Deck 7: The Nature and Creation of Contracts

Question 1

An offer can be revoked

A) if it was made under seal.
B) if it is contained in an option.
C) within a reasonable time of acceptance.
D) if it was a firm offer.
E) as long as the offeror communicates that intention to a judge.

Answer 1

D

Question 2

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?

A) This situation involves a meeting of the minds.
B) This situation creates a bilateral contract.
C) Both letters respond to an offer.
D) Each letter contains an offer, but neither contains an acceptance.
E) This situation is described as a "cross- acceptance."

Answer 2

D

Question 3

Which of the following statements is TRUE?

A) As master of the offer, the offeree can require acceptance to be made in writing.
B) An offeree can generally communicate a revocation in the same way that it communicated its offer.
C) An offer that appeared in a newspaper can only be terminated by a revocation that appears in the same newspaper.
D) A firm offer can only be revoked in writing.
E) none of the above

Answer 3

E

Question 4

Layton Fine Fashions had a shipment of orange ties that it wished to sell. It therefore placed an advertisement, on Monday, in the town newspaper that said, "Fine silk orange ties. The season's hottest fashion trend. This week only - Come to Layton Fine Fashions and we guarantee that you'll pay no more than $35." The advertisement was such a success that the ties were almost entirely sold out within two days. Which of the following statements is TRUE?

A) Layton's offer will be revoked if it places a notice in the same newspaper that says "Sorry, gentlemen - the orange silk ties are all sold out," even if some disappointed customers failed to read that notice before they came to the store.
B) because of the wording of the advertisement, the offer must be held open for one week, and Layton will be held liable to every potential customer who unsuccessfully tries to purchase one of the ties
C) The situation probably is governed by the special rules that apply to tenders.
D) Layton has nothing to worry about because a court certainly would find that the advertisement was an invitation to treat rather than an offer.
E) The advertisement can be properly classified as an option.

Question 5

Eric bought a house for $150 000. He paid $25 000 immediately and promised the seller that he would pay the remainder in monthly instalments over the next ten years. Eric then told his daughter, Naomi, that he would give the house to her if and when she paid all of the monthly payments. Naomi was reluctant to commit herself to that arrangement because she was not sure if she would always have enough money to make the payments. Eric said to her, "Well, let's see how it goes." Naomi made the monthly payments for six years. Unfortunately, she and her father then began to fight. At that point, he told her that the deal was off. Eric has offered to repay Naomi for all of the payments that she had made, but he insists that the house will always belong to him. The market value of the house has recently and unexpectedly increased from $150 000 to $400 000. Which of the following statements is most likely TRUE?

A) Eric and Naomi never had a contract because they never had an intention to create legal relations.
B) Since the parties created a unilateral contract, Naomi still has an obligation to make the monthly payments.
C) Eric and Naomi never had a contract because he revoked his offer before she completed making the payments.
D) Eric is required to give Naomi an opportunity to finish completing the payments, and if she does so, she is entitled to the house.
E) A court would not recognize a contract because no reasonable person would ever offer to sell a $400 000 house for less than half that amount.

Question 6

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 statement is the town most likely to make?

A) an option
B) an irrevocable bid
C) a request for invitations to treat
D) a call for tenders
E) a tender

Question 7

A bilateral contract

A) always imposes obligations on only one party.
B) does not require a meeting of the minds.
C) can occur as a result of a tendering process.
D) always starts with an invitation to treat.
E) must always be accepted through spoken words, rather than through conduct.

Question 8

Rabby Inc is an oil exploration company that wants a sophisticated piece of equipment to be designed for its operations in northern Alberta. It therefore wants to receive bids from various engineering companies. In the context of a normal tendering process, which of the following statements is TRUE?

