Mailbox Rule

The Definition

The mailbox rule determines the date and time an offer on a contract is accepted. It means that the offer is considered accepted on the day the contract was placed in the mail to be sent to the recipient. Because of this rule, if a party changes their mind on the offer after the acceptance is mailed, it does not allow them to back out of the contract without penalties or stipulations to a contract breach. However, in some deals, both parties can agree not to implement the mailbox rule just in case something happens during the days after the contract was mailed. In this case, both parties can collectively agree on when exactly the offer on the contract will be considered accepted and done.

Example of the Mailbox Rule

John decided to buy a house that Mary was selling. Both John and Mary had real estate agents that were helping them with the contract process. John's realtor gave Mary's realtor an informal verbal monetary offer on the house. Mary's realtor discussed the amount with Mary, and they both agreed on the monetary offer. John's realtor wrote up a contract with Mary's realtor, of which both of them read over and agreed upon. John's realtor sent the offer in the mail to Mary's realtor on April 5. However, on April 6, before the contract was received by Mary's realtor, John decided to back out and not purchase the house after all. However, due to the mailbox rule, it was too late for John to back out, since the offer was agreed upon and sent in on April 5. Because John decided to breach the final contract, he had to pay additional fees that he otherwise would not have paid had he made his decision before they submitted the offer in the mail.