Deck 6: Forming Contractual Relationships

Question 1

What common distinguishing characteristic may be attributed to both an option agreement and a counteroffer?

A) Both can result in a lawsuit for damages if deliberately rejected by the offeror.
B) Both are subject to revocation by the offeror prior to a lapse of a set period of time.
C) Both form a separate contract that may or may not lead to the acceptance of an offer.
D) Both serve to prohibit the lapse of an offer before a set time period has expired.

Answer 1

C

Question 2

On Tuesday,Jatelle offered to sell one of her racing motorcycles to Rofan for $8000.Rofan said he needed time to consider her offer.On Friday morning,Jatelle sent Rofan an e-mail message advising the offer was no longer open.Which of the following actions would allow Rofan to try to complete the purchase of her motorcycle?

A) present Jatelle with an offer to buy the motorcycle
B) revitalize the offer by communicating a counteroffer
C) immediately communicate a need for more time to Jatelle
D) immediately communicate the acceptance of Jatelle's offer

Answer 2

A

Question 3

Why are promises to keep offers open for particular periods of time normally unenforceable?

A) because consideration is given in return for the promise to keep the offer open
B) because offers are always revocable
C) because offerors are entitled to make multiple offers
D) because such promises are contrary to public policy

Answer 3

A

Question 4

Jedco Wholesalers Ltd.and BigGrocer Inc.have agreed that Jedco will supply BigGrocer with 400 kilos of watermelon when the crop is harvested.Rather than agree on a set price,they have agreed that the price of the watermelon will be based on the cost of the watermelon to Jedco plus 25 percent.Would this contract be enforceable in court?

A) Yes,because it is not necessary to set out final price in the contract as long as the price can be determined in some way,for example,by a formula.
B) No,because price is an essential term,and the parties have not clearly expressed the final price in their contract.
C) Yes,because parties have agreed to a formula that will produce a reasonable price.
D) No,because price must be decided at the time the contract is entered into and cannot be determined at a future date.

Question 5

Which of the following is NOT an example of an invitation to treat?

A) a newspaper advertisement
B) a display of goods in a retail store
C) a lost and found advertisement
D) an expression of interest to enter negotiations

Question 6

What principle of law was established in Dickinson v.Dodds [1876] 2 Ch.D.463 (C.A.)?

A) that advertisements are merely invitations to treat
B) that all parties must agree on price
C) that an offer can consist of a gratuitous promise
D) that firm offers can be revoked prior to their deadlines

Question 7

Madeline,a garment buyer,left Lance with her business card and a clear impression she was very interested in his line of fashion products.Which of the following is the element that would qualify Madeline's communication as an offer to treat?

A) Qualification is dependent upon the speaker's intention,subjectively assessed.
B) Lance has clearly advertised his products as available for purchase.
C) Qualification is dependent upon an objective assessment of the orator's intent.
D) Lance has relinquished his option by refusing to complete the transaction.

Question 8

In order to form the basis for a contract,an offer must satisfy what condition?

A) It must be in writing.
B) It must contain a request.
C) It must contain all essential terms.
D) It must state when the offer will expire.

Question 9

An offeror has specified the method of communication to be used by the offeree when accepting the offer.What principle would a court apply to determine whether acceptance had been perfected?

A) The offer must have been made using the same method of communication.
B) The offer cannot be accepted by another method of communication.
C) Acceptance by a specified method of communication must be reasonable.
D) Acceptance by other means is effective when received by the offeror.

Question 10

A consumer conducting business with a bank must accept the standard set of terms expressed in the loan agreement,even though those terms are non-negotiable and typically favour the bank.Why would a modern-day court most likely continue to uphold these contractual "take it or leave it" arrangements?

A) the law expects a bank to show goodwill toward its customers
B) the agreement does not require further elaboration or clarification
C) the law expects people to take care of themselves
D) consumers accept the bank's unconditional offer

Question 11

Albert's mother signed a three-month listing agreement with a real estate agent.Prior to considering or accepting either of two below-listing-price offers the agent brought to Albert's mother,she suffered a fatal stroke.What would a judge likely decide if the agent and/or the offerees attempt to legally force the mother's estate to accept one of the offers?

A) that someone who makes an offer and then dies would not be bound
B) that the death increased the chance of one of the offers being accepted
C) that the deceased party cannot personally perform,hence her offer also died
D) that the estate is obligated to complete the sale by accepting one of the offers

Question 12

What is the difference between the communication of an invitation to treat and the communication of an offer to enter into a contract?

A) An offer to enter into a contract is an expression of a willingness to do business.
B) An offer to enter into a contract seeks to facilitate commercial profitability.
C) An invitation to treat expresses an inclination to form a business relationship.
D) An invitation to treat is a promise to perform specified acts on certain terms.

