John Soldau v. Organon Inc., a Delaware Corp.

Court of Appeals for the Ninth Circuit
860 F.2d 355 (1988)

ELI5:

Rule of Law:

Under the 'mailbox rule,' an acceptance of an offer is effective, and a binding contract is formed, at the moment the acceptance is deposited in the mail, regardless of whether the offeree later retrieves the acceptance before its delivery to the offeror.

Facts:

Organon, Inc. discharged its employee, John Soldau.
Organon sent Soldau a letter offering him double the normal severance pay in exchange for a release of all claims against the company.
Soldau signed and dated the release document.
He deposited the signed release in a mailbox outside a post office.
Upon returning home, Soldau discovered a check from Organon for the increased severance pay had already been delivered.
Soldau returned to the post office, persuaded a postal worker to open the mailbox, and retrieved the release he had just mailed.
After retrieving the letter, Soldau cashed Organon's severance check.

Procedural Posture:

John Soldau filed suit against Organon, Inc. in federal district court, alleging violation of the Age Discrimination in Employment Act (ADEA) and state law.
The district court granted summary judgment in favor of Organon.
Soldau, as the appellant, appealed the district court's decision to the United States Court of Appeals for the Ninth Circuit, with Organon as the appellee.

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Issue:

Does depositing a signed acceptance in a mailbox create a binding contract under the 'mailbox rule,' thereby making a subsequent retrieval of the acceptance from the mail ineffective?

Opinions:

Majority - Per Curiam

Yes, a binding contract is formed upon dispatch of the acceptance. The 'mailbox rule' dictates that an acceptance is effective when it is mailed, making Soldau's subsequent retrieval of the letter legally inconsequential. The court found this rule applies under both California and federal common law. The court affirmed the long-standing precedent of the mailbox rule, citing its near-universal acceptance in the common law world, its inclusion in the Restatement (Second) of Contracts § 63(a), and its endorsement by major legal treatises. The court explicitly rejected the minority view from the Court of Claims, which held that an acceptance is only effective upon receipt. The court reasoned that the mailbox rule is not based on the offeree's loss of control over the letter, but on the objective manifestation of assent that occurs at the moment of dispatch. Therefore, a contract was formed when Soldau deposited the release in the mailbox, and his subsequent retrieval of the letter could not undo the contract.

Analysis:

This decision strongly reaffirms the traditional 'mailbox rule' as a foundational principle of contract law, providing a clear point of contract formation. By rejecting the Court of Claims' reasoning based on the sender's ability to retrieve mail, the court solidifies the rule's rationale as being based on the objective manifestation of assent, not physical control. This precedent provides certainty for contracting parties, as it establishes that the deal is sealed upon dispatch, and an offeree's subsequent change of heart is legally irrelevant. The ruling ensures a uniform application of the rule, preventing parties from attempting to revoke an already-mailed acceptance.

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