Soldau v. Organon, Inc. (9th Cir.). Consideration.

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Facts.  John Soldau was discharged by his employer, Organon, Inc. (Organon). He received a letter from Organon offering to pay him double the normal severance pay in exchange for a release by Soldau of all claims against Organon regarding the discharge. Soldau signed and dated the release and deposited it in a mailbox outside of a post office. When he returned home, he had received a check from Organon for the increased severance pay. Soldau returned to the post office, persuaded a postal employee to open the mailbox, and retrieved the release. He cashed the severance paycheck and brought this action against Organon, alleging a violation of the federal Age Discrimination in Employment Act. The district court granted summary judgment for Organon. Soldau appealed.

Issue. Did Soldau accept the release contract?

Opinion. Per Curiam.  The district court was clearly correct under California law. Under federal as well as California law, Soldau's acceptance was effective when it was mailed. The so-called "mailbox" or "effective when mailed" rule was adopted and followed as federal common law by the Supreme Court prior to Erie R.R. Co. v. Tomkins, 304 U.S. 64 (1938). We could not change the rule, and there is no reason to believe the Supreme Court would be inclined to do so. It is almost universally accepted in the common law world. It is enshrined in the Restatement (Second) of Contracts, Section 63(a), and endorsed by the major contract treatises. Commentators are also virtually unanimous in approving the "effective when mailed" rule, pointing to the long history of the rule; its importance in creating certainty for contracting parties; and its essential soundness, on balance, as a means of allocating the risk during the period between the making of the offer and the communication of the acceptance or rejection to the offeror.

Holding.  The court of appeals applied the "mailbox rule" and found that the acceptance was effective when Soldau first deposited it in the mailbox outside the post office. His later retrieval of the release did not undo his acceptance.

Case Questions Ethics.  Did Soldau act ethically in this case?

Policy.  Should the mailbox rule be changed to place the risk of loss of lost letters on the sender? Or is the present rule the best rule?

Business Implication.  How can businesses that make offers protect themselves from the risk of loss associated with the mailbox rule?