On Monday afternoon a buyer signs a counter-offer from the seller, places it in a properly addressed and stamped envelope, and drops it in a U.S. Postal Service mailbox. On Tuesday morning, before the envelope is delivered, the seller telephones the buyer to retract the counter-offer. The contract is silent on when acceptance becomes effective, and no statute alters the common-law default. The envelope arrives Wednesday. The buyer claims a contract was formed Monday; the seller insists the Tuesday call killed the deal. Which common-law principle determines whether a binding contract existed before the seller's Tuesday call?
Correct Answer
C) Mailbox rule
The default common-law rule fixes acceptance at the instant of proper dispatch, making the buyer's deposit in the mailbox Monday afternoon the binding moment — before the seller's Tuesday revocation. That dispatch-equals-acceptance principle is the mailbox rule.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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.
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