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					HOUSE OF LORDS

BRINKIBON LTD v STAHAG UND STAHL WAREN
HANDELSGESELLSCHAFT MbH (1983) 2 AC 34

January 21 1982

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LORD WILBERFORCE:

... With a general rule covering instantaneous communication inter
praesentes [face to face - Editor], or at a distance, with an exception
applying to non-instantaneous communication at a distance, how should
communications by telex be categorised? In Entores Ltd v Miles Far East
Corp the Court of Appeal classified them with instantaneous
communications. Their ruling...appears not to have caused either adverse
comment, or any difficulty to businessmen. 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
variations 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 judgment where the risks should
lie ...

The present case is, as Entores Ltd v Miles Far East Corp itself, the
simple case of instantaneous communication between principals, and, in
accordance with the general rule, involves that the contract (if any) was
made when and where the acceptance was received. This was ... in
Vienna.

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LORD WILBERFORCE:

My Lords, the appellants desire to sue in this country the respondents, an
Austrian company, for breach of an alleged contract for the supply of
steel. In order to do so, they must obtain leave to serve notice of their writ
upon the respondents under one or other of the provisions of R.S.C., Ord.
11, r. 1 (1). Those relied upon are paragraphs (f) and (g). To satisfy (f),
the appellants must show that the contract was ‘made within the
jurisdiction’; to come within (g) they must establish that the action is in
respect of a breach committed within the jurisdiction. The Court of
Appeal has decided against the appellants under both paragraphs.

The question whether a contract was made within the jurisdiction will
often admit of a simple answer: if both parties are in England at the time
of making it, or if it is contained in a single document signed by both
parties in England, there is no difficulty. But in the case of contracts
involving negotiations, where one party is abroad, the answer may be
difficult to find. Sophisticated analysis may be required to decide when
the last counter-offer was made into a contract by acceptance, or at what
point a clear consensus was reached and by virtue of what words spoken
or of what conduct. In the case of successive telephone conversations it
may indeed be most artificial to ask where the contract was made: if one
asked the parties, they might say they did not know - or care. The place of
making a contract is usually irrelevant as regards validity, or
interpretation, or enforcement. Unfortunately it remains in Order 11 as a
test for purposes of jurisdiction, and courts have to do their best with it.

In the present case it seems that if there was a contract (a question which
can only be decided at the trial), it was preceded by and possibly formed
by a number of telephone conversations and telexes between London and
Vienna. and there are a number of possible combinations upon which
reliance can be placed. At this stage we must take the alternatives which
provide reasonable evidence of a contract in order to see if the test is
satisfied. There are two: (i) A telex dated May 3, 1979, from the
respondents in Vienna, said to amount to a counter-offer, followed by a
telex from the appellants in London to the respondents in Vienna dated
May 4, 1979, said to amount to an acceptance. (ii) The above telex dated
May 3, 1979, from the respondents followed by action, by way of
opening a letter of credit, said to have amounted to an acceptance by
conduct.

The first of these alternatives neatly raises the question whether an
acceptance by telex sent from London but received in Vienna causes a
contract to be made in London, or in Vienna. If the acceptance had been
sent by post, or by telegram, then, on existing authorities, it would have
been complete when put into the hands of the post office - in London. If
on the other hand it had been telephoned, it would have been complete
when heard by the offeror - in Vienna. So in which category is a telex
communication to be placed? Existing authority of the Court of Appeal
decides in favour of the latter category, i.e. a telex is to be assimilated to
other methods of instantaneous communication: see Entores Ltd. v. Miles
Far East Corporation [1955] 2 Q.B. 327. The appellants ask that this case,
which has stood for 30 years, should now be reviewed.

Now such review as is necessary must be made against the background of
the law as to the making of contracts. The general rule, it is hardly
necessary to state, is that a contract is formed when acceptance of an offer
is communicated by the offeree to the offeror. and if it is necessary to
determine where a contract is formed (as to which I have already
commented) it appears logical that this should be at the place where
acceptance is communicated to the offeror. In the common case of
contracts, whether oral or in writing inter praesentes, there is no
difficulty; and again logic demands that even where there is not mutual
presence at the same place and at the same time, if communication is
instantaneous, for example by telephone or radio communication, the
same result should follow.