Question 13

Mariam offered to sell her horse to Shia for $5000,but Shia counter-offered with a price of $4500.Mariam rejected Shia's counter-offer.What is the effect of Shia's counter-offer on Mariam's original offer?

A) Mariam's original offer is still available for acceptance until Mariam specifically revokes it.
B) The original offer is no longer available because it has lapsed.
C) Mariam's original offer is no longer available for acceptance because Shia's counter-offer is a rejection of the original offer.
D) Mariam's original offer is still available because she has not replaced it with a new offer.

Question 14

Thomas gave Jerron his final sales pitch,offering 10 percent off the list price,60 days for payment,a delivery date,and delivery terms.What has happened so far at this point in the negotiation process?

A) A consensus on the parties' rights and obligations has been reached.
B) A consensus on the terms of the offer between parties was reached.
C) A complete offer has been extended that is now open to acceptance.
D) There has been a mutual expression of willingness to do business.

Question 15

Yesterday,Farrah offered to sell her car to Ravi for $3000.Today,she changed her mind and no longer wishes to sell the car,and has left a phone message for Ravi advising that the car is no longer for sale.Can Ravi still accept Farrah's offer?

A) No,because Farrah has changed her mind and cannot be forced to sell her car.
B) Yes,provided Ravi is unaware that Farrah has revoked her offer.
C) No,provided Farrah has left him a phone message before he communicated his acceptance.
D) Yes,because Farrah's revocation is ineffective unless it is communicated in writing.

Question 16

What distinguishes the lapse of an offer from the rejection of an offer?

A) An option agreement cannot lapse,but it may be rejected.
B) Acceptance of an offer will be subject to rejection.
C) A lapse requires a communication of deliberate intent by the offeree.
D) Acceptance has not occurred when an offer lapses.

Question 17

What is the meant by the statement that an offer "has lapsed"?

A) that the time for acceptance by the offeror has passed
B) that the offer must be available for acceptance
C) that the offeror has lost the capacity to fulfill the contract
D) that the rejection of the offer has occurred

Question 18

On April 2,Tundra Outfitters Ltd.received an offer to purchase from Lakeview Resorts Inc.Lakeview sought 35 canoes for a May 30 delivery,at $300 per canoe.The offer specified acceptance was to be by fax,received by 4:00 p.m.on April 5.Tundra did not reply.Why would a court consider that no agreement had come into existence?

A) The offer was rejected by the offeror.
B) The offeree took the offer off the table.
C) The offer was revoked prior to its acceptance.
D) The offer is missing because it is no longer alive.

Question 19

Raphael saw Fabco Electronics Inc.'s ad in a newspaper advertising that the store had new laser printers for sale for the price of $75.Unfortunately,the store was sold out by the time Raphael arrived at the store with $75,and he now wants to sue Fabco for breach of contract,claiming he accepted their offer by arriving at the store and tendering his payment of $75.Why will Raphael's breach of contract claim be unsuccessful?

A) because the store was not able to actually supply him with a printer
B) because the store's ad did not constitute an offer to Raphael
C) because the offer expired when the store ran out of printers
D) because the offer lapsed due to the passage of time

Question 20

Why is it important for the parties involved in contractual negotiations to know that an offer has been rejected?

A) The risk in rejecting an offer is that it may not be renewed.
B) A counteroffer is legally recognized as a form of rejection.
C) The distinction between rejection and counteroffer can be unclear.
D) The offer is automatically terminated upon rejection by the offeree.

Question 21

In his decision,Lord Wilberforce stated,"No universal rule can cover all such cases; they must be resolved by reference to the intention of the parties,by sound business practice and in some cases by a judgment of where the risks should lie...." What legal rule did Lord Wilberforce establish in his ruling on this case?

A) the postage rule
B) the postman rule
C) the postbox rule
D) the post office rule

Question 22

A cancer hospital asked its privately owned medical isotope source to arrange an earlier shipment of an urgent order.The private supplier confirmed an earlier shipment was possible for a 30 percent surcharge on the contractual price.Because the hospital's cancer patients needed the isotopes desperately,the hospital faxed a written acceptance of the varied terms.The hospital subsequently refused to pay the price increase.What would a New Brunswick court hearing the ensuing dispute be most likely to determine?

A) Contractual variation supported by pre-existing duties is enforceable.
B) Where there is consent to a gratuitous variation,it is enforceable.
C) Contractual variation was supported by consideration,and therefore the variation is enforceable.
D) Contractual variation unsupported by consideration is enforceable.

