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Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

CHAPTER 3 ACCEPTANCE AND REJECTION OF OFFER

1-3 Corbin on Contracts § 3.26

§ 3.26 Withdrawal of a Letter of Acceptance From the Mails

In a number of cases in the United States Court of Claims it has been successfully argued that because, under the postal regulations, a letter of acceptance may be withdrawn, the ''mailbox rule'' should be discarded.n1 In none of these cases was the letter of acceptance in fact withdrawn. Such decisions have been rejected outside of that court.n2 The postal regulations have for a long period made it possible for the sender of a letter to intercept it and prevent its delivery to the addressee. This has caused some doubt to be expressed as to whether an acceptance can ever be operative upon the mere mailing of the letter, since the delivery to the post office has not put it entirely beyond the sender's control.

It is believed that no such doubt should exist. The question should not turn upon the total loss of power to control, but rather upon the reasonableness of regarding this as a proper method of accepting an offer. As indicated in a previous section of this treatise, the mailbox rule is a rule of convenience. It is designed to minimize the impact of the common law rule that offers are generally revocable until acceptance by shortening the period of revocability where the offeree has dispatched a letter of acceptance. This rule operates to protect offerees. Therefore it is ironic that in a number of cases it has been held that an offeree who withdraws a letter from the mails or who overtakes it by a telephone call or other more rapid means of communication is held to an acceptance that dates from the moment of mailing despite the fact that the offeror learned of the offeree's dissent before learning of the earlier expression of assent.n3 This is not a necessary result. The formation of a contract is a conceptual construct and not a physical fact. We can vary the construct to fit the policies underlying the rules of law in question. There is nothing illogical about concluding that the offeree can enforce a contract that was formed at the moment the acceptance was posted, but that the offeror cannot claim and enforce a contract where the letter of acceptance was withdrawn from the mails or overtaken by a faster message that advises the offeror that the any letter of acceptance that may subsequently be received should be ignored.n4 There is one conceivable difficulty caused by the suggested lack of mutuality. If the facts show that the power to withdraw or overtake is employed for speculative purposes, the abuse of the power should not be permitted.n5

It should be borne in mind that whenever the receipt of the letter is necessary to produce some legal effect, the interception, and resulting non-delivery of the letter will prevent that effect. For almost all purposes, other than the acceptance of an offer, the mere mailing of a letter is not enough to attain the purpose. Unless it is clearly otherwise agreed, the mailing of a letter is not a sufficient notice to quit a tenancy, it is not actual payment of money that is enclosed, it does not transfer title to a check or other document, andn6 it will not ordinarily be sufficient notice required by a contract as a condition precedent to some contractual duty of immediate performance.n7

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For related research and practice materials, see the following legal topics:

Contracts LawFormationAcceptanceMailbox RuleContracts LawFormationAcceptanceGeneral Overview

FOOTNOTES:

(n1)Footnote 1. In Rhode Island Tool Co. v. United States, 128 F.Supp. 417, 130 Ct.Cl. 698 (1955) , the plaintiff submitted a bid on 12 items, without noticing that the last three items were of greatly different quality from the others. The government mailed its acceptance on the last three items, but was notified of the plaintiff's withdrawal because of the mistake before the acceptance was received. The court, in order to hold the withdrawal effective, held that by modern law an acceptance by mail is not operative until it is received by the offeror. The court based this on the fact that postal regulations permit the recall of a letter, so that mailing is no longer irrevocable but leaves the letter subject to the sender's control. However, in its invitation for bids, the defendant had stated that an award would become a binding contract when received. This sustains the decision. Also the plaintiff should have been given relief because of a unilateral mistake. See § 609. Two judges dissented, holding that the bid was irrevocable for a stated period of 20 days, except in case of fraud or mutual mistake.

(n2)Footnote 2. In Soldau v. Organon Inc., 860 F.2d 355 (9th Cir.1988) , the court stated: ''Soldau rests his case upon decisions of the Court of Claims ... rejecting mailing of the acceptance as the crucial event resulting in a contract, in favor of the receipt of the acceptance by the offeror. No other federal court has agreed. Commentators are also virtually unanimous in rejecting the Court of Claims' repudiation of the 'effective when mailed' rule, pointing to the long history of the rule; its importance in creating certainty for contracting parties; its essential soundness, on balance, as a means of allocating the risk during the period between the making of the offer and the communication of the acceptance or rejection to the offeror; and the inadequacy of the rationale offered by the Court of Claims for the change.'' (Footnotes omitted).

