Question 1

List the four ways in which an offer can be terminated by operation of law and explain them in brief.

Accepted Answer

The following are the four ways in which an offer can be terminated by operation of law:
1.Destruction of the subject matter: An offer terminates if the subject matter of the offer is destroyed through no fault of either party prior to the offer's acceptance.
2.Death or incompetency of the offeror or offeree: Prior to acceptance of an offer,the death or incompetency of either the offeror or the offeree terminates an offer.Notice of the other party's death or incompetence is not a requirement.
3.Supervening illegality: If the object of an offer is made illegal prior to the acceptance of the offer,the offer terminates.
4.Lapse of time: An offer expires at the lapse of time of an offer.An offer may state that it is effective only until a certain date.

Question 2

A rejection is a withdrawal of an offer by the offeror that terminates the offer.

Accepted Answer

A) True 
 B)False  False

Question 3

Techstate,a hardware manufacturer in the United States,has an existing contract with a client based in the Republic of Karthasia,which is going through a civil war.The resulting upheaval in that country has led to some of the shipments to the client being destroyed by warring factions.As a sanction against the country,the United States government places an embargo on all exports to that country by U.S.firms.What will be the state of the contract between Techstate and the client in Karthasia after the embargo?

Accepted Answer

A)  It will be terminated due to destruction of subject matter. 
B)  It will be terminated due to incompetency of the offeror. 
C)  It will be terminated due to lapse of time. 
D)  It will be terminated due to supervening illegality. 
A)  It will be terminated due to destruction of subject matter. 
B)  It will be terminated due to incompetency of the offeror. 
C)  It will be terminated due to lapse of time. 
D)  It will be terminated due to supervening illegality. D

Question 4

Peter has two houses that he plans to sell,numbered Lot 1 and Lot 2,each priced at $800,000.David has shown interest in buying Lot 2 but is not able to make up his mind on the final offer,so he asks Peter to give him a week to decide and Peter accepts.But David takes two weeks to get back to Peter with a counteroffer.Before he could give David a reply to his counteroffer,Peter is killed in a fire that burned down Lot 1.Which of the following would be true of this case?

Accepted Answer

A)  The offer is terminated due to lapse of time. 
B)  The offer is terminated due to destruction of the subject matter. 
C)  The offer is terminated due to death of the offeror. 
D)  David can still buy the house for Peter's original offer. 
A)  The offer is terminated due to lapse of time. 
B)  The offer is terminated due to destruction of the subject matter. 
C)  The offer is terminated due to death of the offeror. 
D)  David can still buy the house for Peter's original offer.

Question 5

Analyze the requirements of a consideration.

Accepted Answer

Consideration consists of two elements:

Question 6

Describe the difference between auctions with and without reserve using examples.

Accepted Answer

An auction with reserve is one in which

Question 7

The revocation of an offer is effective when it is ________.

Accepted Answer

A)  dispatched by the offeree 
B)  dispatched by the offeror 
C)  received by the offeree 
D)  received by the offeror 
A)  dispatched by the offeree 
B)  dispatched by the offeror 
C)  received by the offeree 
D)  received by the offeror

Question 8

The person who makes the offer is called the offeree and the person to whom the offer is made is called the offeror.

Accepted Answer

A) True 
 B)False

Question 9

The performance of an accord is called a counteroffer.

Accepted Answer

A) True 
 B)False

Question 10

Luke offered to sell his farm to Kent at $75,000,an offer which Kent declined.A week later,Luke offered to sell the farm for $65,000,stating that it was the final offer,it was valid for one month,and that he would not alter it.Two days later,Kent replied by saying that he was willing to pay $60,000 for the farm.A week after Luke received Kent's offer,Luke declined it.Ten days after that,Kent agreed to buy the farm for $65,000,but Luke refused to sell the farm.Kent decided to sue Luke for a breach of contract.The judge ruled in favor of Luke.Which one of the following is the reason for the ruling in Luke's favor?

Accepted Answer

A)  Luke's original offer of $75,000 is still valid, even though rejected. 
B)  Kent's counteroffer of $60,000 had rendered the offer for $65,000 invalid. 
C)  Kent's acceptance was past the set time period in the offer. 
D)  Kent acted in an incompetent manner with regards to the offer. 
A)  Luke's original offer of $75,000 is still valid, even though rejected. 
B)  Kent's counteroffer of $60,000 had rendered the offer for $65,000 invalid. 
C)  Kent's acceptance was past the set time period in the offer. 
D)  Kent acted in an incompetent manner with regards to the offer.

Question 11

Why does an illusory contract lack consideration?

Accepted Answer

A)  because the consideration promised is unlawful and therefore void 
B)  because the person promises to perform an act or do something he is already under an obligation to do 
C)  because one or both parties can choose not to perform their contractual obligations 
D)  because the compensation paid is for work done in the past 
A)  because the consideration promised is unlawful and therefore void 
B)  because the person promises to perform an act or do something he is already under an obligation to do 
C)  because one or both parties can choose not to perform their contractual obligations 
D)  because the compensation paid is for work done in the past

Question 12

A term in a contract that can reasonably be supplied by the courts is called an implied term.

Accepted Answer

A) True 
 B)False

Question 13

The legal power to accept an offer belongs to the ________.