Question 23

Recent legislation in some provincial jurisdictions overrides the common law that governed the acceptance of a payment of a lesser amount in full satisfaction of a debt.What is the policy rationale for the legislation?

A) to allow debtors to pay by instalments over time
B) to promote the settlement of debts on a final basis
C) to allow creditors to increase the collection of debts
D) to promote a reduction in consumer debt

Question 24

Panda Industries agreed to supply 500 tons of steel rebar to ABC Builders for a price of $250 per ton.Shortly after the contract came into effect,the market price of rebar rose to $275 per ton.Fortunately,ABC Builders was agreeable to paying the hew higher price.Why might ABC Builder's promise to pay an additional $25 per ton be unenforceable?

A) the lack of sufficient consideration
B) the absence of fresh consideration
C) the lack of adequate consideration
D) the absence of formalization

Question 25

Amanda has agreed to attend Rebecca's home and provide her with biology tutoring for three hours per week for a flat fee of $50.What is the legal term for Rebecca's promise to pay Amanda $50 each week?

A) gratuitous promise
B) nominal fee
C) ratification
D) consideration

Question 26

Why would members of a family experience an uphill battle in a common law court with respect to the enforcement of contractual obligations owed to one another?

A) The law presumes promises between family members are non-contractual.
B) The law presumes all promises between family members are gratuitous.
C) The family members' intention to contract must be subjectively tested.
D) The family members must understand the legal consequences of a promise.

Question 27

Boyd wanted to buy a 1967 Mustang car and promised he would pay $10 000 to the first person who presented him with such a vehicle.Jai was the first individual to deliver such a car to Boyd.What form of contract exists between Boyd and Jai?

A) a bilateral contract
B) a unilateral contract
C) a unilingual contract
D) a multilateral contract

Question 28

What is the modern-day rationale for enforcing a gratuitous promise if the promisor has placed a seal beside his or her signature?

A) The presence of the seal protects against forgery.
B) The application of the seal suggests serious intent to be legally bound.
C) The presence of the seal suggests a "firm offer" is being made.
D) The seal serves to verify the identity of the parties.

Question 29

Which of the following is a rebuttable presumption that is applied in contract law situations?

A) In the marketplace,the parties intend to contract.
B) All promises are legally binding.
C) It is presumed that the parties to a contract have agreed on all essential terms.
D) Consideration between the parties is sufficient.

Question 30

What is the legal effect of placing a seal on a contract?

A) The party applying the seal is "estopped" from breaching the contract.
B) The promise in the contract will be enforceable even if it is gratuitous.
C) The application of a seal is ceremonial and has no legal implications.
D) The seal replaces the party's name in the contract.

Question 31

What is the proper method of leading contrary evidence to challenge a legal presumption favouring one party?

A) a rebuttable presumption of the parties' intent to contract
B) the doctrine of rebuttable inference of refusal to contract
C) the doctrine of rebuttable assumption of pre-existing condition
D) a rebuttable promise for which no consideration is given

Question 32

In what ways are the use of seals and the doctrine of promissory estoppel similar?

A) Both are ways to create contracts.
B) Both may render a gratuitous promise enforceable.
C) Both may be arbitrarily revoked.
D) Both are exceptions to the rule that offers lapse after a reasonable period of time.

Question 33

Consideration must always flow from one party in a contract to the other party.

Question 34

Caroline agreed to purchase organic hemp fabric from an Ontario manufacturer.While making an inquiry to purchase organic dyes from a Manitoba producer,she learned they offered a superior organic hemp fabric at a much lower price than the Ontario manufacturer.Knowledge of what legal principle would immediately let Caroline know she made a costly error?

A) Parties must be informed as to the adequacy of price,as it is usually not open to challenge.
B) The consideration to be given for each party's duties is the other party's duties.
C) Parties must pay the price for a promise before they can sue when it is broken.
D) The traditional perspective that alteration of a pre-existing duty is enforceable.

Question 35

What is the meaning of the statement "Promissory estoppel may be used as a shield and not as a sword" with respect to the classical application of the common law doctrine of promissory estoppel?

A) The doctrine is unavailable as a defence in a lawsuit.
B) The doctrine is unavailable as the basis for a lawsuit.
C) The doctrine is unavailable to a person who has made a promise.
D) The doctrine is unavailable to a person who has broken a promise.

Question 36

What key ingredient must be present in order to distinguish a legally enforceable promise from one that is legally unenforceable?

A) acceptance
B) formalization
C) consideration
D) revocation

Question 37

In what way are promises between family members treated differently than promises between other parties?

A) Contracts between family members are prohibited.
B) Family members cannot sue one another for breach of contract.
C) Promises between family members are always treated as gratuitous promises.
D) The law presumes promises between family members are non-contractual.