Then there is the case - very common - of communication at a distance, to
meet which the so called ‘postal rule’ has developed. I need not trace its
history: it has firmly been in the law at least since Adams v. Lindsell
(1818) 1 B. & Ald. 681. The rationale for it, if left somewhat obscure by
Lord Ellenborough C.J., has since been well explained. Mellish L.J. in In
re Imperial Land Co. of Marseilles (Harris’ Case) (1872) L.R. 7 Ch.App.
587, 594 ascribed it to the extraordinary and mischievous consequences
which would follow if it were held that an offer might be revoked at any
time until the letter accepting it had been actually received: and its
foundation in convenience was restated by Thesiger L.J. in Household
Fire and Carriage Accident Insurance Co. Ltd. v. Grant (1879) 4 Ex.D.
216, 223. In these cases too it seems logical to say that the place, as well
as the time, of acceptance should be where (as when) the acceptance is
put into the charge of the post office.

In this situation, with a general rule covering instantaneous
communication inter praesentes, or at a distance, with an exception
applying to non- instantaneous communication at a distance, how should
communications by telex be categorised? In Entores Ltd. v. Miles Far
East Corporation [1955] 2 Q.B. 327 the Court of Appeal classified them
with instantaneous communications. Their ruling, which has passed into
the textbooks, including Williston on Contracts, 3rd ed. (1957), appears
not to have caused either adverse comment, or any difficulty to business
men. 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 upon 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
variations 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 judgment where the risks should
lie: see Household Fire and Carriage Accident Insurance Co. Ltd. v.
Grant, 4 Ex.D. 216, 227 per Baggallay L.J. and Henthorn v. Fraser [1892]
2 Ch. 27 per Lord Herschell.

The present case is, as Entores Ltd. v. Miles Far East Corporation [1955]
2 Q.B. 327 itself, the simple case of instantaneous communication
between principals, and, in accordance with the general rule, involves that
the contract (if any) was made when and where the acceptance was
received. This was on May 4, 1979, in Vienna.
The alternative argument under this head was that the contract was made
by an offer made from Vienna (as above, on May 3, 1979) and an
acceptance by conduct in the United Kingdom. The conduct relied upon
was the giving of instructions by the appellants to set up a letter of credit,
as requested in the respondents’ telex of May 3, 1979. The appellants’
telex of May 4, 1979, opened with the words ‘confirm having opened our
irrevocable letter of credit No. 0761/79 on account of Mide-strade Est.,
Chiasso, Switzerland ...’ Mide-strade Est. is, it appears, the company
behind the appellants - a fact which raises the question whether a letter of
credit on their account satisfied the terms of the respondents’ request. I
need not come to a conclusion on this point because I am satisfied that the
letter of credit was not opened in the United Kingdom. Instructions were
indeed given by the appellants to their bank in the United Kingdom to
open it, and that bank gave instructions on May 4, 1979, to their
correspondent in Vienna, but these steps were between the appellants and
their agents only. They could not amount, in my opinion, to an
acceptance of the offer of May 3, 1979. This took place, if at all, when
the correspondent bank in Vienna notified the respondents: this they did
in Vienna. On neither ground, therefore, can it be said that the contract
was made within the jurisdiction and the case under subparagraph (f)
must fail.

That under subparagraph (g) can be more shortly dealt with. The breach
pleaded is that the defendants (respondents) ‘have not opened a
performance bond and have delivered no steel’ (points of claim paragraph
7). Each of these acts should have been performed outside the jurisdiction
and failure to do them must be similarly located.

On both points, therefore, I find myself in agreement with the Court of
Appeal, and the appeal must be dismissed.

