Question

On May 1st A makes an offer to B. On May 2nd B writes a letter accepting A's offer and mails it on May 2nd. On May 3d A calls B and revokes his offer over the phone. On May 4th A receives B's letter accepting A's offer. Explain in detail whether A or B will prevail. Also, indicate the legal issue involved in this matter.

this is a business law question... there was no option for business law so i figured economics was the closest

Answer 1

The posting rule (or mailbox rule in the United States, also known as the "postal rule" or "deposited acceptance rule") is an exception to the general rule of contract law in common law countries that acceptance of an offer takes place when communicated. Under the posting rule, that acceptance takes effect when a letter is posted (that is, dropped in a post box or handed to a postal worker)

The rules of contracts by post (postal rules) include the following:

1. An offer made by post/letter is not effective until received by the offeree.
2. Acceptance is effective as soon as it is posted.
3. For revocation to be effective, it must be received by the offeree before they post their letter of acceptance.

In this case

• The letter of revocation can be effective only when received. On Day 3 revocation was done on phone and no letter was posted.
• However, a contract was formed on Day 2 when the letter of acceptance was posted.
• It is too late for A to revoke the offer.