Holwell Securities Ltd v Hughes [1974] 1 WLR 155 (CA)

Facts

• Hughes granted Holwell Securities an option to purchase property for £45,000.
• Clause 2 of the agreement specified the option "shall be exercisable by notice in writing at any time within six months from the date hereof."
• Holwell Securities posted a letter exercising the option within six months, but the letter was never received by Hughes.
• Holwell Securities attempted to enforce the option, leading to a dispute over whether a binding agreement had been formed.
• The dispute centered on whether the postal rule applied so that acceptance occurred on posting, despite the letter not reaching Hughes.

Issues

1. Whether the postal rule applied to the acceptance of the option, making posted acceptance effective even if not received.
2. Whether the requirement for "notice in writing" in Clause 2 excluded the application of the postal rule.
3. Whether the postal rule should be disapplied when it would lead to manifest inconvenience or absurdity.

Decision

• The Court of Appeal held that the postal rule did not apply in this case.
• The requirement for "notice in writing" meant actual receipt of acceptance by Hughes was necessary to exercise the option.
• Holwell Securities failed to meet the requirement, as their acceptance was not received within the stipulated time.
• The decision re-affirmed that explicit terms in the offer can override the general postal rule.
• The court also recognised, in obiter, that the postal rule does not apply where its operation would cause manifest inconvenience or absurdity.

Legal Principles

• The postal rule holds that acceptance is effective upon posting, not receipt, subject to the parties’ intentions and the terms of the offer.
• Express terms in an offer can exclude or modify the postal rule; requirements such as "notice in writing" will require actual communication of acceptance.
• The postal rule may not apply where its application would create manifest inconvenience or absurdity, as recognised in obiter.
• The intention of the parties, as shown by the wording of the contract, is central to determining contract formation rules.

Conclusion

The Court of Appeal in Holwell Securities v Hughes clarified that the postal rule does not apply where the offer expressly requires acceptance to be received by the offeror, here by "notice in writing." The explicit contract terms were decisive, and the case established that such requirements override the usual postal rule of acceptance. This decision affirms the primacy of clearly expressed contractual conditions in the law of contract formation.