LORD FRASER OF TULLYBELTON:

My Lords, I am in full agreement with the reasoning of my noble and
learned friends, Lord Wilberforce and Lord Brandon of Oakbrook. I wish
only to add a comment on the subject of where a contract is made, when
it is made by an offer accepted by telex between parties in different
countries. The question is whether acceptance by telex falls within the
general rule that it requires to be notified to the offeror in order to be
binding, or within the exception of the postal rule whereby it becomes
binding when (and where) it is handed over to the post office. The posting
rule is based on considerations of practical convenience, arising from the
delay that is inevitable in delivering a letter. But it has been extended to
apply to telegrams sent through the post office, and in strict logic there is
much to be said for applying it also to telex messages sent by one
business firm directly to another. There is very little, if any, difference in
the mechanics of transmission between a private telex from one business
office to another, and a telegram sent through the post office - especially
one sent from one large city to another. Even the element of delay will
not be greatly different in the typical case where the operator of the
recipient’s telex is a clerk with no authority to conclude contracts, who
has to hand it to his principal. In such a case a telex message is not in fact
received instantaneously by the responsible principal. I assume that the
present case is a case of that sort.

Nevertheless I have reached the opinion that, on balance, an acceptance
sent by telex directly from the acceptor’s office to the offeror’s office
should be treated as if it were an instantaneous communication between
principals, like a telephone conversation. One reason is that the decision
to that effect in Entores v. Miles Far East Corporation [1955] 2 Q.B. 327
seems to have worked without leading to serious difficulty or complaint
from the business community. Secondly, once the message has been
received on the offeror’s telex machine, it is not unreasonable to treat it as
delivered to the principal offeror, because it is his responsibility to
arrange for prompt handling of messages within his own office. Thirdly, a
party (the acceptor) who tries to send a message by telex can generally
tell if his message has not been received on the other party’s (the
offeror’s) machine, whereas the offeror, of course, will not know if an
unsuccessful attempt has been made to send an acceptance to him. It is
therefore convenient that the acceptor, being in the better position, should
have the responsibility of ensuring that his message is received. For these
reasons I think it is right that in the ordinary simple case, such as I take
this to be, the general rule and not the postal rule should apply. But I
agree with both my noble and learned friends that the general rule will
not cover all the many variations that may occur with telex messages.

LORD RUSSELL OF KILLOWEN:

My Lords, I have had the advantage of reading in draft the speeches
prepared by my noble and learned friends, Lord Wilberforce and Lord
Brandon of Oakbrook. I agree with them and accordingly I too would
dismiss this appeal.
LORD BRIDGE OF HARWICH:

My Lords, I have had the advantage of reading in draft the speeches of
my noble and learned friends, Lord Wilberforce and Lord Brandon of
Oakbrook. I agree with them that, for the reasons they give, this appeal
should be dismissed.

LORD BRANDON OF OAKBROOK:

My Lords, both the appellants (whom I shall call ‘the buyers’) and the
respondents (whom I shall call ‘the sellers’) are traders in steel. The
buyers are an English company. The sellers are an Austrian company,
having no place of business in England or Wales.

It is common ground between the buyers and the sellers that early in May
1979, following negotiations which began in April 1979, an executory
contract was made between them for the sale by the sellers to the buyers
of a quantity of mild steel bars. It is further common ground that, in
circumstances which I shall explain later, that executory contract (which I
shall call ‘the contract ‘) was never performed.

On November 30, 1979, a considerable time after performance of the
contract should, according to its terms, have been completed, the buyers
applied ex parte to Robert Goff J. in the Commercial Court for leave to
issue a writ against the sellers claiming damages for breach of the
contract, and to serve notice of such writ on the sellers out of the
jurisdiction in Austria. The application was supported by an affidavit of
Mr. Jackson, a partner in the firm of solicitors acting for the buyers, and
the learned judge made the order which he was asked to make. Pursuant
to that order, the buyers issued a writ against the sellers indorsed on the
back with points of claim, and served notice of such writ on the sellers in
Austria.

On March 11, 1980, Mocatta J. in the Commercial Court dismissed an
application by the sellers, who had meanwhile entered a conditional
appearance in the action, to set aside the service on them of notice of the
writ in Austria.

