Exam 7: The Nature and Creation of Contracts

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 10." As soon as she received that letter on August 1,Helene replied with a letter that said: "That sounds like a good deal.I will bring the money to your office on August 15.I'll also collect the widgets at that time." When Helene arrived at Bentley's office on August 15,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 20.By that time,the market value of the widgets had increased to $75 000.Applying the general rules for communication of acceptance,which statement is most likely TRUE?

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 1.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 3 with a letter that said: "I accept your offer." Simon received that letter on June 5.On June 6,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.

Simon believed that he might want to buy certain shares from Melinda in the near future.On June 1.He therefore paid her $1000 in exchange for an option to purchase 5000 shares in Acme Inc at $10 each on or before October 1.Which of the following statements is TRUE?

Acme Corp is a widget manufacturer that carries on business in Edmonton.Until recently,it sold its products only within the province of Alberta.However,it now wants to sell to customers in Manitoba as well.It is concerned,however,about the effect of the Alberta Contracts Enforcement Act.That statute says that only specially licenced companies are entitled to sell widgets under "contracts that are made within the province of Alberta." Acme Corp is not specially licenced.The statute does not,however,affect contracts that are created outside of Alberta.Bearing in mind the general rules regarding offers and acceptances,suggest ways in which Acme Corp can go ahead with its proposal without violating the Contracts Enforcement Act.

A firm offer is

The Town of Oxbridge wants to build a new arts centre,but it is not sure which construction company it should hire for the job.Which type of action is the town most likely to make?

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.

The case of Carlill v Carbolic Smoke Ball Co is best known for dealing with the issue of

Rosie placed an advertisement in a newspaper that said: "Five purebred Siamese kittens for sale.$200 each.First come/first served.Respond in person or by email to Rosie@netmail.com." Gig saw the advertisement and immediately sent an email message that said,"I will pay $1000 for the five kittens." However,when Gig arrived at Rosie's door with the cash in hand,she refused to hand over the kittens.She explained that while Gig's message was the only reply that she had received in response to her advertisement,she had changed her mind and had decided to keep the kittens for herself.Provide an argument on behalf of Gig that would support the creation of a contract with Rosie.

Joan wants to buy a prime piece of real estate from Guiaumme,but she is waiting to find out whether the bank will give her a loan.In order to make sure that Guiaumme does not sell the land to anyone else,Joan gives him $5000 in exchange for his promise not to sell the land to her within a certain period of time if she decides to go through with the purchase.This type of agreement is called

In a normal tendering process,is Contract A a unilateral contract or a bilateral contract? Is Contract B a unilateral contract or a bilateral contract? Give reasons for your answer.

Lori offers to sell her season pass to the ballet for $200.Her co-worker,Alan,says that he will buy the pass for $150.Alan has provided

In order to decide whether the parties intended to create a legally enforceable agreement,the courts apply a subjective "reasonable person" test.

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

Hare Corporation sends an offer to Tortoise Inc.to purchase a widget through the mail.Hare hasn't heard from Tortoise for two days,so when Fox Company calls them on the phone and offers them the widget at a better price,they accept.They then call Tortoise to revoke the offer,but find that they have already mailed an acceptance.Which of the following is true?

Marissa had 500 shares in XYZ Corp that she was willing to sell at a price of $10 each.She wrote a letter to Mark that said,"I will sell 500 shares in XYZ Corp to you at a price of $10 each.You can accept any time within the next month.This is a firm offer." Marissa signed and sealed that document.When he received that letter two days later,Mark decided to accept Marissa's offer.He wrote a letter to that effect,but then forgot to mail it.Two weeks later,the value of the shares increased to $20 each.Marissa therefore no longer wanted to sell them at the original price.She telephoned Mark and told him that her offer was revoked.She was entitled to do so.

Garfield owns and operates a wholesale business called the Overseas Sporting Goods Store (OSGS).He recently delivered a box of cricket balls to his twenty-year-old son,Imran,and a box of cricket outfits to another sporting goods store called Hit-for-Six.Because Garfield's store went into financial difficulties shortly after making those deliveries to Imran and Hit-for-Six,questions have arisen regarding the nature of those deliveries and in particular whether they were contractual sales.Which of the following statements is TRUE?

The Alberta Teachers' Association (ATA)is negotiating a collective bargaining agreement with the provincial government.The government offers a fixed 2% per year wage increase for five years.The ATA considers this reasonable,but thinks it can get more,so it makes a counter-offer for 3% per year for five years.The government fully rejects the offer.Which of the following is true?

The municipal government has a new contract and is accepting tenders.Your company,Epsilon Management,enters a tender to get the contract.Which of the following statements describes the relationship between the government and Epsilon?

Gordon sends a letter to Thomas that says,"I will buy your diesel engine for $7000." At exactly the same time,Thomas sends a letter to Gordon that says,"I will sell my diesel engine to you for $7000." Which of the following statements is TRUE?