Question 1

Acceptance of an offer to form a unilateral contract need not be communicated to the offeror to be effective.

Accepted Answer

A) True 
 B)False  True

Question 2

Bart owned 100 shares of a stock that was actively traded on a national stock exchange. Bart wanted to sell the shares but felt that his profit would be seriously diminished by selling through a broker and paying the customary brokerage commission. Bart offered the 100 shares to any of a group of six people in a conversation at a party. The offered price was $72.50 per share, the price at which the shares had closed that day. No one really responded to the offer at that time. Ten days later when the shares were trading at $76.25, Marie, one of the offerees at the party, appeared at Bart's office saying that she accepted the offer. Bart claimed the offer no longer was available. Evaluate the legal outcome of this dispute.

Accepted Answer

When an offer is made and the offeror does not indicate how long it is to remain open, the offer expires within a reasonable period of time. In the case of an actively-traded stock, a reasonable amount of time would be relatively short. Further, Bart's offer was not a firm offer, nor did Bart extend a right of first refusal to the six (6) people at the party, so Bart had the right to sell the stock to another investor before Marie came forward to accept his offer.

Question 3

An offer gives the offeror the power to bind the offeree by contract.

Accepted Answer

A) True 
 B)False  False

Question 4

A said to B, "I'll give you $100 for that bracelet." B replied, "$135." A said, "No thanks." B then said that B accepted the $100, but A was no longer interested and said there was no contract. B insists there is a contract. Result?

Accepted Answer

A)  A's offer of $100 was open and accepted by B, thereby forming a contract. 
B)  B's counteroffer of $135 terminated A's offer of $100. 
C)  B's statement, "$135" was a negotiating statement that did not terminate A's original offer of $100. 
D)  A's offer of $100 was irrevocable. 
A)  A's offer of $100 was open and accepted by B, thereby forming a contract. 
B)  B's counteroffer of $135 terminated A's offer of $100. 
C)  B's statement, "$135" was a negotiating statement that did not terminate A's original offer of $100. 
D)  A's offer of $100 was irrevocable.

Question 5

A requirements contract is too vague to be a legally-enforceable agreement.

Accepted Answer

A) True 
 B)False

Question 6

Frank is drunk and while laughing hysterically says to Hal "I'll sell you my truck for a buck". Frank has made a valid offer.

Accepted Answer

A) True 
 B)False

Question 7

In general, an acceptance occurs when:

Accepted Answer

A)  a particular form of words is stated to the offeror. 
B)  a particular mode of expression is made to the offeror. 
C)  the offeree reserves the right to reject the offer. 
D)  a clear expression of the offeree's agreement to be bound by the terms of the offer occurs. 
A)  a particular form of words is stated to the offeror. 
B)  a particular mode of expression is made to the offeror. 
C)  the offeree reserves the right to reject the offer. 
D)  a clear expression of the offeree's agreement to be bound by the terms of the offer occurs.

Question 8

If an offer is indefinite or vague, no contract arises from an attempt to accept it.

Accepted Answer

A) True 
 B)False

Question 9

Under the _______, acceptance of an offer takes place when a properly addressed postage paid mail acceptance is placed in the hands of US Postal Service.

Accepted Answer

A)  mailbox rule 
B)  mail carrier rule 
C)  dispatch rule 
D)  acceptance by mail rule 
A)  mailbox rule 
B)  mail carrier rule 
C)  dispatch rule 
D)  acceptance by mail rule

Question 10

If the offeree purports to accept an offer but in so doing makes any change to the terms of the offer, such action is a counteroffer that rejects the original offer.

Accepted Answer

A) True 
 B)False

Question 11

An agreement that consists of two or more parts and calls for corresponding performances of each part by the parties is called a:

Accepted Answer

A)  partial contract. 
B)  divisible contract. 
C)  performance contract. 
D)  divided contract. 
A)  partial contract. 
B)  divisible contract. 
C)  performance contract. 
D)  divided contract.

Question 12

A customer requested a price from a carpenter on a teak cabinet to be built according to the buyer's specifications. Because teak wood is difficult to obtain, the customer agreed to pay the cost of the wood plus $175 and the carpenter agreed to build it. Which of the following is correct?

Accepted Answer

A)  Although the price is somewhat unclear, the parties have entered into a contract. 
B)  This is an agreement to agree, and is not binding. 
C)  This agreement fails for indefiniteness. 
D)  The carpenter is bound by the agreement, but not the customer. 
A)  Although the price is somewhat unclear, the parties have entered into a contract. 
B)  This is an agreement to agree, and is not binding. 
C)  This agreement fails for indefiniteness. 
D)  The carpenter is bound by the agreement, but not the customer.

Question 13

An option is itself a contract to refrain from revoking an offer.

Accepted Answer

A) True 
 B)False

Question 14

To make an offer, the offeror must appear to intend to create a binding obligation.

Accepted Answer

A) True 
 B)False

Question 15

Generally, advertisements, catalog prices, and circulars are offers that can be accepted.

Accepted Answer

A) True 
 B)False

Question 16

An option contract is a binding promise to keep an offer open for a stated period of time or until a specified date.

Accepted Answer

A) True 
 B)False

Question 17

Advertisements that call for an act may be deemed to be a unilateral contract.

Accepted Answer

A) True 
 B)False

Question 18

A "best efforts" clause is always deemed too indefinite to be enforceable.

Accepted Answer

A) True 
 B)False

Question 19

An offer is effective only if it is communicated by the offeror in person.

Accepted Answer

A) True 
 B)False

Question 20

An output contract is too vague to be a legally-enforceable agreement.

Accepted Answer

A) True 
 B)False

Exam 12: Formation of Contracts: Offer and Acceptance

Acceptance of an offer to form a unilateral contract need not be communicated to the offeror to be effective.

An offer gives the offeror the power to bind the offeree by contract.

A said to B, "I'll give you $100 for that bracelet." B replied, "$135." A said, "No thanks." B then said that B accepted the $100, but A was no longer interested and said there was no contract. B insists there is a contract. Result?

A requirements contract is too vague to be a legally-enforceable agreement.

Frank is drunk and while laughing hysterically says to Hal "I'll sell you my truck for a buck". Frank has made a valid offer.

In general, an acceptance occurs when:

If an offer is indefinite or vague, no contract arises from an attempt to accept it.

Under the _______, acceptance of an offer takes place when a properly addressed postage paid mail acceptance is placed in the hands of US Postal Service.

If the offeree purports to accept an offer but in so doing makes any change to the terms of the offer, such action is a counteroffer that rejects the original offer.

An agreement that consists of two or more parts and calls for corresponding performances of each part by the parties is called a:

A customer requested a price from a carpenter on a teak cabinet to be built according to the buyer's specifications. Because teak wood is difficult to obtain, the customer agreed to pay the cost of the wood plus $175 and the carpenter agreed to build it. Which of the following is correct?

An option is itself a contract to refrain from revoking an offer.

To make an offer, the offeror must appear to intend to create a binding obligation.

Generally, advertisements, catalog prices, and circulars are offers that can be accepted.

An option contract is a binding promise to keep an offer open for a stated period of time or until a specified date.

Advertisements that call for an act may be deemed to be a unilateral contract.

A "best efforts" clause is always deemed too indefinite to be enforceable.

An offer is effective only if it is communicated by the offeror in person.

An output contract is too vague to be a legally-enforceable agreement.

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

Crimes

Torts

Intellectual Property Rights and the Internet

The Legal Environment of International Trade

Nature and Classes of Contracts: Contracting on the Internet

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Negotiable Instruments and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

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