Deck 5: Formation of a Contract: Offer and Acceptance

Question 1

Jack is speaking to Michael and Michael happens to mention that he will be painting his home soon.Jack,who is in some financial difficulty,decides to paint Michael's home in the hope that Michael will pay for the service.One weekend,when Michael is away,Jack paints the whole house.He believes that he is entitled to approximately $1500.When Michael returns,Jack approaches him and asks for $1500.Which of the following is true?

A)Jack,by painting the home,makes an offer that Michael is free to accept or reject.
B)When Michael mentions the need to paint his home to Jack,he indirectly makes an offer that Jack accepts by painting the home.
C)Michael has benefited from the painted home and so he is obliged to pay for it.
D)Michael is not obliged to pay for the work done because he was never made any offer.
E)Jack's conduct is an invitation to do business that has not been accepted by Michael and so Michael is not obliged to pay him.

Answer 1

D

Question 2

A standing offer is

A)one that may be accepted from time to time as needed.
B)one that can be revoked even after acceptance.
C)an offer that is made and withdrawn before it is accepted.
D)one that is said to stand because it is fixed and cannot be changed.
E)one that cannot be revoked after acceptance without the consent of the offeree.

Answer 2

A

Question 3

Joe finds a dog wandering in his yard and he lets it into the house.A day later he sees an advert on a tree stating that the owner of the dog will pay $100 to anyone who finds and returns the dog to the local SPCA office.Joe takes the dog to the local SPCA office.Which of the following is true?

A)Joe did not communicate his acceptance of the offer to the SPCA and so no contract arose.
B)The kind of advert that is placed on the tree cannot give rise to a contract.
C)When Joe takes the dog to the SPCA,he makes the offer and if the SPCA accepts the offer,they are obliged to pay him.
D)The advert on the tree is an invitation to do business and cannot give rise to a contract.
E)Joe will be entitled to the reward because his performance of the obligation in response to the offer is all that is needed in a unilateral contract.

Answer 3

E

Question 4

An offer is

A)a gift.
B)an agreement to give something to another party.
C)a donation.
D)a tentative promise made by one party,subject to a condition or containing a request to the other party.
E)a gesture made by one party to another to make a donation.

Question 5

Which of the following is true? An invitation to do business

A)is a legally binding promise.
B)is a commitment to enter into a contract upon acceptance.
C)is a kind of offer.
D)is not an offer.
E)is an offer.

Question 6

When an offer is not accepted,it will

A)lapse.
B)no longer be an offer.
C)terminate.
D)end.
E)be void.

Question 7

Joe sees a dog wandering around his yard.He lets the dog in.Later he learns that the dog belongs to Mary,a woman who lives a kilometre away.Joe returns the dog to her the next day.A few days later as Joe is riding his bike,he sees an old advert in which Mary offers to pay $100 to any person who will find and return her dog.Joe realizes that he should have claimed the reward at the time that he returned the dog to Mary,and he decides to go to Mary's place.Which of the following is true?

A)Joe will be entitled to the reward because he found the dog and returned it.
B)Joe will not be entitled to the reward because Mary made no offer.
C)Joe will not be entitled to the reward because he did not see the offer of the reward until he had returned the dog and so he did not act in response to the offer of Mary.
D)Mary's advert is an invitation to do business and cannot give rise to a contract.
E)Joe will be entitled to the reward because Mary made an offer and his act of finding and returning the dog is an acceptance.

Question 8

On October 1,Allan mailed an offer to Bob to sell to Bob 1000 boxes of tin plates at a fixed price.The offer was received by Bob on October 11,and Bob immediately accepted the offer by telegram on October 11 and confirmed by letter on October 15.On October 8,Allan mailed a revocation of his offer,which was received by Bob on October 20.In this situation

A)Allan's revocation is really a counter-offer.
B)Allan has no right to try to revoke his offer.
C)Allan's revocation comes too late and there is a contract between Allan and Bob.
D)Allan's revocation of his offer is proper and effective to prevent a contract between Allan and Bob.
E)none of the above

Question 9

Mary goes into a store in which she sees a SALE sign.While she is looking round,she notices that a sign that says 50 percent off has been placed against a pair of knee-high boots.She takes the pair of boots to the cashier.The cashier refuses to sell the boot at the 50 percent discount.Which of the following is true?

