Mailbox Rule

Topics: Contract, Common law, Contract law Pages: 5 (1898 words) Published: July 22, 2010
Mailbox Rule
Discussing Development & Application of Mailbox Rule

I. Introduction
In the Common Law system, “the Mailbox Rule is an alternate term for the Postal Rule; when mailed, an acceptance of an offer to contract is valid from the moment it is deposited into a mailbox; on dispatch.” The Mailbox rule is an exception to the general rule that a contract is created when acceptance is directly communicated to the offeror. The mailbox rule provides that the contract is formed when the letter of acceptance is placed in the mailbox. This rule was established by the case of Adams v. Lindsell (1818) B& Ald 68. In this case, Judge Law said that if that were true, it would be impossible to complete any contract through the post; if the defendants were not bound by their offer until the answer was received, then the plaintiffs would not be bound until they had received word that the defendants had received their acceptance, and this could go on indefinitely. Instead it must be considered that the offerers were making the offer to the plaintiffs during every moment that the letter was in the post [1]. Later, the Mailbox rule was confirmed in Dunlop v Higgins (1848) 1 HL Cas 381 and Henthorn v Fraser [1892]. In addition, the Mailbox rule applies only to acceptance. In Household Fire Insurance Company v Grant (1879), the court ruled that the Mailbox rule only applies to acceptance. Later, the case of Stevenson v McLean (1880) 5 QBD 346 confirmed other contractual letters (such as the revoking offer) don’t take effect until the letter is delivered [2]. As regards to this rule, we also need to pay attention to the fact that a letter is regarded as “posted” only when it is in the possession of the Post Office, which was established in the case of Re London & Northern Bank [1900] 1 Ch 220. The letter must be put into the post box or the hands of someone authorized to collect not deliver mail, which means a letter of acceptance is not considered “posted” if it is handed to an agent to deliver, such as a courier [3]. The Mailbox Rule is based on the theory that when an offer is sent by mail, the acceptance may also be allowed to be sent through the same medium, and because the offeree cannot control the mail when the acceptance is put into the mailbox, the contract will be formed when the acceptance is mailed. II. Drawbacks of Mailbox Rule

1.The Mailbox rule gives a heavier burden to the offeror. In modern business, the most significant advantage of the Mailbox rule is that this rule promotes the conclusion of the deal to be reached rapidly. However, based on the Mailbox rule, the offeror has to be restricted by the acceptance in the situation when they do not receive the acceptance. That means when the mail of acceptance is delayed or lost, the risk is shifted to the offeror, which was established by the case of Household Fire Insurance v Grant (1879) [4]. That is too harsh to safeguard the interests of the offeror. 2.The Mailbox rule deprives the right of the offeree to withdraw the acceptance. As regards to the effectiveness of acceptance, there are two principles in modern law systems. In the Civil Law system, the effectiveness of acceptance follows to the Receipt rule , which allows the offeree to withdraw the acceptance only if the withdrawal of notification prior to the acceptance of the offer reached the offeror because the acceptance is effective only when it reaches the offeror. In the Common Law system, the effectiveness of acceptance conforms to the Mailbox rule. Under the Mailbox rule, the offeree has no right to withdraw the acceptance because the contract is created when the acceptance is mailed. In an information age, market transactions are changing constantly. The acceptance cannot be withdrawn subject to the will of the offeree; also the Mailbox rule is disadvantageous for the offeree to make decisions according to the changeable...
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