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Mailbox Rule

When is an offer accepted?  When can the offeror rescind (take back) the offer?

In contract law, there is a doctrine called the “mailbox rule.”  This applies to the offer and to the acceptance.  According to the rule, an offer is made once it reaches the offeree.  Up until that point, the offeror may rescind it.  An acceptance is made once the offeree “sends” it, regardless of whether the offeror has received it.  That means that once the offeree puts the acceptance letter “in the mailbox,” the contract is formed, and therefore enforceable in court.  The offeror can no longer rescind it.  What can the offeror do to protect itself?

Although a party (the offeree) may accept an offer in any form (email, letter, telephone call, etc.), the offeror may require that acceptance be made only in a particular form.  For example, the offeror may require that acceptance be made only by the hand delivery of an acceptable letter to a specified individual.  Just remember that while this seems straight-forward, you may have layers of offers, acceptances, counteroffers, and “invitations to make an offer” that you have to contend with.  Let us help you from the beginning to avoid expensive litigation in the future.

If you are the offeror and are looking for ways to get out of an offer, there are four ways to do it.  First, the other party (the offeree) can agree to cancel the contract.  Second, you can rescind it before an acceptance.  Third, you can get out of an offer by the offeree rejecting your offer.  But remember, under the UCC, just because different or additional terms are included does not mean that an offer is rejected.  The fourth way you can get out of a contract is by operation of law.  For example, your contract can specify that an offer is valid until a certain date.  Otherwise, a court will likely construe (read into) your contract to imply that an offer is open for a reasonable amount of time.  This reasonableness would be based on past course of dealings between you and the other party, industry standards, and general good faith and fair dealings.  Adding a “time is of the essence” clause might influence a court to find that the reasonable amount of time is not as long as the other party supposed it would be.  


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