On the 19 October 1971 Hughes granted an option to Holwell Securities to purchase a certain property for £45,000. Clause 2 of the agreement provided: 'THE said option shall be exercisable by notice in writing to Hughes at any time within six months from the date hereof...' On 14 April 1972 Holwell Securities' solicitors wrote to Hughes accepting his offer to sell his property. The letter accepting Hughes's offer was lost in the post. The issue before the court was whether a contract had been formed when the letter was posted on 14 April.
Russell L
'Holwell Securities' main contention [was that they had accepted Hughes's offer when they posted their letter of acceptance.]
It is the law in the first place that prima facie acceptance of an offer must be communicated to the offeror. On this principle the law has engrafted a doctrine that, if in any given case the true view is that the parties contemplated that the postal service might be used for the purpose of forwarding an acceptance of the offer, committal of the acceptance in a regular manner to the postal service will be acceptance of the offer so as to constitute a contract, even if the letter goes astray and is lost. Nor, as was once suggested, are such cases limited to cases in which the offer has been made by post... In the present case, as I read a passage in the judgement below, Templeman J concluded that the parties here contemplated that the postal service might be used to communicate acceptance of the offer (by exercise of the option); and I agree with that.
But that is not and cannot be the end of the matter. In any case, before one can find that the basic principle of the need for communication of acceptance to the offeror is displaced by this artificial concept of communication by the act of posting, it is necessary that the offer is in its terms consistent with such displacement and not one which by its terms points rather in the direction of actual communication.
The relevant language here is, 'THE said option shall be exercisable by notice in writing to the Intending Vendor...', a very common phrase in an option agreement. There is, of course, nothing in that phrase to suggest that the notification to Hughes could not be made by post. But the requirement of 'notice... to', in my judgement, is language which should be taken expressly to assert the ordinary situation in law that acceptance requires to be communicated or notified to the offeror.