Holwell Securities Ltd v Hughes [Postal Rule] 1974

Holwell Securities Ltd v Hughes

Court of Appeal

On 19 October 1971
Hughes gave the claimants an option to purchase his house for £45,000. 
Clause 2 of the agreement stated that the option was to be exercised ‘by notice in writing’ within six months from the date hereof.

On 14 April 1972
The claimants posted a letter of acceptance but letter was never delivered. 
After the option had expired the claimants sued for specific performance.
The claimants argued that the postal rule applied and that a contract had therefore been made as soon as the letter of acceptance was posted.



Courts held : Defendant not liable.

The postal rule did not apply because the offer, by asking for ‘notice in writing’, it stated that an acceptance had to reach the offeror.
The postal rule would not apply where all the circumstances of the case indicated that the
parties did not intend there to be a binding contract until an acceptance was actually
received.
Furthermore, the court stated that the rule would never apply where its application would produce ‘manifest inconvenience and absurdity’.


Despite the decision in Holwell Securities Ltd v Hughes, the postal rule is still very much
alive and can still apply. It is, however, important to remember that the rule can apply only
when acceptance is made by posting a letter.



Q : What is specific performance in this case?
A court order requiring Dr Hughes to honour the contract and sell the house to them.