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Contracts/Mailbox rule
Template:ContractLaw 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. The leading case in the mailbox rule is Henthorn v Fraser [1892] 2 Ch 77.
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 revocation 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.
The mailbox rule does not apply to option contracts, where acceptance is still only effective upon receipt.
