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HOLWELL SECURITIES v HUGHES

General Rule:


The postal rule cannot be relied on in cases where acceptance mandates actual notification or communication.


Name:


Holwell Securities v Hughes [1974] 1 WLR 155


Facts:


Holwell Securities (the claimants) were allowed by the defendant to have an option “exercisable by notice in writing to [Hughes, the defendant] at any time within six months from the date hereof.” On 14th April 1972, Holwell Securities gave notice to Hughes in writing as a means of invoking the option. However, the letter never arrived. The claimants, Holwell Securities, applied for specific performance of the option they agreed with the defendants. They argued that it was complete on 14th April, which is when the letter confirming acceptance was posted.


Ratio:


The courts in Holwell Securities v Hughes held that Holwell securities had not legitimately exercised their option.


Application:


If acceptance requires actual notice, the notice becomes a term of acceptance. Applying postal rule in these cases results in absurdity as it would violate terms of the offer. As such, postal rule can be set aside.



Holwell Securities v Hughes

Analysis:


Partly because of these problems and partly because of technological advances (the post is no longer a such crucial method of communication), courts seem to be confining the scope of the postal acceptance rule. This is a rationale behind the decision in Holwell Securities v Hughes [1974] 1 WLR 155. In this case, the postal acceptance rule did not apply because the offeror did not intend that it would apply. While this case is authority for the proposition that the terms of an offer must be met for acceptance to be valid, it also illustrates the reservations modern courts have over the postal acceptance rule.


Holwell Securities v Hughes

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