(n3)Footnote 3. In Soldau v. Organon Inc., 860 F.2d 355 (9th Cir.1988) , the defendant offered the plaintiff double the amount of severance pay to which he was entitled in exchange for a release. Plaintiff signed the release and deposited it in a mailbox. On returning home he found that the promised severance pay had already arrived in the form of a check. He persuaded a postal employee to retrieve the release from the mailbox and return it to him. He thereupon cashed the check and brought suit against the employer based upon the state Age Discrimination Act. The court held that the release was effective on dispatch. It could have ruled alternatively (as the actual movement of acceptance was not relevant) that the suit was barred and the release effective because the check had been cashed.

In Morrison v. Thoelke, 155 So.2d 889 (Fla.App.1963) , the proposed contract was signed and mailed by the purchasers in Florida to the sellers in Texas who signed it and put it in the mails for return to the purchasers. Before it arrived, the sellers telephoned to withdraw their acceptance. It was held that the contract had been formed and bound the sellers.

Accord, Restatement (Second) of Contracts § 63 comment c.

(n4)Footnote 4. It is suggested that this would be the proper ruling in Dempsey v. King, 662 S.W.2d 725 (Tex.Civ.App.1983) .

(n5)Footnote 5.

U.S. - McDonald v. Chemical Nat. Bank, 174 U.S. 610, 19 S.Ct. 787, 43 L.Ed. 1106 (1899) .

In Lucas v. Western Union Tel. Co., 131 Iowa 669, 109 N.W. 191 (1906) , the court said, in dictum, that after mailing an acceptance ''the acceptor has no right to the letter and cannot withdraw it from the mails. Even if he should succeed in doing so the withdrawal will not invalidate the contract previously entered into.''

Hayne v. Cook, 252 Iowa 1012, 109 N.W.2d 188 (1961) , followed the dictum of the Lucas case cited in this note. The offer was sent via one Shuler to the vendor. The latter mailed his acceptance to Shuler with intention to close the deal, with instructions to deliver it to the offeror. Another offer having been received, the vendor then telephoned Shuler not to open the letter when he received it. He then accepted the new offer. The acceptance having been sent by the same method by which the offer itself had been sent, the attempted withdrawal by the vendor was held ineffective and specific performance was decreed.

If the offer was not made by mail and the use of the mails is not otherwise a reasonable medium of acceptance, a telegraphic interception of the letter of acceptance prevents a contract. Scottish-American Mortgage Co. v. Davis, 96 Tex. 504, 74 S.W. 17 (1903) . It should be borne in mind that, even if an offer is not made by mail, communication of acceptance by mail may be customary and reasonable.

(n6)Footnote 6. It has been held that a draft or bill of exchange has not been effectively delivered by merely depositing it in the post, if the postal regulations permit its withdrawal from the mails by the sender. Its actual withdrawal, therefore, prevents any delivery.

Ill. - Buehler v. Galt, 35 Ill.App. 225 (1889) .

Tenn. - Traders' Nat. Bank v. First Nat. Bank, 142 Tenn. 229, 217 S.W. 977, 9 A.L.R. 382 (1920) .

Eng. -Ex parte Cote, L.R. 9 Ch. App. 27 (1873).

Cf. Farmers' Guaranty State Bank v. Burrus Mill & El. Co., 207 S.W. 400 (Tex.Civ.App.1918) ; Canterbury v. Bank of Sparta, 91 Wis. 53, 64 N.W. 311 (1895) . This is to be distinguished, however, from the acceptance of an offer.

In Guardian Nat. Bank v. Huntington County State Bank, 206 Ind. 185, 187 N.E. 388, 92 A.L.R. 1056 (1933) , the plaintiff received checks, drawn on the defendant by the latter's depositor, and forwarded them to the drawee for collection. The defendant received them and mailed a letter saying that they were paid, although the checks were not marked paid and were never charged against the depositor. Later, the defendant withdrew its letter from the post office. It was held that the mailing of the letter was not payment, and was not a final acceptance of an offer because the power of withdrawal from the mails was exercised. The existence of this power was believed to make the post office the agent of the drawee bank alone.

The theory that the post office is the common agent of both parties has been disapproved in this chapter. Probably the decision should be sustained on the ground that the question in issue was one of payment and not one of acceptance of an offer by mail.

(n7)Footnote 7. The cases put by Bramwell, L.J., in Household Fire & C. Acc. Ins. Co. v. Grant, L.R. 4 Ex.D. 216 (1879, C.A.), in his dissenting opinion are, as he asserted, cases in which receipt of the letter would be necessary. Nevertheless, it may be reasonable to regard the acceptance of an offer in a different light, and it is now generally so regarded.