Holwell Securities v Hughes [1974] 1 WLR 155

Hughes, in an agreement dated 19 Oct 1971 granted Holwell an option to purchase premises. The agreement said that the option could be exercised by notice in writing addressed to the vendor at any time within 6 months from that date. It was accepted that Holwell posted a letter to Hughes on 14 April 1972 but this was not received. Holwell sought specific performance. The action was dismissed at trial.

HELD Lawton LJ.

It is a truism of the law relating to options that the grantee must comply strictly with the conditions stated for its exercise. The document was carefully drafted and should be strictly construed. The wording is familiar to conveyancers and should be construed in the way they would use such words. "Notice in writing" should be contrasted with "agreed in writing" and "required in writing". The word "notice" comes from the Latin word "to know" and the Oxford Dictionary suggests it means intimation or warning.

Now notice in writing to the vendor meant that he was to be fixed with this information - but he never was because it never got to him. The Plaintiffs were unable to do what the agreement said they were to do, and fix the vendor with the knowledge of the exercise of the option. If this construction of the option is correct, there is no room to apply the postal rule.

It was argued that the parties must have contemplated the use of the post, and this is enough to bring in Henthorn. But that rule does not apply where the express terms of the offer specify that acceptance must reach the offeror. The public are now familiar with this exception to the general rule through their involvement with football coupons. Also, the rule does not apply if it would lead to manifest absurdity or inconvenience. This means that having regard to all the circumstances, including the subject matter being considered, the rule does not apply where the parties cannot have intended that there should be a binding agreement until the acceptance has been communicated to the other. In my view this principle applied here.