Posting Rule: Everything You Need to Know
The posting rule, also known as a mailbox rule, is used to decide the time that an offer has been accepted, which is an important component of contract law.3 min read
The posting rule, also known as a mailbox rule, is used to decide the time that an offer has been accepted, which is an important component of contract law.
Basics of the Posting Rules
One of the most controversial parts of contract law is issues related to postal rules. Because the communication involved is long-distance, it can be tricky to know when exactly a contract has been formed when using the mail.
Since many business parties are not able to meet in person, communication by mail is very common when negotiating a contract. Most of the questions involving remote communication and contract law center around when contracts are offered and accepted. Postal rules were written and adopted to help resolve issues related to offering and accepting contracts by mail.
Due to advancements in technology, there is also some debate of whether these postal rules apply to electronic communication, such as email.
The basis of contract law is offer and acceptance, determining when a contract exists between two parties. The posting rule is an exception to the normal rules for acceptance, which state that acceptance only occurs when it is directly communicated to the party that made the offer. Under the posting rule, a contract is considered binding the minute the acceptance is placed in the mailbox. This is true even if the person that made the offer never actually receives the acceptance.
The posting rule takes effect from the moment communication of acceptance is intended, including communication by mail or email. The mailbox rule is also used to determine when a communication can be considered delivered. In some cases, the deemed delivery date can be different from the date the letter was actually received. This rule also determines whether a letter of acceptance or one of revocation takes precedence.
Imagine that person A decides to make an offer to person B on April 1. The next day, person A changes their mind and sends a letter revoking their original offer. Person B sends their acceptance letter on April 3 and doesn't receive the revocation letter until April 5. The acceptance letter, because it was sent before the revocation letter was received, is the one that takes effect. Person A is not legally bound by the contract.
Now imagine a different scenario where person B initially rejects the offer by sending a letter and then decides that they want to accept instead. By faxing or emailing an acceptance before the letter arrives, the offer will be accepted since these communications will arrive first.
Performance also counts as acceptance under the posting rule. For instance, if one party orders 1000 units of a product, and then the second party mails the order, this is considered acceptance. Even if the performance is defective, it still counts as acceptance unless an explanation for the defect has been provided.
If person A puts in an order for 500 blue widgets and person B ships 500 red widgets, this is acceptance even though the color was incorrect. Should person B include a note explaining that they shipped red widgets because the no longer produce blue widgets, this is an accommodation instead of acceptance.
Emails and the Posting Rules
Thanks to new information technology, people are able to communicate across large distances more easily than ever before.
Both businesses and individuals have access to multiple communication methods, including the following:
- Instant messaging
There are many different options among legal professionals about which rules of acceptance apply to electronic communications. For example, acceptances made on website depend on the space between the person making the offer and the person accepting, as well as the time the offer was made.
Offers made through email are treated very differently than contracts formed via a website. There is virtually no established law related to accepting or revoking a contract offer through email. When sending information by email, the moment the send button is pressed, the message is considered delivered. Although there is no law related to the issue, postal rules will generally apply to contracts offered by email, meaning as soon as the acceptance is sent, the contract is binding.
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