Paralegal Certification PrepContracts and Business LawMedium
A buyer and seller are negotiating the sale of a rare coin collection. The seller sends a signed letter offering to sell the collection for $10,000, stating, 'This offer is open until Friday at 5 PM.' On Thursday, the buyer mails a letter accepting the offer. However, the seller does not receive the acceptance letter until Saturday morning. Meanwhile, on Friday evening at 6 PM, the seller, having not heard from the buyer, sells the collection to another party. Is there a binding contract between the original buyer and seller?
- ANo, because the seller did not receive the acceptance before selling to another party.
- BYes, because the acceptance was mailed before the offer expired.
- CYes, because the seller's sale to a third party after the offer's expiration is irrelevant.
- DNo, because the offer automatically expired on Friday at 5 PM, regardless of when the acceptance was mailed.
Show answer & explanationAnswer & explanation
Correct answer: B. Yes, because the acceptance was mailed before the offer expired.
Under the 'mailbox rule' (or 'dispatch rule'), an acceptance is generally effective when it is dispatched by the offeree, provided the offer was still open at that time and the offeror did not specify otherwise. Since the buyer mailed the acceptance on Thursday, before the Friday 5 PM deadline, a contract was formed at the moment of dispatch.
Why the other options are wrong
- A. The mailbox rule dictates that acceptance is effective upon dispatch, not receipt, unless specified otherwise.
- C. The seller's actions after a contract has already been formed (due to the mailbox rule) constitute a breach, not a lack of contract.
- D. While the offer specified an expiration time, the acceptance was effective upon dispatch *before* that expiration time.
Mailbox Rule (Dispatch Rule)
A common law rule stating that an acceptance of an offer becomes effective (and thus a contract is formed) at the moment the acceptance is dispatched by the offeree, provided the offer did not specify otherwise and the dispatch was made in a proper manner.
- Applies primarily to non-instantaneous forms of communication (e.g., mail).
- Acceptance is effective upon dispatch, not receipt.
- Revocation is effective upon receipt.
- Does not apply if the offer specifies acceptance must be 'received'.
Memory trick: Mailbox rule: Send it, and it's done!