Final answer:
The rejection of an offer becomes effective when it is received by the offeror. This is based on the mailbox rule in contract law, which dictates the timing of communications. Timing is critical, and methods of communication can affect when a rejection is effective.
Step-by-step explanation:
When is a Rejection of an Offer Effective?
In contract law, the rejection of an offer is considered effective when it is received by the offeror. This principle is part of what's referred to as the 'mailbox rule' or the 'postal rule', which deals with the timing of when offers, acceptances, and rejections of contracts are effective in relation to communications sent through the mail or similar means.
An offer is a proposal by one party to another intended to create a legally binding agreement upon acceptance. Rejection is one of the ways a party to whom the offer is presented can respond. When the offeree conveys their decision not to accept the offer to the offeror, it becomes a rejection. According to the law, only upon the offeror's actual knowledge of the rejection does it take effect. Various methods of communication can impact when the communication of rejection is considered to have taken place. If rejection is sent via post, it is effective when it arrives in the offeror’s mailbox, not when the offeree sends it. For instant communications, such as email or text messages, the rejection is effective once it reaches the offeror in a manner that they can retrieve and acknowledge it.
It is important to note that timing can be critical in contractual negotiations, especially if the offer specifies a deadline for acceptance or rejection. If an offeree tries to retract a rejection before it reaches the offeror and instead communicates an acceptance, the acceptance could be valid if the offeror has not yet received the initial rejection.
Therefore, understanding when a rejection is effective can be crucial in the context of contract formation and can prevent disputes regarding whether a binding contract has been formed or not.