The Mirror Image Rule: How Understanding Common Law Doctrines Will Help You Better Manage Your Contracts

Part of managing your contracts is understanding the common law doctrines around them. By knowing how these rules work and how they apply to your contracts, you can choose the right processes and tools to increase the efficiency and success of your organization.

As you create and negotiate contracts, one of the key elements of success is a basic comprehension of common law principles. Since the foundation of common law is built upon the concept that there are a basic set of rules that everyone knows and follows, it’s important to know exactly what those entail. Below are a few rules that will help you better manage your contracts and move towards an agreement more quickly.

The Mirror Image Rule

Whether or not you realize it, you’ve been using this rule from an early age. The mirror image rule is simply that accepting an agreement has to be the same terms as the original offer. If you don’t accept the original offer, negotiations begin, and an agreement is reached only when an offer is accepted as it is.

For example, when you sell your house, you put it on the market in its current state. It may need a new coat of paint, new floors, or new appliances, but you note that the buyer is responsible for replacing these once they purchase. If anyone makes an offer and closes on the house, that means they accept these terms. However, a buyer may propose that you replace all the appliances before they purchase the house. At this point, the buyer has not accepted the offer and you don’t have an agreement. If you accept the buyer’s offer and replace all the appliances before selling, then you have agreed to their proposed terms and the mirror image rule applies. If you refuse, there is no agreement, and you either continue to negotiate or part ways.

Caveat Emptor (Let the Buyer Beware)

Caveat emptor is Latin for “let the buyer beware.” Although some actions may void a contract, the caveat emptor states that the responsibility for making sure an agreement is fair falls to the buyer. Even if the offer is bad for the purchaser or the merchandise is defective, once the agreement is made it is final, regardless of what happens to the merchandise afterward. Any errors must be fact, not judgment, to void the contract.

For example, with that same house you were selling, suppose you put it on the market for $500,000. A buyer comes along and purchases, but the home was really only worth about $450,000. Since it’s the buyer’s responsibility to be paying attention to the market and research the value of a home, their purchase was an error of judgment, not fact, so the contract is still valid.

Posting Rule (Mailbox Rule)

Determining the exact point that a contract is agreed upon when the communication takes place via mail is known as the posting rule. This rule states that accepting the contract is final when the acceptance is mailed before a rejection of the contract or a revoking of the terms.

For example, if a purchaser mails a contract on Monday, but decides they don’t want to agree on Tuesday, they’ll send a revocation letter. However, if the contract has already been received, signed, and sent back by Wednesday, when the revocation letter arrives, the contract is already final and cannot be rejected. The contract was valid as soon as the buyer agreed to the original terms (the mirror image rule) and mailed their agreement.

In the present day, the mailbox rule is not often used, as most contracts have moved to the digital world. With a contract management platform, you bypass the mailing aspect altogether and can negotiate in real time through online redlining and discussion panels. Negotiation is much easier and faster when you can work directly within one contract that stays in one place. Viewing different versions, tracking changes, and collaborating with colleagues and third parties is much simpler without the hassle of mailing or even emailing a contract back and forth. You have better insight into the contract itself and your whole portfolio of contracts, allowing you to make better decisions. While it’s still important to have a basic knowledge of contract common law, implementing a contract management platform greatly simplifies your processes and helps you make wiser and faster deals.

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