Traditional contract formation requires the contracting parties to have a "mutual understanding" of the terms of the agreement. During the negotiation process, there may be invitations to make offers (e.g., price lists are sometimes not offers, but invitations) and counter-offers. However, the basic norm is that formation needs the parties to convey an offer and acceptance of the contract terms.
Communication of Acceptance
A contract is generally concluded when acceptance is communicated to the offeree. This regulation caused few issues in face-to-face negotiations. Furthermore, with the advancement of long-distance communication systems and the related dependability issues, the circumstance frequently arises in which the offeree has dispatched an acceptance that is either never received by the offeror or comes after the offer has expired. In each situation, the question is whether the acceptance is notified to the offeree when it is sent or when it arrives. Case law differentiates between delayed means of communication such as mail and telegrams and nearly immediate modes of communication such as the telephone, telex, and fax machine. Electronic communication has yet to be considered by the courts.
Early case law saw the creation of the "mailbox rule" for ordinary mail, which states that acceptance is presumed to have been notified to the offeree when the package enters the postal system. This restriction has been extended to telegrams and couriers as well. The offeror, on the other hand, is free to impose restrictions on the acceptance's communication (e.g., the offer must be received; must be by telephone). Unlike the "mailbox rule," acceptances transmitted by immediate or almost immediate means such as the telephone, telex, and fax are created when the offeror gets the acceptance. These methods are akin to face-to-face interactions in that both parties are presumed aware of any interruption in the connection and can take corrective action.
There is scant case law regarding electronic message acceptance. On the one hand, certain instances indicate that the general norm is that the acceptance must be received by the offeror and that the mailbox rule is really a small exception. But on the other side, electronic message receipt may not be immediate, and because the mailbox rule has been extended to telegrams, it may be argued that it should be extended to electronic mail as well. Even though some electronic message systems, such as private EDI networks, allow near-instant transmission, anecdotal data reveals that Internet e-mail is unreliable and can take minutes, hours, or even days to get to its destination.
Another reason for a mailbox-like norm for electronic mail is the role of the offeror in delivery. While telexes and faxes are received practically instantaneously at the recipient's location, certain electronic mail systems employ mail servers, managed by third parties, that are not situated at the recipient's location. Even after the mail server has acknowledged receipt, the receiver must take steps to connect to their mailbox on the mail server before the communication is complete. Given that the offeror is only partially responsible for assuring delivery, it may not be fair to shift the full risk of electronic mail delivery to the offeree.
It is also possible that electronic communication will not be governed by a single norm. In a recent telex communication case, the House of Lords of England appeared to be backing away from the application of a general rule: the message may not reach or be meant to reach the designated recipient instantly. Messages may be sent after hours or at night with the goal or idea that they would be read later. There might be a mistake or a default on the recipient's end that prohibits receipt at the time anticipated and believed in by the sender. The communication might have been sent and/or received by third-party computers. And a plethora of additional permutations is possible.