The sellers appealed against the decision of Mocatta J. and by order of
June 12, 1980, the Court of Appeal (Stephenson and Templeman L.JJ.)
allowed the appeal and set aside both the order of Robert Goff J. of
November 30, 1979, and that of Mocatta J. of March 11, 1980. The Court
of Appeal refused an application by the buyers to present a petition of
appeal to your Lordships’ House, but leave for them to do so was later
given by the Appeal Committee.

There are two grounds on which the buyers relied in the courts below,
and continued to rely in your Lordships’ House, for their contention that
this was a proper case for service out of the jurisdiction in Austria under
R.S.C., Ord. 11, r. 1 (1). The first ground was that the case came within
paragraph (f) of rule 1 (1) because the action begun by the writ was
brought against the sellers to recover damages in respect of a contract
which was made in England. The second ground was that the case came
within paragraph (g) of rule 1 (1) because the action begun by the writ
was brought against the sellers in respect of a breach of contract
committed in England. Robert Goff J. appears to have accepted both
grounds. Mocatta J. accepted the first ground but rejected the second. The
Court of Appeal rejected both grounds.

My Lords, the negotiations between the parties which led up to the
making of the contract were conducted, in the main at any rate, by telex. I
say ‘in the main’ because there is some evidence, contained in the
affidavit of Mr. Jackson, to which I referred earlier, that there were also
some telephone conversations between representatives of the parties
relating to the matter. There was, however, no evidence to show what was
said in the course of any such telephone conversations and no
significance can therefore be attached to them.

There were six telexes leading up to making of the contract: four from the
buyers to the sellers, sent on April 20, April 23, April 26 and May 4,
1979; and two from the sellers to the buyers sent on April 25, and May 3,
1979. In the course of these telexes the principal terms of the contract
were agreed as follows. First, the goods to be sold were to be 20,000
metric tons of mild steel bars of four different sizes. Secondly, the goods
were to be delivered c. & f. Alexandria on liner terms. Thirdly, the price
was to be U.S.$353 per metric ton. Fourthly, the goods were to be
shipped in five separate instalments, each of 4,000 metric tons, in June,
July, August, September and October 1979. Fifthly, payment of the price
of each of the five instalments, namely, U.S.$1,412,000, was to be made
by means of a letter of credit, revolving four times, which was to be
operative at a named bank in Vienna. Sixthly, the following documents
were to be presented against the letter of credit: a commercial invoice; a
full set of clean bills of lading; a certificate of origin legalised by the
Egyptian embassy or consulate; a blacklist certificate of the shipping
company; a works certificate indicating the mechanical properties of the
steel and that the bars were manufactured according ta British Standard
Specification 4449/1969. Seventhly, the sellers were to provide a
performance bond based on a percentage of the total price of
U.S.$7,060,000. With regard to this the buyers first proposed that the
percentage should be 5 per cent., but the sellers made a counterproposal
of 3 per cent. which, since the buyers made no objection to it, appears to
have been impliedly accepted by them. Eighthly, if the freight rates were
to increase for the shipments in September and October, the buyers would
repay such increase to the sellers. With regard to this too, the proposal
came first from the sellers and, since the buyers made no objection ta it,
appears again to have been impliedly accepted by them.

In their telex of May 3, 1979, the sellers named the Zentralsparkasse der
Gemeinde bank in Vienna as the bank at which the buyers’ letter of credit
was to be operative. Following receipt of that telex the buyers, on May 4,
1979, gave instructions to their London bank, as a result of which the
latter sent to Osterreichische Landerbank, their correspondent bank in
Vienna, a long telex which amounted either to a letter of credit, or at any
rate to notice of a letter of credit, opened by a Swiss firm, Mide-strade
Est., of Chiasso, in favour of the sellers in respect of the prices payable
for the five instalments of steel bars the subject matter of the contract.

In the last paragraph but one of that telex the buyers’ London bank said:

‘This telex advice should be considered as a negotiable instrument. Please
advise the above credit through Zentralsparkasse der Gemeinde, Wien,
Vienna. Please also advise the beneficiaries about the arrival of credit on
telephone.’