A)The cashier is in breach of contract.
B)Mary is not entitled to a 50 percent discount because the sign was not an offer.
C)The conduct of the store amounts to false advertising and Mary will be entitled to the 50 percent discount.
D)Mary is entitled to a 50 percent discount because that boots were advertized as being sold at a discount of 50 percent.
E)The store is in breach of contract.

Question 10

Use this fact situation to answer the related questions that follow: Alexander enters a grocery store to purchase some tea.He walks through the aisles until he finds the aisle he wants with the different kinds of tea displayed on the shelves.He finds the tea that he wants and then goes to the cashier,who scans the tea and tells Alexander the price,which Alexander then pays.The cashier then hands the tea to Alexander,who leaves the store.
In this situation,the tea on the store shelves is

A)an offer.
B)a contract.
C)a promise to sell.
D)an invitation to treat.
E)all of the above

Question 11

Deep Check
On June 10,A delivered to B a written offer to sell his (A's)property to B for $6000.00.The offer stated that it would be open for acceptance until 9
A)A's offer must remain open until 9
A)m.on June 12.On June 11,B heard that A was agreeing to sell or had sold his property to C.On the evening of June 11,B delivered an acceptance of A's offer to the place where A was staying and on the following morning personally delivered his acceptance to A,who declined the acceptance stating,"You are too late." In this situation

A)m.on June 12th.
B)B's acceptance of A's offer is a valid acceptance.
C)because B did not give A the money,there is no acceptance.

Question 12

On June 1 George goes to Harry's fruit store,and while he is there,Harry offers to sell George 100 bushels of grapes that have just been delivered to his store for $20.00 per bushel.Harry also tells George that he should not wait too long to accept Harry's offer,because the best time to sell grapes is within three to four days of delivery.George simply says,"Let me think about it and I'll get back to you before the end of the day." However,George does not return that day; instead,he comes back seven days later to tell Harry that he accepts the offer.Harry replies,"You're much too late,I sold the grapes to Mr.Smith on June 5." In this situation

A)George's statement "Let me think about it and I'll get back to you before the end of the day" is a counter-offer.
B)Harry's offer has lapsed given the perishable nature of the grapes.
C)Harry was wrong in selling the grapes to Mr.Smith.
D)Harry must keep his offer open until George accepts it.
E)Harry's offer has been withdrawn.

Question 13

Revocation takes effect

A)when an offeror contracts with someone other than the offeree.
B)when sent.
C)when the offeror becomes bankrupt.
D)when received.
E)none of the above

Question 14

Use the fact situation in Q3 to answer the related question that follows: In the above fact situation,acceptance occurs

A)when the cashier takes Alexander's money and hands the tea to Alexander.
B)when Alexander takes the tea off the shelf.
C)when Alexander takes the tea home.
D)when Alexander hands the money to the cashier.
E)when the cashier says goodbye to Alexander.

Question 15

Use the fact situation in Q3 to answer the related question that follows: In the above fact situation,an offer occurs

A)when Alexander takes the tea home.
B)when the cashier tells Alexander the price of the tea.
C)when Alexander hands the money to the cashier.
D)when Alexander sees the price beside the teas on the shelves.
E)when Alexander takes the tea off the shelf.

Question 16

An acceptance of an offer must be

A)made slowly.
B)loud and clear.
C)by conduct only.
D)positive.
E)in writing only.

Question 17

An offer is made by an ________ to an ________.

