Question

Alvin is a homeowner. On January 1st he wrote Sure Insurance Company asking about fire insurance for his home. On January 10th, Sure Insurance offered Alvin fire insurance for $200 per year. On January 11th, Alvin placed a letter in the mail accepting the insurance company's offer and enclosed a check for $200. A problem with the US mail causes Sure Insurance not to receive the letter until January 30th. On January 12th, Alvin's house burned. Alvin made a claim to the insurance company that was denied. Alvin wants to sue Sure Insurance because he believes he had a contract with them.

a. Who is the offeror in the problem and why?

b. Who is the offeree and why?

c. Is Alvin correct? Does he have a contract with Sure Insurance Company? Why or Why not?

Answer 1

a. The offeror is defined as the party that makes an offer to another party. In the provided case, Sure Insurance Company is the offeror. It is because it offers fire insurance to Alvin for $200 per year.

b. The offeree is defined as the party that accepts the offer made by the offeror. In the given case, Alvin is offeree as he accepts the offer provided by Sure Insurance Company.

c. Yes, Alvin is correct. Alvin had a contract with Sure Insurance Company. It is because of the mailbox rule. Mailbox rule or mailbox posting rule specifies that an offer is deemed accepted on the same date when the acceptance letter is posted to the offeror. In the given case, Alvin accepted the offer on January 11th by depositing the acceptance letter in the mailbox. Since Alvin's house was burned on January 12, therefore, he is entitled to make claim for the loss.