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Rules & Doctrines

Table of Contents

The Mailbox Rule

Acceptance by mail or similar means creates a contract at the moment of dispatch, provided that the mail is properly addressed and stamped, unless:

(i) The offer stipulates that acceptance is not effective until received; or

(ii) An option contract is involved (an acceptance under an option contract is effective only upon receipt [Restatement (Second) of Contracts §63]).

The above rule appears in the BarBri Contracts outline.

Another way of looking at it, as sometimes expressed in court opinions, is this:

“The ‘mailbox rule’ provides that where the acceptance is deposited in a properly stamped and addressed envelope, the contract becomes complete and binding, whether or not the acceptance actually reaches the addressee.” Grange Mut. Cas. Co. v. Woodard, 861 F.3d 1224 (11th Cir. 2017)

In addressing with particularity when acceptance is dispatched, Williston on Contracts states:

“An acceptance is dispatched within the meaning of the rule under consideration when it is put out of the possession of the offeree and within the control of the postal authorities, telegraph operator, or other third party authorized to receive it.” § 6:37, at 484. However, “mere delivery of an acceptance to a messenger with directions to mail it amounts to no acceptance until the messenger actually deposits it in the mail.”

The treatise continues:

“The private delivery service, under the modern view, would have to be independent of the offeree, reliable both in terms of its delivery obligations and record keeping, and of a type that would customarily be used to communicate messages of this sort. Such agencies as the United Parcel Service, Federal Express, or even private messenger services in urban areas would qualify, and as soon as the communication leaves the offeree’s possession and is placed with an authorized recipient of the instrumentality, an effective dispatch will be deemed to have occurred.”

This point—the use of an agency other than the USPS—is something to comment on should you find it in an exam. That is, you’ll note that it is referred to as “the modern view,” so that—like many other rules you’re learning—it’s usually best to write something like:

“Under the old common law rule, it is likely that the court would rule that the acceptance was not effective when ‘mailed’ insofar as it was not sent via USPS; however, under the modern view, if a customarily used delivery service is reliable and keeps good records (as is/does UPS), it suffices—in which case the court would likely rule this acceptance to have occurred at the moment of delivery by the offeree to United Parcel Service.”

In plain English, the “meeting of the minds” necessary to contract formation occurs at the exact moment word of acceptance is sent via post (etc., see above) by the person accepting it, rather than when that acceptance is received by the person who offered the contract.

The main effect of the posting rule is that the risk of acceptance being delivered late or lost in the post is placed upon the offeror. Now this seems to me to be a very important point: If the offeror is reluctant to accept this risk, he can always expressly require actual receipt as a condition before being legally bound by his offer.

What Is an Option Contract?

A promise to keep an offer open that is paid for. With an option contact, the offeror is not permitted to revoke the offer because with the payment, he is bargaining away his right to revoke the offer for a stated period of time.

Image of two peoples hands, reviewing a contract

In the United States, the majority rule is that the mailbox rule does not apply to option contracts. By default, an option contract is accepted when the offeror receives the acceptance, not when the offeree mails it. However, because the California Civil Code (that’s statutory law, not common law) applies the mailbox rule to all contracts; California follows the minority rule, under which the mailbox rule also applies to option contracts. Palo Alto Town & Country Village, Inc. v. BBTC Company (1974). This, too, can be mentioned in answer to an essay question.

You may ask, “What about the MBE-style questions?” For bar exams (and in most law schools), all such questions are to be “answered according to generally accepted fundamental legal principles, unless noted otherwise in the question.” The exception to that is this: The Official Text of Articles 1 and 2 of the Uniform Commercial Code are applicable.

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