A) The tendering process requires the parties to satisfy a number of statutory requirements.
B) Rabby Inc will provide an offer to enter into a fair bidding process, issue an invitation to treat offers for the design contract, and accept one engineering company's offer to design the equipment.
C) The law will recognize Contract B in order to protect the Rabby Inc while it evaluates the bids that it has received.
D) Each engineering company that participates will issue an invitation to treat, an offer, and an acceptance.
E) An engineering company should carefully check its cost calculations before submitting its bid because that bid will be turned into Contract A if Rabby Inc accepts it.

Question 9

Cindy calls Davin to accept his offer to trim her hedges in exchange for a haircut. Cindy is described as the

A) proposer.
B) contracting party.
C) offeree.
D) invitee.
E) offeror.

Question 10

Wessam offers to sell Ivan a bicycle for $100. Ivan asks to think about it for a couple days. The next day, Wessam tells him that she has increased the price to $150. Wessam has

A) made a counter offer.
B) allowed a reasonable time to lapse.
C) lost her capacity to enter into a contract.
D) revoked her original offer.
E) rejected the offer.

Question 11

Hiram Brody worked as a research assistant for Rheem Shareef, who was one of his professors. Rheem regularly asked Hiram to proofread documents that she had written. Hiram therefore was not especially excited when he was asked to proofread a research proposal that Rheem had drafted in connection with a major project for which she had recently received generous funding from the government . He did, however, become very excited when he read paragraph 14 of the document: "I will offer Hiram Brody the position of joint- investigator. That position will require him to both resign from his present post as my research assistant and take a leave of absence from his current studies. Given the nature of the project and given his outstanding qualifications, Hiram will be paid $8000 per month for a period of eighteen months." After Hiram hurriedly finished proofreading the document, he unsuccessfully tried to contact Rheem to talk about his new position. He learned, however, that she had left town, on very short notice, to be with a sick relative who lived outside of Canada. He then wrote a letter to the Chair of his University Department in which he both resigned as Rheem's research assistant and took a two- year leave of absence from school. He also left a message on Rheem's telephone answering machine in which he said, "I accept. I can't wait to begin working as your joint- investigator." Hiram consequently was very angry when Rheem said, after she had returned from abroad, that she had changed her mind and had hired another person to serve as her joint- investigator. Hiram insists that she cannot do so because he had already accepted her offer. A court, however, would say that Hiram could not create a contract by leaving a telephone message for Rheem because

A) the document contained an invitation to treat, rather than an offer.
B) he was already contractually required to work for her as a research assistant.
C) it is impossible to accept an offer while the offeror is outside of the country.
D) she had given the document to Hiram as a proofreading assignment, rather than as a contractual offer.
E) she had communicated her offer to him in writing.

Question 12

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

A) If the market value of the shares immediately dropped to $5 each and stayed there throughout the option period, Simon would be obligated to buy 5000 shares from Melinda at double their actual value.
B) Simon will be entitled to enforce the option only if Melinda cannot find any other potential buyers.
C) If the market value of the shares immediately increased to $20 each and stayed there throughout the option period, Melinda might be obligated to sell 5000 shares to Simon at half of their market value.
D) The option would create enforceable obligations only if and when Simon agreed to buy the shares.
E) If the market value of the shares immediately increased to $20 each, Melinda could revoke her offer to sell the shares any time before Simon accepted it.

Question 13

Jose and Mei entered into what appeared to be a contract for the sale of an antique automobile. Jose agreed to pay the purchase price and Mei agreed to deliver the car to Jose's garage. Secretly, however, Mei planned to keep the car for herself. Will a court enforce the agreement?

A) A court will not enforce the agreement because Mei expected to keep the automobile and contract law tries to protect reasonable expectations.
B) A court will not enforce the agreement because the existence of Mei's secret plan meant that the parties did not really agree to the same thing.
C) A court will not enforce the agreement because business people must be able to rely on outward appearances.
D) A court will enforce the agreement because Mei behaved badly and the court wants to punish that type of behaviour.
E) A court will enforce the agreement because a reasonable person would have believed that the parties entered into a contract.

