Understanding the Mirror Image Rule: Common Law Basics 

What is Contract Common Law Doctrine? Understanding the Mirror Image Rule and Other Basics 

When it comes to forming contracts, does the term “common law doctrine” raise your heart rate up a notch? Don’t worry, we have you covered! 

As you create and negotiate contracts, one of the foundations to grasp is a basic understanding of common law rules, for example the mirror image rule. These laws help better define the fundamental premise of contract law. This is the process of an offer and acceptance in business transactions. 

Common law doctrine is simply a set of certain, accepted, and adhered-to rules based on past legal cases. 

When you know how these rules work, you’ll gain more confidence in negotiating and managing your contracts. More importantly, you will move toward an agreement more quickly! 

For More Information on the Stages of the Contract Lifecycle:

1. Drafting a Contract
2. Internal Approval of the Agreement
3. Contract Negotiation
4. Signing the Contract
5. Securely Storing the Agreement
6. Tracking Contracts and Documents

What is the Mirror Image Rule?

The mirror image rule means that when you accept an agreement, you’re doing so based on the exact terms of the original offer. 

Whether or not you realize it, you’ve likely been using this principle from an early age. It is almost a kind of code of moral conduct!

The principle behind this rule is that one party accepts the offer as is, and then it’s contractually written to mirror that. It’s also called the “absolute acceptance” rule, meaning that the parties offer and accept the exact terms, in order to create a contract.  

What happens when you don’t accept an original offer? Negotiations begin again, and agreement happens only when everyone accepts the offer as it is.

How the Mirror Image Rule Works

Let’s say you want to sell your house. You put it on the market, and a buyer accepts it as-is. In this case, the mirror image rule applies. The buyer accepts your exact terms and you move forward with a contract for sale. 

Now, let’s say you want to sell your house, but an interested party asks that you, the seller, pay for an inspection before they move forward on the purchase. The buyer does not accept the exact offer but proposes new terms as a counter-offer, so the mirror image rule does not apply.

This rule might seem obvious, so why is this important? Because no party is liable if a party does not accept the terms as offered. Generally, there is no fundamental breach of contract if you do not revert back to the original terms and choose to walk away. 

Of course, if you accept those new terms, then (you guessed it!) the mirror image rule has been applied. If you refuse, no agreement has been made, and you can continue to negotiate, or part ways. 

What is the Caveat Emptor Rule? (Let the Buyer Beware)

Caveat emptor is Latin for “let the buyer beware.” 

The caveat emptor rule in contract law makes it a buyer’s responsibility to understand their risk, rights, and any particular regulations around a sale. 

Essentially, a buyer is responsible for their decisions, and they must make sure the terms are good for them before they sign the contract — even if the terms ultimately do not unfold in the buyer’s best interest down the line. 

Caveat emptor means that it falls on the buyer to determine whether a purchase is suitable for them. While some actions and regulations may override the caveat emptor rule, and it’s always best to work with a trusted counsel, this is a common contract rule for the sale of some goods, products, and real estate. 

How Caveat Emptor Works

Let’s say a buyer wants to purchase an office building. They perform their due diligence and decide the as-is offer is in their best interest. They then sign the terms with “caveat emptor” that the purchase is made as-is. 

Once a buyer moves forward with a sale and signs a contract, the buyer has then assumed any risk in what they may not have uncovered during their due diligence. 

What is the Posting Rule? (Mailbox Rule)

This rule states that a contract is binding when that acceptance goes in a mailbox. It is binding even if that acceptance never actually reaches the person who made the offer.

The posting rule in contract law is one argument businesses use to legally accept and bind a contract when all parties aren’t in the same location. Of course, the rule was originally to serve parties doing business long-distance, to more clearly define when an offer is accepted. 

In the last 20 years, there are new laws around electronic transmission, but generally, they do not change the spirit of this rule. Whether by mail or by email, the posting rule supports that an offer is binding based on the time of acceptance. 

How the Posting Rule Works

Let’s say you mailed out a contract with a wet signature (you know, an old-fashioned ink signature). Once you place that contract in the mail, that’s the time it’s accepted. The same holds true at the time a document is emailed.  

Contract Lifecycle Management Platform: Opt for a Single Source of Truth 

These days, of course, most contracts have moved to the digital sphere. With a contract management platform, you can negotiate in real-time through online redlining, commenting, and version controls. As a result, agreement and time to value is better by working directly on a platform.

In addition, viewing different versions, tracking changes, and collaborating with colleagues and third parties is simpler without the hassle of mailing or even emailing a contract back and forth. 

The shift to digital contract management offers you better insight into contract terms as well as your entire portfolio of contracts, allowing you to make better decisions. 

While it’s necessary 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. 

Don’t fall behind the curve and join the thousands of companies using contract management software.

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