Acceptance Rules — Apply rules for acceptance rejection and revocation

Historical Context & Motivation

The rules governing acceptance, rejection, and revocation of offers did not emerge fully formed from a single statute or treatise; rather, they evolved over centuries of Anglo-American common law as courts struggled to determine the precise moment at which two parties become bound by mutual assent. Early English courts in the seventeenth and eighteenth centuries treated contract formation as a largely informal affair, but the increasing complexity of commercial transactions—particularly those conducted through the postal system—demanded clearer doctrinal frameworks. The question of when an acceptance becomes effective became particularly pressing as parties negotiated across distances, and the common law responded with a series of landmark decisions that continue to shape modern contract doctrine.

Understanding this historical trajectory is essential because the bar exam regularly tests the interplay between these doctrinal layers: the common law baseline, statutory modifications under the UCC, and the Restatement's synthesis. The central question each rule addresses is the same one that animated Adams v. Lindsell two centuries ago—at what exact moment does an offer, acceptance, rejection, or revocation become legally operative, and what power does each party retain to alter the course of contract formation?

Core Principles & Definitions

Before analyzing the specific rules governing acceptance, rejection, and revocation, it is necessary to establish the foundational concepts that structure this area of contract law. Each concept represents a distinct exercise of legal power—the power to create, destroy, or terminate the conditions necessary for a binding agreement. Mastery of these definitions is critical because bar exam questions frequently pivot on the precise classification of a communication as an acceptance, a rejection, a counteroffer, or a revocation.

Visual Explanation — The Lifecycle of an Offer

The diagram above captures the essential architecture of offer-and-acceptance doctrine. Notice that the three paths from the offeree's power of acceptance diverge in a critical way: acceptance is the only communication effective upon dispatch. Both rejection and revocation require receipt to take effect. This asymmetry creates the classic bar exam fact patterns involving crossed communications in the mail—for example, an acceptance mailed at 2:00 PM and a revocation received at 3:00 PM yields a valid contract because the acceptance was dispatched before the revocation was received. The exception box at the bottom reminds us that option contracts (whether supported by consideration under the Restatement § 87 or by the UCC § 2-205 firm offer rule) suspend the offeror's revocation power entirely, creating a window during which the offeree can deliberate without risk.

How It Works — The Mailbox Rule & Its Exceptions

The Mailbox Rule (Restatement § 63)

Under the mailbox rule, an acceptance dispatched by a medium reasonable under the circumstances is operative from the moment of dispatch, regardless of whether it is ever received. This rule applies unless the offeror explicitly stipulates that acceptance is effective only upon receipt, or unless the acceptance is sent by an unreasonable medium (in which case it is effective only upon timely receipt). The rationale is rooted in the allocation of risk: once the offeree has taken the affirmative step of dispatching acceptance, she has committed herself and is entitled to rely on the existence of a contract.

Critical Exceptions to the Mailbox Rule

• Option contracts: Acceptance of an option is effective upon receipt, not dispatch. Because the offeree already has the protection of irrevocability during the option period, the policy rationale for the mailbox rule (protecting the offeree from revocation during transit) does not apply.
• Rejection followed by acceptance: If the offeree sends a rejection and then sends an acceptance, whichever communication arrives first controls. The mailbox rule does not protect the acceptance because the offeree is essentially trying to undo a prior termination.
• Acceptance followed by rejection: If the offeree mails an acceptance and then sends a faster rejection that arrives first, the acceptance is still effective upon dispatch. However, if the offeror detrimentally relies on the rejection, the offeree may be estopped from enforcing the contract.
• Offeror stipulates receipt: The offeror is master of the offer and may require acceptance to be effective only upon receipt, expressly overriding the mailbox rule.

Revocation Mechanics

Revocation is the offeror's exercise of the power to withdraw the offer before acceptance. Under common law, an offer may be revoked at any time before acceptance, even if the offeror stated that the offer would remain open for a definite period, unless the promise to keep the offer open is supported by separate consideration (creating an option contract). Direct revocation requires the offeror to communicate the withdrawal to the offeree, and it is effective upon receipt. Indirect revocation occurs when the offeree acquires reliable information that the offeror has engaged in conduct inconsistent with an intention to enter the proposed contract—for instance, learning from a trustworthy source that the offeror has sold the property to a third party (Dickinson v. Dodds).

Detailed Breakdown — Common Law vs. UCC Acceptance Rules

One of the most critical distinctions tested on the bar exam is whether a transaction is governed by common law (services, real property, intangibles) or by the UCC Article 2 (sale of goods). The two regimes treat acceptance differently in several material respects, and selecting the wrong framework on an exam question will almost certainly lead to an incorrect answer. The table below systematically compares the two approaches across the most frequently tested dimensions.

Worked Example — Crossed Communications

The following fact pattern, typical of MBE-style questions, illustrates how the mailbox rule interacts with revocation to determine whether a contract has been formed. Working through each step systematically demonstrates the analytical framework you should employ on the exam.

Strengths, Limitations & Common Pitfalls

Understanding the policy rationales behind each rule helps you predict how courts—and bar examiners—will resolve ambiguous fact patterns. Below is a comparative analysis of the strengths and limitations of the major acceptance doctrines, followed by the most common mistakes students make on exam questions.

Connection to Advanced Theory — Unilateral Contracts & Promissory Estoppel

The basic acceptance rules explored in this lesson serve as a foundation for several more complex doctrines that frequently appear on the bar exam. Two advanced issues are particularly important: the treatment of unilateral contracts (where acceptance is by complete performance, not by promise) and the role of promissory estoppel (Restatement § 90) as a substitute for consideration in creating irrevocable offers. Understanding how these advanced doctrines interact with the baseline acceptance rules will allow you to handle the most challenging bar exam fact patterns.

As you progress through Contracts preparation, recognize that the acceptance rules covered here are the first layer of a more complex analytical structure. The bar exam will frequently present fact patterns requiring you to move from the basic rules into these advanced doctrines—for example, a general contractor who relies on a subcontractor's bid (applying Restatement § 87(2) and promissory estoppel to prevent revocation), or a homeowner who begins painting a house before receiving the owner's attempted revocation of a unilateral offer (applying Restatement § 45 to create an option upon commencement of performance).

Practice Problems

Summary — Acceptance, Rejection & Revocation