Think before you mail

Can someone who mails a letter reclaim it from the U.S. Postal Service before

it is delivered? Or will the letter, once placed into the mail, be delivered

to the addressee even if the sender has a change of heart about sending

it? This seemingly trivial question can have a surprising importance in

the law of contracts.

In contracting, there are many circumstances in which one party must provide

formal notice to the other party. The clearest example is in the initial

formation of the contract itself. To accept an offeror's proposal, and thereby

bring the contract into existence, the agency accepting the bids must accept

the offer within a time limit, if any, that the offeror might specify. If

the acceptance is provided late, even by a minute, no contract is formed.

Prior to about 1900, common law held that an acceptance was effective as

of the date it was placed into the U.S. mail. This principle was known as

the "mailbox rule." It was based on the understanding that once a letter

was mailed, it could not be recalled. The understanding meant once you handed

over a document to the Postal Service, it was equivalent to delivering it

directly to the addressee.

In 1913, the Postal Service changed its regulations to allow the person

sending the document to recall it in many situations. Based on the change,

most courts disclaimed the mailbox rule as a general principle. From that

time, acceptance was said to occur when the notice was delivered to the

addressee. See United States v. Dick.

The courts, however, recognized that in some cases the parties might agree

to be bound by the mailbox rule even though the rule did not otherwise apply.

For example, some courts have found that a contractual provision that specifically

allows notice by mail necessarily adopts the mailbox rule, making notice

effective when the document is dropped off at the post office. See, for

example, University Emergency Medicine Foundation v. Rapier Investments

Ltd.

The government has adopted the mailbox rule for contracts it awards. For

some years, the procurement regulations have stated that a federal government

contract comes into existence at the time that the government's acceptance

notice is placed into the U.S. mail, or is otherwise delivered to the offeror.

See, for example, Computer Wholesale Corp. Under this rule, the contract

is formed at the earlier date of either when the notice is mailed or when

it is put into the offeror's possession.

However, even when the mailbox rule applies, it is strictly limited to being

placed in the U.S. mail — not when delivered by an overnight carrier, for

example. In such cases, acceptance will not be effective until the notice

is delivered into the hands of the addressee. See, for example, G.E. Sales

& Rentals.

The many cases litigated in this area demonstrate that even today there

is uncertainty as to the application of the mailbox rule. So it is important

for the parties to any contract to specify clearly which notices should

be considered effective upon mailing.

— Peckinpaugh is corporate counsel for DynCorp, Reston, Va.