Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas

Facts

• The parties negotiated and concluded a contract over telephone, with the offeror in one city and the offeree in another
• A dispute arose over which court had jurisdiction, turning on where the contract was actually formed
• The postal rule, if applied, would have located contract formation at the place of acceptance (offeree's location)

Issue

1. Whether the postal rule (contract complete on dispatch of acceptance) applies to instantaneous communication such as telephone, or whether a different rule governs.

Held

• The postal rule is specifically justified by the delay and uncertainty inherent in postal communication, a justification absent in instantaneous communication
• For telephone and similar instantaneous modes, the contract is complete only when and where the acceptance is actually heard by the offeror
• This located the contract's formation at the offeror's location, not the offeree's

Ratio Decidendi

The postal rule's rationale, addressing delay and communication uncertainty, does not extend to instantaneous communication. For telephone or similar modes, ordinary contract principles apply: acceptance must actually be communicated and heard by the offeror for the contract to be complete, at that place and time.