Exam 7: The Nature and Creation of Contracts

In early March, Mathilde offered to rent her cottage to Tom for the first two weeks of July at a cost of $1200. Mathilde did not impose any restrictions on acceptance. Tom did not yet know when his vacation was scheduled, so he did not immediately respond to Mathilde's offer. Tom learned at the end of June that he was entitled to vacation during the first two weeks of July. He therefore arrived at the cottage on July 1st and told Mathilde for the first time that he was accepting her offer. Which of the following statements is most likely TRUE?

A battle of the forms usually occurs when

If you insert a coin into a vending machine and receive a chocolate bar in exchange, have you entered into a contract? If so, is that contract unilateral or bilateral? Give reasons for your answer.

An offer can be revoked

Quality Kitchens Inc operates a store that sells kitchen utensils and gadgets. In an attempt to increase sales, the store ran an advertisement in a newspaper that featured Juicy Brand Blenders for $49.99. Martha rushed to the store with the intention of buying a blender. When she arrived however, she was told that while there were no such blenders in stock, the store did have several Swirl Brand Blenders to sell for $99.99 each. After a bit of investigation, Martha discovered that the store knew that it never had any Juicy Brand Blenders, and that it was simply hoping that shoppers would buy the Swirl Brand Blenders once they got inside the store. Which of the following statements is TRUE?

Mysty offered to sell her car to Tim for $15 000. Tim faxed a letter to her that said, "Consider it sold. I'll bring the money to you next Monday when I pick up the vehicle. Of course, for that price, I'll want you to install a new stereo in it." Tim did not hear anything more from Mysty, but he arrived at her door the following Monday with $15 000 in cash. He was delighted to find that a new stereo had been installed in the car, but disappointed when Mysty refused to accept his money or hand over the vehicle. Mysty is required to do so because there was a valid offer and acceptance.

By submitting a tender, a party normally

Gigagar Inc manufactures computer components. It wants to develop a new line of product, but realizes that it cannot do so without a complicated device known as a "digital phalange finger." It has tried to design that devise itself, but has failed. It therefore sent a letter to Katenben Ltd, another high- tech company, that said: "We are willing to pay $100 000 for the design of a digital phalange finger." Katenben Ltd responded by saying that it believed that it might be able to design the device. However, it also indicated that it could not guarantee its results and said that it did not want to commit itself to a potentially impossible project. Gigagar Inc then wrote back in a letter that said: "We understand your concerns. We do not require any guarantee of success. We also appreciate that, given the complexity of the project, you may decide to drop the matter after some preliminary investigations. Nevertheless, our offer stands-we will pay $100 000 if you successfully design a digital phalange finger." Katenben Ltd spent the next six months and a great deal of money trying to design the device. As it neared successful completion, however, Gigagar Inc announced that its own engineers had experienced an unexpected breakthrough and had successfully created a digital phalange finger. Gigagar Inc therefore told Katenben Ltd that its offer of $100 000 was revoked. Three days later, Katenben Ltd also successfully produced a working digital phalange finger. It now demands payment of $100 000. Is it entitled to that money? Give reasons for your answer.

Bentley sent a letter to Helene that said: "I'll sell 5000 widgets to you for $50 000. This offer is open for acceptance until August 10th." As soon as she received that letter on August 1st, Helene replied with a letter that said: "That sounds like a good deal. I will bring the money to your office on August 15th. I'll also collect the widgets at that time." When Helene arrived at Bentley's office on August 15th, however, he refused to accept the money or hand over the widgets. He explained that he had not yet received her letter. He also said that he was no longer willing to do business with her. Helene's letter finally reached Bentley on August 20th. By that time, the market value of the widgets had increased to $75 000. Applying the general rules, which statement is most likely TRUE?

A statute makes it illegal for an unlicenced individual to "offer for sale a switchblade knife." Mack, who does not hold a licence, owns a store that deals in a variety of items. The front window display case, which is visible from the street, contains a switchblade knife that has a price tag on it. Mack has undoubtedly committed a crime because he does not hold a licence.

Explain what it means to say that the offeror is the "master of the offer." Provide examples to support your answer.

A firm offer is binding upon the offeror if it was given in writing.

It is presumed that people who create agreements in commercial contexts do intend to create legal relations, while people who create agreement in social or family contexts do not intend to create legal relations. Provide an explanation for each of those presumptions.

As Bennie entered The Big Table restaurant, he noticed a sign that said "All- U- Can- Eat - At Our Reasonable Price." Because the restaurant was busy, and because the staff were all tied up with other customers, Bennie found a table for himself and then began eating from the self- serve buffet. After finishing his meal, he paid an appropriate amount to the cashier and left the building. Bennie had not spoken, or been spoken to, at any point. Which of the following statements is TRUE?

The "master of the offer"

Which of the following statements is TRUE?

Jose and Mei entered into what appeared to be a contract for the sale of an antique automobile. Jose agreed to pay the purchase price and Mei agreed to deliver the car to Jose's garage. Secretly, however, Mei planned to keep the car for herself. Will a court enforce the agreement?

In late April, Harper Corp placed an advertisement in a newspaper that said: "We cater parties. Up to 150 people for only $3000. No hidden fees or costs." The manager of Martin Inc telephoned Harper and left a voice message that said, "We are calling to place an order to have a party for 150 people on the first of June." The next day, the manager of Harper called Martin and explained that, due to a scheduling conflict, it could not stage a party on the first of June. Martin now says that a contract had been created and that Harper has breached that agreement. Which of the following statements is TRUE?

Anita was required to enter her co- worker's office to get a file. When she was there, she saw the draft of an email message on the screen of her co- worker's computer. The message was addressed to Anita, but it had not yet been sent. In the message, the co- worker offered to sell Anita her leather jacket for $100. Once Anita saw the email, she was entitled to accept the offer.

Simon owns 10 000 shares in ABC Inc. He wanted to sell half of them in order to raise $20 000 in cash. He therefore wrote separate letters to Bronwyn and Gwyneth on June 1st. In each case he said, "I will sell 5000 shares in ABC Inc to you for $20 000. Please respond by any reasonable means within one week." Bronwyn replied on June 3rd with a letter that said: "I accept your offer." Simon received that letter on June 5th. On June 6th, he received a fax from Gwyneth that said, "I accept your offer." Simon then informed Gwyneth by telephone that he had already sold the shares to Bronwyn. In that situation, there is no contract between Simon and Gwyneth.