The Mailbox Rule and Contract Law

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  • 0:06 What Exactly Does…
  • 1:15 Mailbox Rule In Action
  • 3:25 Mailbox Rule and Snail Mail
  • 4:58 Mailbox Rule and Case…
  • 6:26 In Summary
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Lesson Transcript
Instructor: Kat Kadian-Baumeyer

Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses.

The mailbox rule applies to offer and acceptance in contract law. This common law practice, by default, states that when an offer or acceptance reaches the mailbox, it means a legitimate offer has been extended or the offer has been accepted.

What Exactly Does Offer and Acceptance Mean?

Sometimes a mailbox is more than just a mailbox. In contract law, the mailbox can represent the meeting of the minds that binds two parties together in a contractual agreement without ever meeting in person.

In contract law, this is known as the mailbox rule, or, offer or acceptance is valid once it is placed in the mailbox. Of course, there are several other elements that must be present for a contract to be valid:

  • Offer by the offeror
  • Acceptance by the offeree
  • Mutuality, or meeting of the minds
  • Consideration, or exchange of one thing of value for another
  • Capacity, or competency of offeror and offeree
  • Legally accepted contract terms

We will focus on offer and acceptance, or the expressed willingness to enter into an agreement to perform by the offeror and the acceptance of the performance by the offeree. We will also look at how this works when the offer and acceptance is done through the mail, fax machine or email.

Mailbox Rule in Action

The mailbox rule applies when a valid offer is sent by mail, email or fax machine to the offeree within an established timeframe.

To simplify this, an offeror can send an offer to an offeree stating specific terms and conditions. By placing this offer in the mailbox with appropriate postage, it will be considered a valid offer.

The offeree, in turn, may accept the offer by communicating the acceptance in writing. It is valid once placed in the mailbox for return to the offeror.

That sounds simple enough. Well, not so fast!

In Adams v. Lindsell (1818), a contract for the sale of wool fleece was at issue. Here is the timeline:

  • 9/2: Lindsell wrote to Adams offering to sell him wool fleeces. In the letter, Lindsell required expressed acceptance (by 9/7) in the form of a mailed response.
  • 9/5: Adams received the offer letter, accepted in writing and quickly mailed the offer back to Lindsell.
  • 9/8: Lindsell did not receive the written acceptance in the mail and decided to sell the wool to another party.
  • 9/9: Lindsell received Adam's acceptance, but the wool was already sold.

Adam demanded his wool fleeces. After all, he abided by the terms of the offer by signing the letter and rushing it off to the mailbox that same day! Lindsell saw it differently and argued that there was never a valid contract because acceptance was not received by the specific date of September 7th.

Technically, the mailbox rule applied because Adams placed the acceptance letter in the mailbox by the specified date of September 7th as required in the terms. Lindsell had to make good on his offer.

Sometimes, there are circumstances when the original terms of the offer are changed, even as the offer is on its way to the offeree.

Mailbox Rule and Snail Mail

In the fast-moving business world, sending a contract via mail may not be the most efficient way to deliver.

In a situation where the terms of an offer change or the offer is withdrawn, communication of the change via mail can take time to arrive. The offeree may not become aware of the change until after he accepts the original offer.

To better understand this, let's analyze Henthorn v. Fraser (1892) in where a real estate transaction challenged the mailbox rule.

Henthorn received a letter from Fraser with an offer to purchase real estate. In the offer, it was stated that a response must be sent within 14 days of receipt. With all intentions to accept the offer, Henthorn signed and sent the acceptance immediately the next day, well within the 14-day deadline.

In the meantime, Fraser decided to withdraw the offer. He sent Henthorn a letter of withdrawal before acceptance was received - but after Henthorn actually placed it in the mail. In other words, Henthorn sent his acceptance letter prior to Fraser mailing the withdrawal letter.

In this case, crossing in the mail did not factor into the offer. The acceptance letter was mailed before the withdrawal letter. Therefore, Fraser had no choice but to uphold the terms of the contract to transfer the real estate property.

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