Exam 3: Formation of a Valid Contract

Smith met Jones at a street corner and made a verbal offer to buy his canoe for $200.Jones replied that he would "think about it." Smith nodded affirmatively.The two then went about their separate business.Later in the day,Smith met Brown,who also had a canoe for sale,and Smith offered to purchase Brown's canoe for $175.Brown agreed to sell Smith his canoe.At 4 p.m.the same afternoon,after Smith and Brown had made their arrangement,Jones telephoned Smith to say he would accept Smith's offer to buy his canoe. -Smith's offer was merely an invitation to do business.

McSweeney agrees to clear out Broad's basement,but no price is set at the time.Broad argues,once McSweeney has done the work,that since no price was agreed upon,he should pay only a reasonable price and not the excessive amount stated in the bill presented to him by McSweeney.He is right.

Acme Life Insurance refused to pay out on a life insurance policy on the late Mr.Levitt.Since such policies are essentially contracts betting on the length of life of the insured,this contract is unenforceable in law by Mr.Levitt's family since it is only the need to protect its business reputation that makes an insurer pay.

Smith met Jones at a street corner and made a verbal offer to buy his canoe for $200.Jones replied that he would "think about it." Smith nodded affirmatively.The two then went about their separate business.Later in the day,Smith met Brown,who also had a canoe for sale,and Smith offered to purchase Brown's canoe for $175.Brown agreed to sell Smith his canoe.At 4 p.m.the same afternoon,after Smith and Brown had made their arrangement,Jones telephoned Smith to say he would accept Smith's offer to buy his canoe. -Smith's offer lapsed when Smith agreed to purchase Brown's canoe.

Parker owed Andrew a debt in the amount of $1,000.The debt was payable on June 1. -If Parker offered Andrew the sum of $900 on the due date as payment in full,at Common Law,Andrew would be entitled to collect the remaining $100 even though he accepted the lesser sum as payment in full on the due date.

A trader on the floor of the stock exchange makes a deal with another trader by hand signals for the sale of a block of shares.This is a binding contract.

Green,a retailer,placed an advertisement in a local newspaper on May 5 that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10 at a sale price of $100 each.Regular Price $199.First come,first served!" Doe was the 10th customer in the store on May 10,but Green refused to sell him a TV set for $100. -Green's advertisement was only an invitation to do business,and not a valid offer to sell.

Smith met Jones at a street corner and made a verbal offer to buy his canoe for $200.Jones replied that he would "think about it." Smith nodded affirmatively.The two then went about their separate business.Later in the day,Smith met Brown,who also had a canoe for sale,and Smith offered to purchase Brown's canoe for $175.Brown agreed to sell Smith his canoe.At 4 p.m.the same afternoon,after Smith and Brown had made their arrangement,Jones telephoned Smith to say he would accept Smith's offer to buy his canoe. -The acceptance by Jones was ineffective because Jones did not reply to Smith by way of a written acceptance.

Don rented a small store from a landlord to carry on a business.Don stated that he was of legal age,18,to carry out the deal when,in fact,he was only 17 years old.After a short period of time Don realized that his business plans were not working out and it would be in his best interest to return to school.By this time,the landlord was wondering why he had not received a cheque for Don's rent.When he confronted Don about this,Don informed him of his plans.The landlord told Don he would have to pay for the time he occupied the premises.Don said that he would not pay,and the landlord could not force him to pay because he was not of legal age and was insolvent.Discuss this situation using your knowledge of the law governing age of majority.

The Big Book Store just received a shipment of 100 copies of Contemporary Business Law: Principles and Cases at a wholesale price.The store contacted the local university to see if it was interested in purchasing the book.The book store faxed an offer asking for $5,000.00 for the 100 books.Due to a poor-quality fax transmission the last three zeros were not visible,so it appeared that the 100 books were on sale for $500.The university accepted the offer,received the books,and deposited $500 in the store's bank account.Upon receiving its bank statement,the store realized the error and decided to take action against the university.Will it succeed?

Mr.Groves,a successful lawyer,is asked by his daughter's day care to do their legal work on a voluntary,unpaid basis and,since it is minimal,he agrees.As the result of an error he makes in drawing up the day care's standard employment contract,a mistake that would not have been made by the reasonable lawyer,the day care has to compensate an employee who was let go for failure to meet the job requirements.Since Mr.Groves received no consideration for his work,the day care cannot hold him liable for its loss.