Question 38

What element must be present to enable an innocent party to commence a lawsuit when a promise is broken?

A) The innocent party must agree to a "price" for the defendant's promise.
B) The work must be performed.
C) The consideration must be adequate.
D) The promise must be accepted.

Question 39

Gandrel received an offer to purchase on his home.The offer provided for the payment of the asking price but required Gandrel's new appliances and riding lawnmower to be included in the purchase price.Does Gandrel's offer to sell his home still have legal substance?

A) Yes,the original offer could be conditionally accepted.
B) No,the lapse of time automatically terminates the original offer.
C) Yes,it forms the basis of the purchaser's counter-offer.
D) No,a counteroffer is a terminal rejection of an original offer.

Question 40

Under what circumstances would a judge who is determining a remedy to a commercial dispute consider that a contract does not exist even though all of the required elements of reaching an agreement are present?

A) A phrase indicates the agreement is subject to formal contract.
B) A contract lacks sufficient consideration for both parties.
C) A contract lacks adequate consideration for both parties.
D) A phrase indicates the agreement is subject to its exact wording.

Question 41

A firm offer differs from an offer because cannot be revoked.

Question 42

The adequacy of consideration is not normally open to challenge.

Question 43

Contracts between family members are just as binding and enforceable as contracts in the marketplace.

Question 44

An advertisement in a newspaper will never be considered to constitute an offer.

Question 45

Firm offers can be revoked prior to their deadlines by the formation of an option agreement,whereby the offeror pays the offeree to keep the offer open for a specified time.

Question 46

The postbox rule prohibits the formation of contracts through the mail.

Question 47

An option agreement is viewed by the courts as a gratuitous promise.

Question 48

Before a contract can take place,the parties must have reached a consensus as to their respective rights and obligations.

Question 49

A gratuitous promise is never enforceable.

Question 50

Vague commitments involving commercial exchange between parties are invitations to treat because of the lack of specification of the terms or scope of the proposed arrangement.

Question 51

Contracts that contain unreasonable terms are unenforceable.

Question 52

Standard form contracts are used to ensure that contract terms are fair to both parties.

Question 53

Once made,an offer cannot be revoked.

Question 54

The concept that a contract is formed only when a complete offer is unconditionally accepted by the other side forms a fundamental rule in codified law.

Question 55

Canada's new CASL law (anti-spamming legislation)makes it illegal to send an electronic commercial message without the prior actual or implied consent of the recipient.

Question 56

Because a court infers an intention to contract,it will also speculate on what the parties would have agreed had they fully completed their negotiations.

Question 57

An offeree may revoke an offer any time prior to acceptance by merely notifying the offeror of its withdrawal.

Question 58

Use of a seal in a written contract acts as a substitute for the requirement of consideration.

Question 59

An offer is a conditional promise.

Question 60

An offer to sell one's house for a "reasonable price" is capable of forming the basis of a contract.

Question 61

Identify and briefly describe six ways that an offer can be terminated.

Question 62

Provide a legal analysis of a typical retail transaction,discussing offer,acceptance,consideration,and intention.

Question 63

While contract law normally requires that the parties provide consideration in order to render an agreement enforceable,the law is less concerned about the adequacy of the consideration provided by each party.What is the rationale for each of these seemingly conflicting principles?

Question 64

Explain the difference between offer and invitation to treat.Give an example of each.

Question 65

How do the courts get around the basic rule that a gratuitous promise is not enforceable if they feel that not enforcing such a promise would be unfair? Identify and briefly describe the requirements for this "get around."

Question 66

Identify and briefly describe what element is recognized as forming the basis of a contract in common law.Include a brief explanation of what is meant by the legal requirement of certainty of offer and identify and briefly described the circumstances under which a court would endeavour to resolve ambiguities in an alleged offer.

Question 67

An offer without a stated deadline will automatically expire after a "reasonable period of time."

Question 68

An offer is automatically terminated when it is rejected by an offeror.

Question 69

Where an agreement reached through offer and acceptance contains the phrase "this agreement is subject to formal contract," the agreement itself is unenforceable unless and until the formal contract comes into existence.

Question 70

Revocation may be communicated through a reliable third-party source.

Question 71

Briefly describe the options available to a party to a contract who wishes to avoid problems related to cost increases.

Question 72

Identify and briefly define the events that will cause an offer to be taken off the table.

Question 73

Identify the source of a competing analysis of the traditional common law view of unenforceability of a gratuitous promise.Provide a brief explanation of the competing analysis and explain the goal it was meant to achieve.

Question 74

How does the common law treat partial payment of a debt in lieu of full payment,and what might a debtor do in response to the common law?