Question 14

Which of the following statements is TRUE?

A) The courts recognize a difference between an offeree's inquiry and a counter offer.
B) An invitation to treat indicates that the offeree is willing to receive an acceptance.
C) An invitation to treat indicates that the offeror is willing to receive an acceptance.
D) An offer is automatically terminated as soon as it is accepted by one person.
E) The courts use a subjective test to determine whether a statement is an offer or an invitation to treat.

Question 15

In early March, Mathilde offered to rent her cottage to Tom for the first two weeks of July at a cost of $1200. Mathilde did not impose any restrictions on acceptance. Tom did not yet know when his vacation was scheduled, so he did not immediately respond to Mathilde's offer. Tom learned at the end of June that he was entitled to vacation during the first two weeks of July. He therefore arrived at the cottage on July 1st and told Mathilde for the first time that he was accepting her offer. Which of the following statements is most likely TRUE?

A) Tom does not have the right to stay at the cottage because he let Mathilde's offer lapse.
B) Tom has the right to stay at the cottage because he accepted Mathilde's offer by silence.
C) Tom has the right to stay at the cottage because he accepted Mathilde's offer by conduct.
D) Tom has the right to stay at the cottage because Mathilde should have known, as a reasonable person, that he would want to do so.
E) Tom has the right to stay at the cottage because Mathilde gave a firm offer.

Question 16

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. This type of agreement is called

A) a conditional offer.
B) a firm offer.
C) an option.
D) a proposal.
E) a tender.

Question 17

An invitation to treat

A) can only occur within the context of a call for tenders.
B) is a part of most tenders.
C) always occurs in response to an offer.
D) is a type of offer.
E) constitutes a significant risk when it occurs in the context of sale negotiations.

Question 18

The phrase quid pro quo means

A) professional services.
B) something for something.
C) an intention to contract.
D) agreement on point.
E) a thing of value.

Question 19

ABC Inc and XYZ Ltd entered into a written agreement for the purchase and sale of paper products. That agreement contained a clause that said: "This arrangement is not entered into, nor is this memorandum written, as a formal or legal agreement, and shall not be subject to legal jurisdiction in the Law Courts." ABC Inc wants the paper products, but XYZ Ltd refuses to deliver them. Which of the following statements is most likely TRUE?

A) The agreement is legally enforceable because the clause in question is inconsistent with the rules of offer and acceptance.
B) The agreement is legally enforceable because the clause in question demonstrates that the parties had a meeting of the minds.
C) The agreement is legally unenforceable because the clause in question was an invitation to treat, rather than an offer.
D) The agreement is legally enforceable because it was written.
E) The agreement is legally unenforceable because the parties did not intend to create legal relations.

Question 20

Quality Kitchens Inc operates a store that sells kitchen utensils and gadgets. In an attempt to increase sales, the store ran an advertisement in a newspaper that featured Juicy Brand Blenders for $49.99. Martha rushed to the store with the intention of buying a blender. When she arrived however, she was told that while there were no such blenders in stock, the store did have several Swirl Brand Blenders to sell for $99.99 each. After a bit of investigation, Martha discovered that the store knew that it never had any Juicy Brand Blenders, and that it was simply hoping that shoppers would buy the Swirl Brand Blenders once they got inside the store. Which of the following statements is TRUE?

A) The advertisement contains an offer of a unilateral contract.
B) The store is legally obligated to sell a Juicy Brand Blender to Martha for $49.99.
C) The store is required to sell a Swirl Brand Blender to Martha for $49.99.
D) The store is guilty of a bait and switch.
E) Martha can force the store to acquire a Juicy Brand Blender and sell it to her for $49.99.

Question 21

"Contract law represents the pathology of commerce." Which of the following statements fully explains that quotation?

