Holwell Securities Ltd v Hughes [1974] 1 WLR 155

Court: Court of Appeal

Facts: The defendant, Dr. Hughes, granted an option to Holwell Securities Ltd to purchase his property for a specified sum within a six-month period. The option contract contained a clause stating that acceptance must be "communicated in writing" to exercise the option. On April 14, 1972, Holwell Securities sent a letter exercising the option, but the letter was lost in the post and never reached Dr. Hughes. As a result, Dr. Hughes refused to complete the purchase, and Holwell Securities sought specific performance.

Issue: Could the postal rule apply to validate the exercise of the option, despite the letter never reaching the offeror, given the explicit requirement that notice be "communicated in writing"?

Held: The Court of Appeal upheld the decision that no contract had arisen. The court reasoned that the postal rule was excluded by the express terms of the contract, which required actual communication of acceptance. Russell LJ noted that the postal rule does not apply where the offeror specifies a mode of acceptance that requires the notice to be received. In this case, the requirement of "notice in writing" indicated that the postal rule could not be applied.

Key Judicial Statement: Lawton LJ stated, "First, it does not apply when the express terms of the offer specify that the acceptance must reach the offeror. The public nowadays are familiar with this exception to the general rule through their handling of football pool coupons."

💡Leveluplaw: This case reinforces that the postal rule can be excluded by express contractual terms, requiring that acceptance be communicated directly to the offeror. The decision highlights the importance of clear and specific drafting when specifying how offers are to be accepted. Additionally, the case notes that the postal rule will not apply if its use would lead to manifest inconvenience or absurdity, as this would contradict the intentions of the parties.