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Sometimes the delivery of email to an internal recipient failed, even if the address is correct:
Delivery has failed to these recipients or groups:
The email address you entered couldn't be found. Please check the recipient's email address and try to resend the message. If the problem continues, please contact your email admin.
This could be caused by an corrupt entry in the outlook address cache.
To solve this problem, simply delete the failing address from the address cache:
To do so open Outlook, click on 'New Email' and start typing the address in question. If Outlook starts to offer to auto complete the address, click on the X symbol at the end of the offered address, to delete this cached address.
Now enter the address manually or choose it from the global address list by clicking on 'To...'.