After giving those instructions to their London bank, the buyers on the
same day, May 4, 1979, sent to the sellers a telex in these terms:

‘Confirm having opened our irrevocable letter of credit No. 0761/79 on
account of Mide-strade Est., Chiasso, Switzerland, favouring yourselves
for U.S. dlrs. 1,142,000 covering shipment of 4,000 m. tons rebars stop
the credit is to revolve four times covering total shipment of 20,000 m.
tons stop this credit has been advised through Osterreichische
Landerbank (Wien).’

Mide-strade Est. of Chiasso in Switzerland were in fact principals on
whose behalf the buyers, throughout their negotiations with the sellers,
were acting as agents. The mention, however, of that Swiss firm’s name
in the telexed letter of credit sent by the buyers’ London bank to their
correspondent bank in Vienna, and in the telex from the buyers to the
sellers set out above, constituted the first intimation to the sellers that a
third party was involved in the contract on the buyers’ side.

On May 9, 1979, the sellers sent a telex to the buyers complaining that
the letter of credit was unworkable and that it had been opened in the
name not of the buyers but of a Swiss firm of whom the sellers knew
nothing. On May 21, 1979, the sellers sent a further telex to the buyers in
which they said, in effect, that they were withdrawing from the contract
on the ground that they had not had opened in their favour a proper letter
of credit under it. Further telexes were exchanged in which the buyers
sought to persuade the sellers to change their minds and go on with the
contract, but these efforts all failed. The result accordingly was that the
contract was never performed.

My Lords, I shall consider first the buyers’ contention that the case comes
within paragraph (f) of R.S.C., Ord. 11, r. 1 (1) , because the action begun
by the writ was brought against the sellers to recover damages in respect
of a contract which was made in England. In order to examine that
contention it is necessary to consider the question when and where the
negotiations between the buyer and the seller resulted in what both parties
agree they did result in, namely, a concluded contract of sale.

In Mr. Jackson’s affidavit of November 21, 1979, in support of the
buyers’ ex parte application to Robert Goff J. he stated in paragraph 4
that the contract came into being as the result of an offer by the buyers,
contained in a telex sent by them to the sellers on April 26, 1979, being
accepted by a telex sent by the sellers to the buyers on May 3, 1979. The
manner in which the contract was made was pleaded in the same way in
paragraph 4 of the buyers’ points of claim indorsed on the back of the
writ.

Examination of the two telexes concerned does not support the buyers’
original case on how the contract was concluded. The buyers’ telex of
April 26, 1979, is capable of being interpreted as an offer, but the sellers’
telex of May 3, 1979, cannot be interpreted as an acceptance of such
offer, because it introduced terms which differed materially from those
contained in the latter. In particular, the buyers in their telex of April 26,
1979, proposed a performance bond of 5 per cent. on the total purchase
price, whereas the sellers in their telex of May 3, 1979, specified a
performance bond of 3 per cent. The sellers further introduced an entirely
new term, under which the buyers were to pay to the sellers any increase
in freight charges in respect of the September and October shipments. In
these circumstances the sellers’ telex of May 3 must, in accordance with
well-established principles of the law of contract, be interpreted not as an
acceptance of the buyers’ offer but as a counter-offer.

In your Lordships’ House, Mr. Thompson Q.C. for the buyers accepted,
as I understood him, that the way in which the contract was said to have
been made, first, in paragraph 4 of Mr. Jackson’s affidavit and, secondly,
in paragraph 4 of the buyers’ points of claim, could not be supported. He
recognised that the sellers’ telex of May 3 had to be interpreted as a
counter-offer, and he put forward two alternative cases as to the manner
in which that counter-offer was accepted by the buyers, either of which
would, he said, produce the same result, namely, that acceptance took
place, and the contract was therefore made, in England.

Mr. Thompson’s first contention was that the sellers’ counter-offer
contained in their telex of May 3, 1979, was accepted by the buyers by
their conduct on May 4, 1979, in instructing their London bank to open
the required letter of credit operative in Vienna. His second and
alternative contention was that the counter-offer was accepted by the
buyers sending to the sellers their telex of May 4, 1979, which I quoted in
full above.