A)inviter; invitee
B)offeror; offeree
C)initiator; offeree
D)initiator; receiver
E)offeror; invitee

Question 18

A offers to sell his car to B for $6000.00.However,B replies,"I will not buy it at that price," and walks away,never to be heard from again.In this situation,B's reply constitutes

A)a lapse of A's offer.
B)a rejection of A's offer.
C)a revocation of A's offer.
D)a counter-offer.
E)none of the above

Question 19

Jack tells Mike,"I'd like to buy your boat for $100 000." Mike,in response,says,"That's too cheap.I'll sell you my boat for $150 000." Mike's statement is a ________ and a ________.

A)refusal; new offer
B)rejection; new offer
C)refusal; rejection
D)rejection; counter-offer
E)rejection; valid offer

Question 20

An offer may be revoked before it is accepted.To be valid,a revocation must be

A)promised.
B)communicated to the offeree before acceptance.
C)subject to a condition.
D)loud and clear.
E)exclusive.

Question 21

Jill tells Jack that she will pay $1000 for his pail of water.If he accepts this kind of agreement,it is

A)a standing offer.
B)a multilateral contract.
C)a bilateral contract.
D)a unilateral contract.
E)a collateral contract.

Question 22

On January 1,A offers to sell his property to B for $175 000.00 and gives B an option to purchase the property until July 1.The option reads: "The said option shall be exercisable by notice in writing to the seller at any time within 6 months from the date of the option." B mails his acceptance to A on February 12,but the letter never reaches A.In this situation,

A)B's acceptance by mail is not in accordance with the option and there is no contract between A and B.
B)since the option states that it is exercisable by notice in writing to the seller,mailing the acceptance is deemed to be notice to the seller.
C)since the option states that it is exercisable by notice in writing to the seller,and since the acceptance never came to the seller,B's acceptance by mail is not acceptance at all.
D)B's acceptance of the option by mail is a proper acceptance,creating a contract between A and B.
E)none of the above

Question 23

When the offeror specifically states in the contract that acceptance can be given by performing an act,direct verbal communication of acceptance is not needed to make the contract binding.

Question 24

An offer must be communicated to the offeree.

Question 25

Mary places a notice in a local variety store.The notice reads as follows: "I shall pay $1000 for the return of my dog,Mundo." Jim sees the notice.Jim finds the dog and returns it to her.Which of the following is true?

A)Mary can refuse to pay Jim because Jim did not communicate his acceptance of the offer to Mary,and an acceptance must be communicated to the offeree.
B)The notice is an invitation to treat and could not give rise to a contract.
C)Mary makes a counteroffer.
D)Mary is obliged to pay Jim because by finding the dog,he accepted the contract and no notification was needed.
E)When Jim finds the dog,he makes the offer and it is up to Mary to determine whether she wishes to accept the offer.Mary is thus entitled to reject the offer.

Question 26

An acceptance must always be communicated to the offeror for a valid contract to arise.

Question 27

A offers in writing to sell his truck to B for $8000.00.The offer goes on to state that acceptance must be hand-delivered in writing to A.However,B decides to send A a fax in which he accepts A's offer.In this case,

A)A must sell his truck to B.
B)as far as B is concerned,the only important part of A's offer is B's acceptance in any form.
C)the failure of B to accept the offer by fax causes A's offer to lapse.
D)B's fax is a proper acceptance of A's offer.
E)B's fax is not a proper acceptance of A's offer.

Question 28

An invitation to do business is a commitment to enter into a contract upon acceptance.

Question 29

Silence can be a sufficient method of acceptance

A)when the contract is a bilateral contract.
B)if the parties to a contract have habitually used this method to communicate assent.
C)when the offeror leaves the jurisdiction after making the offer.
D)when the contract is a unilateral contract.
E)when the offeree forgot to communicate its acceptance.

Question 30

Within a standard form contract there always exists the ability to bargain the terms of the contract.

Question 31

We study business contract law in order to

A)know the consequences of breaking one's obligation.
B)understand and bargain for contractual obligations.
C)resolve commercial disputes.
D)understand legislation that pertains to business.
E)know when a binding contract is entered into.