A) A business person should go to court every time that a commercial contract develops a problem.
B) Legal issues usually arise only if a commercial relationship becomes unhealthy.
C) Most of the problems that affect commercial contracts are unpredictable and unavoidable.
D) Since most contracts are performed without problems, there is no reason for business people to study the rules of contract.
E) Most contracts eventually develop problems that require a judge's help.

Question 22

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

A) tenders.
B) invitations to treat.
C) counter offers.
D) insanity.
E) unilateral contracts.

Question 23

Which of the following statements is TRUE?

A) Neither party can revive an offer once a counter offer has been made.
B) The death or insanity of either the offeror or the offeree will always prevent acceptance.
C) There cannot be a "meeting of the minds" if the offeror accepts the offeree's counter offer.
D) An option will never come to an end by the mere lapse of time.
E) A firm offer can be accepted any time before it is terminated.

Question 24

Henrique posts a notice at the racetrack that says he is willing to sell his old horse for $5000. When he returns to the track the next day two people arrive at the same time to buy the horse. A court would most likely say that Henrique

A) must choose between the buyers and sell the horse for $5000 to one of them.
B) can accept the offer of both buyers.
C) must sell the horse to one buyer and find another horse to sell to the other buyer.
D) can keep the horse and refuse to sell to either person.
E) must sell the horse to one buyer and pay $5000 to the other buyer.

Question 25

A firm offer is

A) always supported by consideration.
B) freely revokable.
C) always found, among other times, in a tender situation.
D) the same thing as an option.
E) always placed under seal.

Question 26

The phrase consensus ad idem means

A) less than the value of that.
B) one idea in two minds.
C) offer of agreement.
D) value for the agreement.
E) agreement on that previously mentioned.

Question 27

As Bennie entered The Big Table restaurant, he noticed a sign that said "All- U- Can- Eat - At Our Reasonable Price." Because the restaurant was busy, and because the staff were all tied up with other customers, Bennie found a table for himself and then began eating from the self- serve buffet. After finishing his meal, he paid an appropriate amount to the cashier and left the building. Bennie had not spoken, or been spoken to, at any point. Which of the following statements is TRUE?

A) Assuming that the general rules apply, no contract was formed until Bennie paid for his meal.
B) If a court was required to decide how much Bennie had to pay for his meal, it would rely on the concept of quantum meruit.
C) because he ate without first receiving permission to do so from the restaurant, Bennie probably committed a crime
D) While he undoubtedly was required to pay for his meal, the lack of communication means that Bennie's obligation to pay could not have arisen in the law of contract.
E) The facts of this case provide a clear illustration of the concept of a unilateral contract.

Question 28

Morris posted a notice promising to pay a $50 reward to anyone who found his lost cat. Morris saw Edna, his neighbour, and drew her attention to the notice. She expressed sympathy, but said that she did not have time to help because she was rushing off to work. When she returned home early that afternoon, however, she went to Morris's house to tell him that she would look for the cat. Although he was not at home, she searched the area, found the animal and returned it to his house. Morris now refuses to pay Edna the $50. A court would most likely say that Edna can

A) demand payment because the offeree decides whether an offer has been open for a reasonable period.
B) do nothing because she rejected Morris's offer when she said she had to rush to work.
C) demand payment because a contract was created through her act of acceptance.
D) do nothing because she was required to communicate her acceptance in writing.
E) do nothing because Morris is entitled to revoke his offer at any time.

Question 29

Which of the following statements is TRUE?

A) An intention to create legal relations never exists in a family context.
B) The courts use a subjective test when determining whether or not there is an intention to create legal relations.
C) An intention to create legal relations always exists in a commercial context.
D) When dealing with the intention to create legal relations, courts apply presumptions that cannot be rebutted.
E) The existence of an intention to create legal relations is usually obvious.

Question 30

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. Which of the following statements is TRUE?

