, but it was never delivered. One of the most fundamental concepts of the law of contract is that of offer and acceptance. Secondly, it probably does not operate if its application would produce manifest inconvenience and absurdity. The wording here implies a need for actual communication. MR WHITWORTH: If your Lordship pleases, yes. Citations: [1974] 1 WLR 155; [1974] 1 All ER 161; (1973) 26 P & CR 544; (1973) 117 SJ 912; [1974] CLY 3955. I consider this argument to be fallacious. Later provisions include in this the Recorded Delivery service. The plaintiffs, I think, took one of these paths. ____________________, HTML VERSION OF JUDGMENT____________________. Is a stockbroker who is holding shares to the orders of his client liable in damages because he did not sell in a falling market in accordance with the instructions in a letter which was posted but never received? MR MACPHERSON: No, my Lord. It is a truism of the law relating to options that the grantee must comply strictly with the conditions stipulated for exercise: see Hare v. Nicholl, 1966 2 Queen’s Bench, 130. In Holwell Securities Ltd v Hughes, it was excluded by the offeror requiring ânotice in writingâ. The option was to be exercisable 'by notice in writing' within 6 months. IN THE SUPREME COURT OF JUDICATURE COURT OF APPEAL CIVIL DIVISION On appeal from Order of Mr Justice Templeman. MR WHITWORTH: I was taking it as such, I am afraid. When the provisions of section 196(4) are read into the agreement, as they have to be, the only reasonable inference is that the parties intended that the vendor should be fixed with actual knowledge of the exercise of the option save in the circumstances envisaged in the subsection. This case considered the issue of acceptance of a contract and whether or not acceptance of an offer to purchase a property was valid when it was posted and not actually received by the owner of the property. Holwell Securities v Hughes [1974] 1 WLR 155 Hughes, in an agreement dated 19 Oct 1971 granted Holwell an option to purchase premises. Moreover, the defendant did not have knowledge of the existence of the combination of two letters which alone could be said to be an exercise of the option. LORD JUSTICE RUSSELL: No, Mr Macpherson, we think not. 493, C.A. Judgement for the case Holwell Securities v Hughes P had a contract with D whereby he had the option to purchase land, âexercisable by notice in writingâ to D. Pâs solicitors sent a letter to D requesting to buy land but this was never received. The parties to the option agreement cannot have intended any such absurd result to follow. This does not persuade me that the artificial posting rule is here applicable. Royal Courts of Justice, 5th November 1973: B e f o r e : LORD ⦠acceptor able to retract before communicated? Upon this principle the law has engrafted a doctrine that, if in any given case the true view is that the parties contemplated that the postal service might be used for the purpose of forwarding an acceptance of the offer, committal of the acceptance in a regular manner to the postal service will be acceptance of the offer so as to constitute a contract, even if the letter goes astray and is lost. I agree. It is a formal document which must have been drafted by someone familiar with conveyancing practice. [12] The postal acceptance rule is an established part of the law of contract in both Scots law and English law. LORD JUSTICE RUSSELL, LORD JUSTICE BUCKLEY (Not present) and LORD JUSTICE LAWTON ____________________. This conflicts with and therefore negatives the application of a system of acceptance by the act of posting the registered letter, just as would be the case if the option instrument had expressly provided “The said notice in writing if sent by registered post duly etc., etc., shall be deemed to have been given to the Intending Vendor at the time at which etc., etc.”. Like this case study. The illustrations of inconvenience and absurdity which Lord Bramwell gave are as apt today as they were then. He asked me if I had heard from Messrs Brecher, the other people’s solicitors, and I said ‘No’. Its derivation is from the Latin word for knowing. An option to purchase within a period given for value has the characteristic of an offer that cannot be withdrawn. Holwell Securities v Hughes 1974 1 All ER 161 ... Coe v New South Wales Bar Association 2000 NSWCA 13 - Duration: 1:04. www.studentlawnotes.com 532 views. (Q) And to whom did you speak there? LORD JUSTICE LAWTON: The issue in this appeal was clear. Holwell Securities Ltd v Hughes (1974) On the 19 October 1971 Hughes granted an option to Holwell Securities to purchase a certain property for £45,000. LORD JUSTICE RUSSELL: Mr Whitworth, the appeal will be dismissed; and I apprehend you ask for costs. Share this case by email Share this case. He said ‘Well, I have had a letter from them