Published: Wed, 07 Mar 2018
Brinkibon Ltd v Stahag Stahl  2 AC 34
Contract – Formation – Acceptance – Postal Rule – Jurisdiction – Instantaneous Communication – Offer
The complainants, Brinkibon Ltd, were a company that was based in London. They were buying steel from the defendants, Stahag Stahl, who were sellers based in Austria. The complainants sent their acceptance of the offer by Telex, which was to the defendants in Vienna. Brinkibon Ltd later wanted to sue Stahag Stahl for breach of contract and applied to serve an out of jurisdiction party.
The issue in this case concerned where the contract was formed, as the breach of contract could only be dealt with under English law if the contract was formed in England. Otherwise, as the defendant’s argued, the contract would be dealt with by Austrian law. The court had held that the contract was created in Austria and this decision was appealed. Another issue in the appeal was when the formation of a contract would be when using instantaneous communication, such as Telex.
The appeal was dismissed and the courts held that the contract was formed in Austria and the breach of contract would have to go through Austrian courts. As the communication of acceptance was received by Telex in Vienna, this was when the contract was created. The court reaffirmed Entores v Miles Far East Co, which stated that the postal rule did not apply to instantaneous forms of communication, which would include Telex. However, the court also stated that there was no universal rule and each case would have to be resolved by looking at the intention of the parties and sound business practice.
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