In support of the first contention Mr. Thompson argued that the conduct
of the buyers in giving the instructions concerned to their London bank
took place in England, and that, since that conduct had the effect of
concluding the contract, the contract was one made in England for the
purposes of paragraph (f) of R.S.C., Ord. 11, r. 1 (1).

In support of his second and alternative contention, Mr. Thompson
argued that, since the buyers’ telex of May 4, which resulted in the
concluding of the contract, was sent by a representative of the buyers in
London, once again the contract was one made in England for the
purposes of paragraph (f) above.

My Lords, I do not consider that Mr. Thompson’s first contention, that
the contract was concluded by the conduct of the buyers on May 4, 1979,
in giving instructions to their London bank can possibly be right. It may
be that when, as a result of those instructions, a letter of credit was
opened operative at a bank in Vienna, and the sellers were then notified
of that fact by that bank, such notification had the effect of bringing into
being a concluded contract on the terms of the sellers’ telex of May 3,
1979. But the proposition that the mere giving by the buyers to their
London bank of the instructions concerned, without any notification to
the sellers of the fact that such instructions had been given, or of their
nature and effect, could result in bringing into being a concluded contract
appears to me to be quite untenable. On the other hand, if the contract
was concluded as a result of a letter of credit operative at a bank in
Vienna being opened, and the bank concerned then notifying the sellers
of such opening, the contract so concluded would be one made in Austria
and not in England.

Mr. Thompson’s second and alternative case, that the contract was
concluded by the buyers transmitting to the sellers their telex of May 4,
1979, seems to me to be the correct analysis of the transaction. On this
analysis, however, the buyers are up against the difficulty that it was
decided by the Court of Appeal in Entores Ltd. v. Miles Far East
Corporation [1955] 2 Q.B. 327 that, when an offer is accepted by telex,
the contract thereby made is to be regarded as having been so made at the
place where such telex was received (in this case Vienna) and not in the
place from which such telex was sent (in this case London).

Mr. Thompson invited your Lordships to hold that the Entores case was
wrongly decided and should therefore be overruled. In this connection he
said that it was well-established law that, when acceptance of an offer
was notified to an offeror by post or telegram, the concluding of the
contract took place when and where the letter of acceptance was posted or
the telegram of acceptance was despatched. He then argued that the same
rule should apply to cases where the acceptance of an offer was
communicated by telex, with the consequence that the contract so made
should be regarded as having been made at the place from which the telex
was sent and not the place where it was received.
My Lords, I am not persuaded that the Entores case [1955] 2 Q.B. 327,
was wrongly decided and should therefore be overruled. On the contrary,
I think that it was rightly decided and should be approved. The general
principle of law applicable to the formation of a contract by offer and
acceptance is that the acceptance of the offer by the offeree must be
notified to the offeror before a contract can be regarded as concluded,
Carlill v. Carbolic Smoke Ball Co. [1893] 1 Q.B. 256, 262, per Lindley
L.J. The cases on acceptance by letter and telegram constitute an
exception to the general principle of the law of contract stated above. The
reason for the exception is commercial expediency: see, for example,
Imperial Land Co. of Marseilles, In re (Harris’ Case) (1872) L.R. 7
Ch.App. 587, 692 per Mellish L.J. That reason of commercial expediency
applies to cases where there is bound to be a substantial interval between
the time when the acceptance is sent and the time when it is received. In
such cases the exception to the general rule is more convenient, and
makes on the whole for greater fairness, than the general rule itself would
do. In my opinion, however, that reason of commercial expediency does
not have any application when the means of communication employed
between the offeror and the offeree is instantaneous in nature, as is the
case when either the telephone or telex is used. In such cases the general
principle relating to the formation of contracts remains applicable, with
the result that the contract is made where and when the telex of
acceptance is received by the offeror.

It follows from what I have said that, in my opinion, Mr. Thompson’s
contention that the present case falls within paragraph (f) of R.S.C., Ord.
11, r. 1 (1), fails and must be rejected.