Accepted Answer

A)  offeror 
B)  offeree 
C)  agent 
D)  seller 
A)  offeror 
B)  offeree 
C)  agent 
D)  seller

Question 14

Which of the following is true about a promissory estoppel?

Accepted Answer

A)  It is invoked in cases having option contract infringements. 
B)  It permits a court to order enforcement of a contract that lacks consideration. 
C)  It allows for a party to claim goods, which were revoked, for which it has already paid consideration. 
D)  It is invoked in cases that involve a promissory note to pay considerations at a later time. 
A)  It is invoked in cases having option contract infringements. 
B)  It permits a court to order enforcement of a contract that lacks consideration. 
C)  It allows for a party to claim goods, which were revoked, for which it has already paid consideration. 
D)  It is invoked in cases that involve a promissory note to pay considerations at a later time.

Question 15

Which of the following is a necessary prerequisite for legally claiming a reward?

Accepted Answer

A)  A promise of completing the requested act is sufficient for a claimant to claim the reward. 
B)  Knowledge of the reward before completing the requested act is necessary to claim the reward. 
C)  The claimant can claim the reward even if he or she came to know of the reward subsequent to completing the act. 
D)  The offeror cannot withdraw the reward once the offer has been placed in the public domain. 
A)  A promise of completing the requested act is sufficient for a claimant to claim the reward. 
B)  Knowledge of the reward before completing the requested act is necessary to claim the reward. 
C)  The claimant can claim the reward even if he or she came to know of the reward subsequent to completing the act. 
D)  The offeror cannot withdraw the reward once the offer has been placed in the public domain.

Question 16

Jennifer had put up a reward offer,in the local newspaper,for her lost watch for two weeks now.But after buying a new watch,Jennifer decided to not pursue her old watch,and so decided not to put up the reward offer in the third week.Betty,who found the watch,and saw the reward offer,returned the watch to Jennifer during the third week.Which of the following would be true about Betty receiving chances of receiving the reward?

Accepted Answer

A)  Betty will not receive the reward as Jennifer had already revoked it. 
B)  Betty will not receive the reward as Jennifer had stopped publishing the reward offer. 
C)  Betty cannot claim the reward because she had not performed all the requested acts. 
D)  Betty can claim the reward because Jennifer had not published a notice of revocation. 
A)  Betty will not receive the reward as Jennifer had already revoked it. 
B)  Betty will not receive the reward as Jennifer had stopped publishing the reward offer. 
C)  Betty cannot claim the reward because she had not performed all the requested acts. 
D)  Betty can claim the reward because Jennifer had not published a notice of revocation.

Question 17

The term ________ refers to a mode of acceptance that is indicated from what is customary in similar transactions,usage of trade,or prior dealings between the parties.

Accepted Answer

A)  express authorization 
B)  implied authorization 
C)  option contract 
D)  unequivocal acceptance 
A)  express authorization 
B)  implied authorization 
C)  option contract 
D)  unequivocal acceptance

Question 18

A contract into which both parties enter but in which one or both of the parties can choose not to perform their contractual obligations is known as a(n)________.

Accepted Answer

A)  illusory promise 
B)  gift promise 
C)  preexisting duty 
D)  illegal consideration 
A)  illusory promise 
B)  gift promise 
C)  preexisting duty 
D)  illegal consideration

Question 19

With regard to unenforceable contracts,an extortion call in which a man agrees to pay money in return for his family's safety would be considered as a(n)________.

Accepted Answer

A)  preexisting duty 
B)  illusory promise 
C)  illegal consideration 
D)  past consideration 
A)  preexisting duty 
B)  illusory promise 
C)  illegal consideration 
D)  past consideration

Question 20

An agreement that an offeror will not sell his property for a specified period subsequent to the offeree paying consideration to the offeror is referred to as a(n)________.

Accepted Answer

A)  unequivocal acceptance 
B)  contract of adhesion 
C)  option contract 
D)  firm offer 
A)  unequivocal acceptance 
B)  contract of adhesion 
C)  option contract 
D)  firm offer

Exam 10: Agreement and Consideration

List the four ways in which an offer can be terminated by operation of law and explain them in brief.

A rejection is a withdrawal of an offer by the offeror that terminates the offer.

Analyze the requirements of a consideration.

Describe the difference between auctions with and without reserve using examples.

The revocation of an offer is effective when it is ________.

The person who makes the offer is called the offeree and the person to whom the offer is made is called the offeror.

The performance of an accord is called a counteroffer.

Why does an illusory contract lack consideration?

A term in a contract that can reasonably be supplied by the courts is called an implied term.

The legal power to accept an offer belongs to the ________.

Which of the following is true about a promissory estoppel?

Which of the following is a necessary prerequisite for legally claiming a reward?

The term ________ refers to a mode of acceptance that is indicated from what is customary in similar transactions,usage of trade,or prior dealings between the parties.

A contract into which both parties enter but in which one or both of the parties can choose not to perform their contractual obligations is known as a(n)________.

With regard to unenforceable contracts,an extortion call in which a man agrees to pay money in return for his family's safety would be considered as a(n)________.

An agreement that an offeror will not sell his property for a specified period subsequent to the offeree paying consideration to the offeror is referred to as a(n)________.

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