Carlos visited Vancouver last summer and instead of going back to Ontario he stayed and enrolled at Simon Fraser University. He needed money but didn't need things left in Ontario, including his car. In mid-December, he wrote a friend and offered to sell the car for $4000 and told him to send him a letter with his answer. His friend received the letter on January 2, checked his financial situation, and sent a letter of acceptance January 3. Meanwhile Carlos, short of cash and not having heard from his friend, sold the car to Mr. Reno on December 31. Carlos received his friend's letter January 8. On these facts, which of the following is true?
A) In order for there to be a binding contract, there must be an offer and receipt of the letter.
B) All methods of acceptance are effective upon receipt by the offeror.
C) Sending an acceptance by mail was not a reasonable method of acceptance in this situation.
D) The letter of acceptance was effective when it was received, and by then Carlos had sold the car, so there was no contract.
E) The acceptance was effective before it was received, so there was a contract between Carlos and his friend.

Question

Quizplus · Accepted Answer

The mailbox rule states that an acceptance is effective upon dispatch when the parties have contemplated the use of mail as a means of communication of acceptance, or when the offeror uses the mail to make the offer. Since Carlos initiated the transaction by mail, it's reasonable to conclude that mail was an acceptable means of communication for acceptance. Therefore, the acceptance by Carlos's friend was effective when it was sent on January 3, before Carlos sold the car to Mr. Reno on December 31.

Carlos Visited Vancouver Last Summer and Instead of Going Back