A seller in Traverse City receives an offer with an acceptance deadline of noon on Wednesday. On Tuesday evening, the seller mails a signed acceptance letter. The letter arrives at the buyer's address on Thursday. The buyer, unaware of the mailed acceptance, submits a written revocation of the offer on Wednesday morning before noon. Under Michigan contract law, which outcome is most likely correct?
Correct Answer
A) A binding contract was formed when the seller mailed the acceptance on Tuesday, under the mailbox rule
Under the common law mailbox rule, which Michigan courts apply to contract formation, an acceptance is effective upon dispatch (when mailed), not upon receipt, provided the mail is an authorized or reasonable means of communication. When the seller mailed the signed acceptance on Tuesday evening — before the Wednesday noon deadline — a binding contract was formed at that moment. The buyer's Wednesday morning revocation came after contract formation, making it ineffective. The late arrival of the letter on Thursday does not change when the contract was formed.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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