Sunday, April 19, 2015

MBE Fast Fact: The Mailbox Rule

The mailbox rule (under the common law of contracts) has the potential to be very confusing. But if you note the following, then questions testing this concept shouldn't be too bad:

The rule is meant to set forth a determination as to whether acceptance of an offer is effective. The simplest situation is where the acceptance is by mail, and only an acceptance is mailed. In such a case, the acceptance becomes effective at the moment of dispatch, unless the offeror has expressly stated that acceptance will become effective only once it is received. (And on the MBE, the offeror does sometimes state that!) As is often the case in contract law, the offeror has the final word, so if the offeror states that the mailbox rule does not apply (by claiming acceptance is only valid upon receipt,) then don't apply the rule for that particular question. Note, also, that the mailbox rule does not apply in the case of an option contract (when consideration has been provided to hold the offer open). In an option contract, acceptance is effective upon receipt by the offeror rather than dispatch by the offeree.

A second scenario involves the offeree dispatching a rejection in the mail, and then changing his mind and dispatching an acceptance before the rejection is received by the offeror. Here, the rejection will be effective, unless the acceptance is received first.

Lastly is the situation in which the offeree sends an acceptance and then sends a rejection. Because acceptance was first dispatched you should merely apply the general mailbox rule that acceptance is effective upon dispatch. But there is one twist: If the rejection arrives prior to the acceptance (unlikely), then the rejection will be effective.

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