Easterbrook v Young

The High Court of Australia considered the dispute between Easterbrook and Young concerning the validity of a notice of intention to exercise an option to purchase land. The central issue was whether the notice, which was posted by ordinary mail, was effective to exercise the option, notwithstanding that it was not received by the optionor.

The court was required to determine whether the posting of a notice of intention to exercise an option by ordinary mail constituted effective communication of that intention to the optionor, thereby exercising the option, even if the notice was lost in transit and never received. This involved an examination of the principles of contract law, specifically concerning the communication of acceptance and the effect of the postal rule.

The High Court held that the postal rule, which deems acceptance effective upon posting, did not apply to the exercise of an option. The court reasoned that the exercise of an option is not an acceptance of an offer in the same way as forming a contract. Instead, it is an act which, when performed, binds the optionor to a contract on terms already fixed. Therefore, for the exercise of the option to be effective, the notice must be communicated to the optionor. The court found that posting the notice by ordinary mail, without any agreement or stipulation for that method of communication, was insufficient to effect communication, and thus the option was not validly exercised.