REESE BROS PLASTICS LTD v HAMON-SOBELCO AUSTRALIA PTY LTD

1. This case arose from a dispute between Reese Bros Plastics Ltd and Hamon-Sobelco Australia Pty Ltd concerning a contractual obligation which was effected through telex and telefacsimile. The dispute reached the Supreme Court of New South Wales and has been tackled by the Chief Justice Smart J, especially on the issue as to where the contract is made. However, a stay of proceeding was ordered because of the doctrine of forum non conveniens. This doctrine gives a discretionary power to the Supreme Court to halt further proceeding with the case because of the view that there is another existing court that is better suited to take cognizance of the same. Hence, the case was remanded to the New South Wales Court of Appeal.
2. This case is cited as Reese Bros Plastics Ltd v Hamon-Sobelco (Australia) Pty Ltd (1988) 5 BPR 97325 (Court of Appeal, New South Wales). It is only a digest report as it was already partially touched by the Supreme Court of Australia before it was remanded to the NSW Court of Appeal.
3. There were three landmark cases mentioned in the present controversy which resonated the same issue: when is a contract deemed to be perfected if it involves instantaneous forms of communication such as telex, fax, or phone. The leading case of Entores Ltd v Miles Far East Corp[1] laid the doctrine that the “regular postal rule” found no application in case of instantaneous forms of communication, such that “acceptance occurs where the message of acceptance is read”.[2]

The postal rule does not apply to instantaneous forms of communication such as telexes…and telephones. The result is that unless there is actual communication (which will not happen if there is a sudden power failure during the course of transmission at the receiving end) no contract will be created. If a contract is created, it will, in conformity with the general rule, be created in the place where the acceptance is received. The general rule is that the place of contract is where the last act needed to conclude the contract takes place, namely, the communication or receipt of acceptance.[3]

The same principle was reiterated in the case of Mendelson-Zeller Co Inc v T & C Providores Pty Ltd[4] decided in New South Wales. Lastly, the case of Brinkibon Ltd v Stahag Stahl GmbH[5] held that telex falls under the category of instantaneous form of communication; thus, acceptance is effected only when it has been received by the offeror.[6] In deciding the case at bar, the Chief Justice Smart J affirmed and upheld the doctrine laid in the aforementioned cases. When the case reached the New South Wales Court of Appeal, Gleeson CJ and Kirby P concurred with the decision rendered by the Chief Justice. Hence, this concurrence is tantamount to affirmation of the principle laid down in the three landmark cases.

It should be noted that Kirby P emphasized that there is actually no case decided by the New South Wales Court of Appeal which confirmed the decision rendered in the cases of Entores Ltd v Miles Far East Corp and Brinkibon Ltd v Stahag Stahl GmbH. However, Kirby P mentioned that Rogers J accepted the decision rendered in Mendelson-Zeller Co Inc V T & C Providore Pty Ltd insofar as telex exchanges is concerned; hence, he decided to approach the appeal without deciding the question.

4. The present controversy involved two companies. The respondent in this case is Hamon-Sobelco Australia Pty Ltd, a Sydney-based company while the appellant Reese Bros Plastics Ltd is a company based in New Zealand. Essentially this case has precedential value in Western Australia, because it is a controversy decided by the New South Wales Court of Appeal concerning instantaneous forms of communication which involved a company that is incorporated under its laws. Earlier, it has been mentioned that Kirby P. emphasized the lack of actual precedence in the state of New South Wales affirming the ruling of the two English cases (Entores Ltd v Miles Far East Corp and Brinkibon Ltd v Stahag Stahl GmbH). Thus, this case is the very first case decided by the New South Wales Court of Appeal that applied the doctrines laid in the above mentioned cases. The remanding of the case showed that the Supreme Court believed that it was the NSW Court of Appeal which has better jurisdiction to hear and decide the case.
5. Gleeson CJ affirmed the decision of the Chief Justice applying the doctrines laid in the earlier three landmark cases. He rejected the view of the appellant that the there was no perfected contract until the actual supply and delivery of the appellant and the subsequent payment of the respondent. This view suggests that appellant manufactured goods without being bound to any contract. From what transpired from the facts elicited, Gleeson concluded that the appellant accepted the terms and conditions given by respondent then later on attempted to substitute its own terms and conditions to the prejudice of the respondent.

Kirby P on the other hand used a different approach in arriving at his conclusion. According to the judge, it a condition precedent to decide what the contract was in order to ascertain where the contract was perfected.  He believed that since the object of the contract is valuable, supply of grids, both parties would normally be bound themselves to clear terms and conditions prior to the commencement of the contract. Lastly, McHugh JA concurred with the decision of the Chief Justice with no further explanation.

6. The three judges affirmed the decision of the Chief Justice in the sense that the contract was made where the acceptance was made – in this case, it took place in New South Wales. The only difference between the judgment of Gleeson and Kirby is that the former judge tends to rebut the averment of the appellant in arriving at his conclusion while the latter judge opted first to assess the nature of the contract to conclude where the contract was perfected. Nevertheless, both judges believed that the acceptance of the offer happened in New South Wales.

References

Gillies, Peter, ‘Concise Contract Law’, (1988) The Federation Press.

[1] [1955] 2 QB 327.

[2] Ibid.

[3] Gillies, Peter, Concise Contract Law (The Federation Press, 1988) 24.

[4] [1981] 1 NSWLR 366.

[5] [1983] 2 AC 34.

B[6] Ibid.