delivered to me today and I understand that you will be getting a letter as well, or a copy of this’. The plaintiffs were unable to do what the agreement said they were to do, namely, fix the defendant with knowledge that they had decided to buy his property. The two reasons are: It is an important point of construction and principle and, potentially certainly, there is a large amount of money involved. The defendant, Dr Hughes, had granted a callâ option with respect to his property at 571 High Road, Wembley to the claimants, Holwell Securities Ltd, given the claimants the irrevocable right to purchase the property during the option period for the specified sum. The object of this subsection was to enable conveyancers to omit from instruments affecting property stipulations as to the giving of notices if they were prepared to accept the statutory ones. *156 APPEAL from Templeman W.L.R.757. If this construction of the option clause is correct, there is no room for the application of any rule of law relating to the acceptance of offers by posting letters since the option agreement stipulated what had to be done to exercise the option. I propose in this judgment to start by taking the short path and then to survey the other. What if the letter had been delivered through the letter-box of the house in due time, but the defendant had either deliberately or fortuitously not been there to receive it before the option period expired? Oxbridge Notes is a trading name operated by material facts and summary of judgement(s). or is it wrong? I presume now he will vacate it. This, submitted Mr Macpherson, was enough to bring the rule into operation. Should any inference be drawn from the use of the word “notice”? This, in my judgment, was enough to exclude the rule. Holwell Securities claimed specific performance of the contract when Dr Hughes refused to complete the sale of his house. The relevant language here is, “The said option shall be exercised by notice in writing to the Intending Vendor …”. The view of Mr Justice Plowman in Re 88 Berkeley Road, N.W.9 (1971 Chancery, 648) that “served” meant “given” was not disputed. Being such, they are, it seems to me, inconsistent with the application of the theory of acceptance at the time of posting. (A) No. MR WHITMORTH: In the event of no leave being sought. The option agreement was an instrument affecting property. privacy policy. I do not know how much, because of course property values fluctuate so greatly; but, having lost the bargain, the Plaintiffs may have lost a good deal of money. Giving a notice means the same as serving a notice: see In re 88 Berkeley Road (1971 1 Chancery, 648). My recollection is that he said ‘Your presence does not have to be there’ or ‘You don’t have to be there yourself, if this letter is delivered, or posted to you’.” Counsel for the plaintiffs argued that since the defendant knew that the plaintiffs were anxious to exercise the option, and there was in existence a written notice exercising it, therefore there was a “notice in writing to the defendant”. A person does not give notice in writing to another person by sitting down and writing it out and then telephoning to that other saying “Listen to what I have just written”. Acceptance: Postal Rule [Flash Card 2 of 2] Retraction. It contained a clause stipulating that there must be notice (here, receipt of the offer) in writing within six months in order to exercise the option. The option was to be exercised âby notice in writing toâ the grantor within the stipulated time. Does the rule apply in all cases where one party makes an offer which both he and the person with whom he was dealing must have expected the post to be used as a means of accepting it? â¢Applying that to this case: B wasnât bound by a possible contract between F and N. 8-Holwell Securities Ltd v Hughes [1974] 1 WLR 155 (CA) Summary: â¢Need to carefully and explicitly follow the terms of a contract. For Holwell Securities Ltd v Hughes I wrote: Procedural history: Hughes refused to sell the property and Holwell sued for breach. In the option clauses under consideration the draftsman used the phrase in connection with the exercise of the option but in other parts of the agreement he was content to use such phrases as “agreed in writing” (see clause 4) and “if required in writing” (see clause 8(a)). In order for there to be a legally binding contract offer, acceptance, consideration and the intention to create legal relations must be established. In my judgment, the factors of inconvenience and absurdity are but illustrations of a wider principle, namely, that the rule does not apply if, having regard to all the circumstances, including the nature of the subject-matter under consideration, the negotiating parties cannot have intended that there should be a binding agreement until the party accepting an