I turn to examine Mr. Thompson’s other contention that the present case
falls within paragraph (g) of R.S.C., Ord. 11, r. 1 (1). In order to do this it
is necessary to consider first what is the breach of the contract in respect
of which the buyers’ action against the sellers was brought, and then to
see whether such breach, assuming that it was committed, took place
within or outside the jurisdiction.

This part of the case appears to have been conducted by both sides at
every stage in the courts below as if the breach of the contract in respect
of which the buyers’ action was brought consisted of an anticipatory
breach in the form of a repudiation of the contract contained in the
sellers’ telexes of May 9 and 21, 1979. As a result the question
considered in the courts below was whether such repudiation took place
in the country from which the telexes concerned were sent, namely,
Austria, or in the country in which they were received, namely, England.
Both Mocatta J. and the Court of Appeal took the view that the
repudiation, and therefore the relevant breach of the contract, took place
in Austria, the country from which the telexes concerned were sent.

In my view both sides, in conducting this part of the case on the basis
described above, were acting under a complete misapprehension as to
what was the breach of the contract in respect of which the buyers’ action
was brought. That this is so becomes immediately apparent from the
terms of paragraphs 6, 7 and 8 of the points of claim indorsed on the back
of the writ.

Assuming, in favour of the buyers, that the sellers, by sending their
telexes of May 9 and 21, repudiated the contract, a situation then arose in
which the buyers were entitled to elect between two courses. They could
either accept the repudiation and treat the contract as at an end; or they
could decline to accept the repudiation and treat the contract as still
subsisting. It is clear that, in that situation, the buyers elected to follow
the second course and not the first.

I say that that is clear for four reasons. First, there is nowhere to be found
in the documents put in evidence any telex or letter from the buyers to the
sellers indicating that the former accepted the repudiation of the contract
by the latter. Secondly, though reference is made in paragraph 6 of the
buyers’ points of claim to the sellers’ two telexes of May 9 and 21, 1979,
it is nowhere pleaded either that the sending of those telexes constituted a
repudiation of the contract by the sellers, or that the buyers elected to
accept such repudiation and treat the contract as at an end. Thirdly, the
breach of the contract in fact pleaded in paragraph 7 of the points of claim
is simply a failure by the sellers to perform the contract by opening a
performance bond and delivering the steel. Fourthly, the damage alleged
to have been suffered by the buyers in paragraph 8 of the points of claim
is damage calculated by reference to the difference between the market
and the contract prices of the steel at the time when the five instalments
should, on the footing that the contract remained in force, have been
delivered to the buyers.

Having regard to these matters the question to be considered in relation to
paragraph (g) of R.S.C., Ord. 11, r. 1 (1) is not in what country did any
alleged anticipatory repudiation of the contract by the sellers take place.
The question is rather whether the sellers, on the assumption that they
failed to perform any part of their obligations under the contract, thereby
committed any breach of the contract in England. There is no difficulty in
giving a negative answer to that question, for it has never been suggested
that any part of the contract to be performed by the sellers was to be
performed anywhere except outside the jurisdiction.

It follows from what I have said that, in my opinion, Mr. Thompson’s
contention that the present case falls within paragraph (g) of R.S.C., Ord.
11, r. 1 (1) also fails and must be rejected.

My Lords, for the reasons which I have given, I would affirm the decision
of the Court of Appeal, though on different grounds in relation to
paragraph (g), and dismiss the appeal.

Since preparing this speech I have had the advantage of reading in draft
that of my noble and learned friend, Lord Wilberforce. In it he points out
that, while the present case, like the Entores case [1955] 2 Q.B. 327, is
concerned only with instantaneous communication by telex between the
principals on either side, there may in other cases be a number of
variations on that simple theme. He further expresses the view that there
can be no general rule capable of covering all such variations, and that,
when they occur, the problems posed by them must be resolved by
reference to the intention of the parties, sound business practice and in
some cases a judgment where the risk shall lie. I agree entirely with these
observations.

				
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