Mailbox rule
The mailbox rule or the postal
acceptance rule is a term of common law
contracts which determines when a contract has
been formed where the parties are communicating
via the mail. The basic thrust of the rule is
that an acceptance of an offer that is sent
before a revocation of the offer is received.
However, if a communication is sent rejecting the
offer, and a later communication is sent
accepting the contract, then the first one to be
received by the offeror will prevail.
For example, suppose A makes an offer to B on
January 1; A then decides to revoke the offer on
January 2, and puts a letter in the mail to B
revoking the offer; however, B puts a letter
accepting the offer in the mail on January 3, and
does not receive A's revokation letter until
January 4. Because B sent his acceptance before
receiving A's revocation, the mailbox rule
dictates that B's acceptance is effective. A will
therefore be bound to the contract, and can no
longer revoke the offer.
Suppose, on the other hand, that A makes an offer
to B on January 1, and B decides to reject the
offer on January 2, and puts a letter in the mail
to A rejecting the offer; however, the next day B
changes his mind and sends A a fax accepting the
offer. In this situation, whichever communication
A receives first will govern.
Under the mailbox rule, performance is a means of
acceptance. If A orders 1000 blue coathangers,
and B ships them out, that shipment is considered
to be a conveyance of acceptance of A's offer to
buy the coathangers. Defective performance is
also an acceptance, unless accompanied by an
explanation. For example, if A orders 1000 blue
coathangers, and B mistakenly ships 1000 red
coathangers, this is still an acceptance of the
contract. However, if B ships the red coathangers
with a note that they sent these because they had
run out of blue coathangers, this is not an
acceptance, but rather an accommodation, which is
a form of counter-offer.
With the advent of modern technology, the mailbox
rule has been expanded to cover all technology by
which commercial communication may reasonably be
conducted, including by telephone, telegraph, fax
and e-mail. However, if the offeree were to
convey acceptance by commercially unreasonable
means - by cross-country pony express, for
example - the acceptance would not be effective
until it had actually been received.
Please note that the mailbox rule does not
apply to option contracts, where acceptance is
still only effective upon receipt.
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