offer or exercising an option had in fact communicated the acceptance or exercise to the other. In essence, the principle states that, for a contract to be formed, there must have been an offer by one party (the offeror) which must have been accepted by the other party (the offeree). But the requirement of “notice … to”, in my judgment, is language which should be taken expressly to assert the ordinary situation in law that acceptance requires to be communicated or notified to the offeror, and is inconsistent with the theory that acceptance can be constituted by the act of posting, referred to by Anson as “acceptance without notification“. A notice is a means of making something known. It was to be an intimation to him that the grantee had exercised the option: he was the one who was to be fixed with the information contained in the writing. The letter of acceptance was lost in the post; therefore Hughes did not receive a valid acceptance as he had not received a ânotice in writingâ. But that is not and cannot be the end of the matter. MACPHERSON, Q.C. Russel LJ: Generally there is a prima facie duty to communicate acceptance for it to be valid, upon which there is engrafted a doctrine that “if the parties contemplated that the postal service might be used for…forwarding the acceptance of the offer” then committing the acceptance to the postal service “in the usual manner” creates a contract, even if the letter isn’t delivered. Subsection (4) of the section provides that such a notice shall be sufficiently served if it is sent by post in a registered letter addressed to the person to be served by name at his abode or place of business, and that, if it is not returned through the post office undelivered, service shall be deemed to be made “at the time at which the registered letter would in the ordinary course be delivered”. Both, in my judgment, are satisfactory but the roundabout one has some paths leading off it which can lead the traveller after legal truth astray. This case document summarizes the facts and decision in Holwell Securities Ltd v Hughes 1 WLR 155. (Q) Do you remember what he told you? There is, I consider, a further or perhaps parallel ground for exclusion of acceptance by act of posting in this case, which arises under section 196 of the Law of Property Act, 1925, and in particular subsection (5) which was new in property legislation. It should not apply where, having regard to all the circumstances, the contracting parties cannot have intended that there should be binding agreement until acceptance was, in fact, communicated. students are currently browsing our notes. writingdated October 19, 1971, defendant,Dr. The case of Dickinson v. Dodds (1876 2 Chancery Division, 463) referred to does not assist on this point: all it does is to show that an offeree cannot accept a withdrawable offer after he has learnt, by whatever means, that it has been withdrawn. Holwell Securities Ltd v Hughes is similar to these court cases: Williams v Roffey Bros & Nicholls (Contractors) Ltd, Household Fire and Carriage Accident Insurance Co Ltd v Grant, Byrne & Co v Leon Van Tienhoven & Co and more. Holwell Securities Ltd v Hughes Court of Appeal. MR WHITWORTH: Just to tidy up one matter, my learned friend has naturally had a caution on the register in respect of this option. It was held that the postal acceptance rule can be set aside where (1) there was no contemplation by the parties that the postal service would be used to convey the letter, or (2) where the contract prevented the rule having force and possibly (3) where the rule would produce “manifest inconvenience and uncertainty” (NB only Lawton LJ says this- the other 2 judges don’t comment). In my judgment, it does not. The object of this subsection, as also of subsection (3), is to specify circumstances in which proof of actual knowledge may be dispensed with. Did the plaintiffs exercise an option to purchase the premises known as 571, High Road, Wembley, by posting a letter to the defendant which he never received? But, it was appealed. It was accepted for the plaintiffs that the option instrument was an instrument affecting property. These provisions, if applicable to the present case, are of course to be regarded as part and parcel of the option instrument. Thomas Hilaire Hughes, 100,granted plaintiffs,Holwell Securities Ltd., 571High Road, Wembley, agreementprovided: saidoption shall W.L.R.155 EDUCATIONALUSE ONLY Page 1973WL 40382 (CA ⦠LORD JUSTICE RUSSELL: Are you asking for an undertaking? Perhaps we could do it this way, that if no such application is made in the House of Lords, then we will take steps to remove the caution. Holwell Securities v Hughes England and Wales Court of Appeal (Civil Division) (5 Nov, 1973) Will it be all right if I do?’ and he said yes it would. 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