Question 32

Margaret finds a stray cat and takes it in.The following day she is speaking to some friends and learns that Kelly,a woman who lives some distance away,has lost a cat.She goes around to the home of Kelly,leaves the cat in the yard and leaves a note for Kelly.The next day she gets a voice mail message from Kelly thanking her.A few days later Margaret sees a notice in which Kelly offers to pay $500 to anyone who returns her cat.Margaret,who needs some cash,returns to Kelly's home and demands the $500 reward.Which of the following is true?

A)Kelly's notice is an invitation to treat.
B)Because Margaret did not demand the $500 when she returned the cat,she cannot go back and request it.The offer has lapsed.
C)By returning the cat,Margaret performed the contract and so has to be paid.Margaret's performance gives rise to a unilateral contract.
D)Kelly and Margaret have a bilateral contract.
E)Margaret did not know of the offer before she returned the cat.So she could not have been accepting the offer when she returned the cat.No contract arose.There is thus no obligation on Kelly to pay the $500.

Question 33

When an offeror invites acceptance by mail,it is possible for the offeror to state in the offer that the offer will only become a contract once acceptance is actually received by the offeror.That is,the postal rule does not apply even though an invitation to acceptance by mail was given.

Question 34

When communication between parties is by fax,the place where a contract is formed is

A)where the offeror resides.
B)where the offeree receives the offer.
C)where the subject matter is located.
D)where the offeror receives the acceptance.
E)where the offeree resides.

Question 35

Where is a contract said to be formed?

A)at the place where the offer is made
B)at the place where the acceptance is dropped into a mailbox
C)at the place where the offer is revoked
D)at the place where the parties do business
E)at the place when the acceptance becomes effective

Question 36

An offer will lapse only if the offeree has had a reasonable time to accept.

Question 37

When an offer is proposed to an interested party,the mode of acceptance does not matter even if a preferred method of communication is stipulated within the offer.

Question 38

Goods displayed on shelves in a store constitute an offer.

Question 39

John and Edward are negotiating the sale and purchase of one of John's very expensive paintings.In the course of the negotiations,John says,"I'll sell it to you for $20 000.00,to which Edward replies,"That is a little too much for me; I'll give you $14 500.00." John thinks about this for a moment and says,"No,but I'll take $17 500.00.Edward says,"That is still too much; I'll buy it for $15 500.00.John looks at the painting and replies,"You know it is worth more than that.Why don't you give me $16 500.00 and we'll call it a day." Edward responds with,"I only have $16 000.00 so that is all I will pay for it," to which John replies,"Done." In this case,

A)the contract is for $16 500.00.
B)the contract is for $17 500.00.
C)the contract is for $14 500.00.
D)there is no contract at all.
E)the contract is for $16 000.00.

Question 40

Like acceptance,revocation of an offer by mail is valid and binding once the letter of revocation is placed in the mailbox.

Question 41

What is a unilateral contract?

Question 42

All contracts begin with a promise,but not all promises become contracts.Explain.

Question 43

What is a negative option?

Question 44

What is a counter-offer? What effect does a counter-offer have on an offer?

Question 45

A counter-offer by its very nature contains a rejection of the offer.Explain.

Question 46

Explain how an Internet contract is formed.

Question 47

Explain how a bilateral contract differs from a unilateral contract.

Question 48

What is the legal effect of a counter-offer?

Question 49

Explain why a newspaper advertisement by a merchandising company is not a binding and enforceable contract.

Question 50

Explain the theory behind lapse as a way of preventing the formation of a contract.

Question 51

Why should you not make an agreement to sell your car to a purchaser "for a fair price"?

Question 52

Not all offers must be communicated to the offeror for a valid contract to arise.Explain.

Question 53

Explain the difference between an invitation to do business and an offer.

Question 54

Explain how the rule concerning withdrawal of an offer by post differs from that concerning the time of acceptance by post.