Legal Definitions - dispatch rule

The dispatch rule, also widely known as the mailbox rule, is a fundamental principle in contract law that determines when an acceptance of an offer becomes legally effective. Under this rule, an acceptance is considered valid and binding at the moment it is sent or "dispatched" by the offeree (the person receiving the offer), rather than when it is actually received by the offeror (the person making the offer).

This rule primarily applies when the parties intend to communicate by non-instantaneous methods, such as postal mail, email, or fax, unless the offer explicitly states otherwise (e.g., by requiring acceptance upon receipt). The purpose of the dispatch rule is to provide certainty for the offeree, ensuring that once they have taken the affirmative step of accepting an offer, a contract is formed, and the offeror cannot then revoke the offer before receiving the acceptance.

Examples:

• Business Transaction via Mail:

  Imagine "GreenThumb Nurseries" sends a written offer to "Urban Landscapers" to sell 1,000 rare plant saplings at a specific price. The offer states that acceptance must be in writing. Urban Landscapers drafts an acceptance letter, signs it, and places it in the postal mail on a Tuesday morning. Later that same Tuesday afternoon, before GreenThumb Nurseries receives the letter, GreenThumb finds a buyer willing to pay a higher price and attempts to revoke its offer to Urban Landscapers by sending a fax. Under the dispatch rule, Urban Landscapers' acceptance became legally effective on Tuesday morning when they mailed the letter. GreenThumb Nurseries' attempt to revoke the offer later that day is ineffective because a binding contract was already formed when the acceptance was dispatched.

• Real Estate Offer via Email:

  Consider a scenario where David offers to buy Lisa's vacation home for a set price, sending the offer via email. The offer specifies that Lisa must accept by replying to the email. Lisa reviews the offer, decides to accept, and sends her acceptance email at 9:00 AM on a Thursday. Due to a temporary internet outage on David's end, his email server doesn't actually receive or process Lisa's email until 11:00 AM. At 10:00 AM, before his system registers Lisa's acceptance, David changes his mind and sends Lisa an email attempting to revoke his offer. According to the dispatch rule, Lisa's acceptance was effective at 9:00 AM when she sent the email. A contract for the sale of the vacation home was formed at that moment, making David's subsequent revocation attempt invalid.

• Job Offer Acceptance:

  A company, "Innovate Solutions," extends a formal job offer to Michael for a project manager position, detailing the salary, benefits, and start date in a letter. The letter instructs Michael to sign and return a copy of the offer to accept. Michael signs the acceptance letter and drops it into a secure company mailbox (which is collected daily by internal mail services) on a Friday afternoon. Over the weekend, before the letter is delivered to HR on Monday, Innovate Solutions decides to restructure and wants to withdraw the offer to Michael. However, because Michael dispatched his acceptance by placing it in the designated mailbox on Friday, a binding employment contract was formed at that point. Innovate Solutions cannot unilaterally withdraw the offer once it has been accepted and dispatched, even if they haven't physically received it yet.