A) As a matter of law, the transaction with Hit- for- Six could not be an enforceable contract unless it was sufficiently evidenced in writing.
B) Depending upon the facts, a court might be persuaded that the delivery to Hit- for- Six was not made with an intention to create legal relations.
C) Even if it did not request the outfits, and even though it has not had any communication with Garfield, OSGS will be required to pay for the outfits unless it immediately sends them back to Garfield.
D) As a matter of law, Garfield could not have had an intention to create legal relations when he entered into the transaction with Imran because Imran is his son.
E) Neither transaction can be a contract unless money was exchanged for the balls and outfits.

Question 31

Which of the following statements best explains why the courts use an objective test to determine whether or not there is an intention to create legal relations?

A) The law of contracts is intended to protect reasonable expectations.
B) It would not be fair to recognize a contract unless both parties actually intended to be bound by that contract.
C) The courts are confident that people do not lie in court.
D) An objective test is used if a party is a company, while a subjective test is used if a party is a human being.
E) The reasonable person test is only useful for determining subjective intentions.

Question 32

By submitting a tender, a party normally

A) prevents the other party from revoking its bid.
B) accepts an offer to create a fair bidding process.
C) creates an invitation to treat.
D) creates an enforceable contract, called an option, to create another contract in the future.
E) accepts an offer to enter into a contract for services.

Question 33

In late April, Harper Corp placed an advertisement in a newspaper that said: "We cater parties. Up to 150 people for only $3000. No hidden fees or costs." The manager of Martin Inc telephoned Harper and left a voice message that said, "We are calling to place an order to have a party for 150 people on the first of June." The next day, the manager of Harper called Martin and explained that, due to a scheduling conflict, it could not stage a party on the first of June. Martin now says that a contract had been created and that Harper has breached that agreement. Which of the following statements is TRUE?

A) A contract was created between the parties as soon as Martin left its message on Harper's answering machine, regardless of when Harper listened to that message.
B) In classifying the nature and effect of Martin's telephone message, a judge would focus exclusively on the intention that Martin had at the time.
C) Because an advertisement is presumed to be an invitation to treat, Martin's telephone message probably was not a contractual acceptance.
D) If it did not actually have a scheduling conflict, Harper Corp would be obligated to satisfy Harper Inc's order.
E) Because a contract cannot be created between corporations, Harper Corp cannot be held liable to Martin Inc.

Question 34

The three elements needed to create most contracts are best described as

A) offer and acceptance, an invitation to treat, and communication of the offer.
B) an intention to create legal relations, an exchange of value, and consideration.
C) offer and acceptance, consideration, and a written agreement.
D) an intention to create legal relations, offer and acceptance, and consideration.
E) quid pro quo, volenti non fit injuria, and consensus ad idem.

Question 35

Regarding a battle of the forms, which one of the following does a court often consider when deciding which contractual form applies?

A) the existence of a duty of care in negligence
B) the usual practice in the industry
C) the parties' subjective intentions
D) the likelihood of future dealings between parties
E) the availability of insurance

Question 36

On March 1st, Janet, who lives in Edmonton, sent a letter to Tad, who lives in Toronto. The letter said: "I want to buy your car. I'll pay $10 000 for it. If I don't hear anything more from you, I'll assume that I can drive the car away when I'm in Toronto at the beginning of April." When he received that letter on March 5th, Tad phoned Janet. She was not home, but he left a message on her answering machine that said: "I'm willing to sell my car to you, but only if you promise to pay $15 000. I need your answer within one week." Janet listened to that message on March 6th. That same day, she sent a second letter to Tad that said, "I received your message. I'll pay $15 000, but not one cent more." On March 10th, Tad decided that he did not want to sell the car after all. He immediately left a message on Janet's answering machine that said: "The deal is off. I'm keeping my car." An hour later, he received Janet's second letter. Which of the following statements is most likely TRUE?

