Facts

The offeror, Brinkibon (London, England) wanted to sue the offeree,

Stahag (Vienna, Austria) for breach of contract. Acceptance of
Brinkibons offer had been by way of telex from London to Austria.
Which jurisdictions law applied? The answer to this question depended
on whether the postal rule applied - if it did the contract would have
been concluded in England and English law would apply; if it did not
apply then the contract would have been concluded where the
acceptance was received Vienna.
Held

The postal rule does not apply to direct/instant forms of communication

(including telex) as telex was used here the postal rule did not apply
and the contract was formed in Vienna. The Court also observed that
even though with telex the message may not be received by the
intended recipient immediately (there may be agents or other third
parties who receive the messages to be passed on to the intended
recipient) a telex that goes directly from the offerees business to the
offerors business (unlike a telegram which employs the use of a post
office) should be treated as if it were an instantaneous communication.
If a telex is sent to an office acceptance occurs when the telex reaches
the place of business, not when it actually gets to the person to whom it
is addressed.

he buyers, an English company, by a telex, sent from London to Vienna, accepted the terms of sale offered by
the sellers, an Austrian company. The buyers issued a writ claiming damages for breach of the contract.
The House of Lords held that the service of the writ should be set aside because the contract had not been
made within the court's jurisdiction. Lord Wilberforce stated that the present case is, as Entores 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.

Appellant
Brinkibon Ltd.
Respondent
Stahag Stahl und Stahlwarenhandelsgesellschaft mbH

Year
1982
Court
House of Lords
Judges
Lords Wilberforce, Fraser of Tullybelton, Brandon of Oakbrook, Russell of Killowen,
and Bridge of Harwich
Country
United Kingdom
Area of law
Acceptance, Communication of acceptance
Issue
Where is a contract created when it is between parties in two jurisdictions?
Contents
[show]
Facts

Edit

Brinkibon, located in London, telexed their acceptance of a contract offer to

purchase steel from Stahag Stahl in Vienna. Brinkibon, alleging breach, wanted to
serve the respondent with a writ claiming damages for breach of contract in
England, but Stahag Stahl claimed they were not under British jurisdiction. The
lower courts found for Stahag Stahl, saying the contract was created in Austria and
thus the claim had to go through Austrian courts.
Issue

Edit

1. Where is a contract created when it is between parties in two jurisdictions?

Decision

Edit

Appeal dismissed.
Reasons

Edit

This case follows the similar case of Entores Ltd. v Miles Far East Corp. which found
that in cases of instantaneous communication, the contract is only complete when
the acceptance is received by the offeror, and the contract is made at the place
where the acceptance is received. In this case, the acceptance was delivered to the
offeror in Vienna, thus Austria has jurisdiction over the issue. Lord Wilberforce goes
on to discuss the implications of the rules of instantaneous communication at
length. He states that no universal rule of acceptance can cover all cases of
instantaneous communication they must be resolved with references to the
intentions of the parties, and the specific circumstances of the case.
Ratio

Edit

In cases of instantaneous communication, the contract is only complete when

the acceptance is received by the offeror and the contract is made at the
place where the acceptance is received.

There is no universal rule of acceptance in cases on instantaneous

communication; they must each be decided based on the intentions of the
parties and the circumstances of the particular cases.

Facts
Prolonged negotiations between buyers - English company (Brinkibon) and sellers - an Austrian company
(Stahag Stahl) over sale of steel bars. Brinkibon sent a telex accepting the terms of sale offered at a point
in time by Stahag Stahl. Contract was not performed that is Brinkibon did not get their steel and sued
Stahag in the English Cts. Stahag objected on the grounds that the English Cts had no jurisdiction over
an Austrian company.

Brinkibon arguments

Contract formed in London because acceptance was communicated to the offeree in London

Why? Telex is like post or telegram legal rule is that in general acceptance is complete when
the item is posted

Result if successful is that contract is formed in London and law of UK should govern, including
laws relating to service of writs

Contract formed in Vienna because acceptance was communicated to offeree in Vienna - this is
the rule for inter praesentes communication (people in each others presence) and telex has been
assimilated to other inter praesentes communications such as telephone

Result if successful is that contract is not formed in London and law of UK should not govern

Stahag Stahl arguments

Contract formed in Vienna because acceptance was communicated to offeree in Vienna - this is
the rule for inter praesentes communication (people in each others presence) and telex has been
assimilated to other inter praesentes communications such as telephone

Result if successful is that contract is not formed in London and law of UK should not govern

Held
When and where the contract was formed if it was formed in England, then the English Rules of Court
were applicable which allowed a party to serve a writ on someone outside the jurisdiction, if the contract
was made within the jurisdiction. Ct found that contract was formed in Vienna so service of writs was
improper.