A) The parties do not have a contract because Janet was not entitled to say that her initial offer would be accepted through silence.
B) A contract was created in Edmonton on March 6th.
C) The parties do not have a contract because an offer that is received by telephone cannot be accepted by mail.
D) Tad successfully revoked his offer before he received Janet's acceptance.
E) A contract was created in Toronto on March 10th.

Question 37

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

A) a trust.
B) a tender.
C) a firm offer.
D) a counter offer.
E) an option.

Question 38

A battle of the forms usually occurs when

A) each party insists on multiple copies of a document.
B) each party's standard form contract contains all of the terms of the agreement.
C) each party insists upon using the offeror's standard form contract for every transaction.
D) each party claims to have entered into a contract on the basis of its own standard form contract.
E) each party insists upon using the offeree's standard form contract for every transaction.

Question 39

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

A) A contract was created on August 20th.
B) Bentley revoked his offer on August 15th.
C) A contract was created on August 1st.
D) Bentley's offer was terminated by lapse of time.
E) A court would refuse to recognize a contract because it would be unfair to require Bentley to sell $75 000 worth of widgets for $50 000.

Question 40

The "master of the offer"

A) is a description of the offeree, who can either accept or reject an offer.
B) can insist that silence will be treated as acceptance.
C) can change the terms of an offer after it has been accepted.
D) is always the same party that issued the offer.
E) is a concept that occurs under a bilateral contract, but not under a unilateral contract.

Question 41

On June 1st, Sasha agreed to sell a car to Elaine for $10 000. Under the terms of that agreement, she was required to pay the price to him on June 10th and he was required to transfer ownership in the car to her on the same day. Once Sasha and Elaine do so, their contractual relationship will be terminated for all purposes.

Question 42

A statute makes it illegal for an unlicenced individual to "offer for sale a switchblade knife." Mack, who does not hold a licence, owns a store that deals in a variety of items. The front window display case, which is visible from the street, contains a switchblade knife that has a price tag on it. Mack has undoubtedly committed a crime because he does not hold a licence.

Question 43

Under the normal tendering process, a party that submits a bid may have obligations under both Contract A and Contract B.

Question 44

It is presumed that people who create agreements in commercial contexts do intend to create legal relations, while people who create agreement in social or family contexts do not intend to create legal relations. Provide an explanation for each of those presumptions.

Question 45

An option is valid only if it is placed under seal.

Question 46

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

Question 47

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

Question 48

Agreements created between family members or friends are never legally enforceable.

Question 49

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 ? HYPERLINK "mailto:[e-mail]" ?[e-mail]." ?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.

Question 50

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.

Question 51

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.

Question 52

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

Question 53

From a risk management perspective, explain why it may be better for a business to use an invitation to treat, rather than an offer, when seeking someone to buy its product.

Question 54

On June 1st, Maureen sent a letter to Joel that offered to sell 10 000 shares in Tadpole Inc (a computer software company) for $5 each. Her letter did not require Joel to respond by any particular date. On June 3rd, Tadpole Inc publicly announced that its engineers had perfected a new technology that would revolutionize the electronic commerce industry. By June 4th, the price of a single share in the company had increased to $100. On June 6th, Joel returned from his cottage and learned of both Maureen's offer and the price of Tadpole Inc shares. He promptly sent a letter to Maureen that said, "I accept your offer. I will pay a total of $50 000 for 10 000 shares in Tadpole Inc." Maureen obviously no longer wants to sell her shares under the price that she quoted in her offer. Discuss the factors that a court would consider in deciding whether or not she and Joel had created a contract.

Question 55

An offer is always automatically revoked if either the offeror or the offeree dies before acceptance.

Question 56

How is the concept of a meeting of the minds related to the concepts of offer and acceptance? Illustrate your answer by reference to the phenomenon of a cross- offer.

Question 57

A person may be held liable under a contract even if they did not personally want to enter into an enforceable agreement.

Question 58

Mysty offered to sell her car to Tim for $15 000. Tim faxed a letter to her that said, "Consider it sold. I'll bring the money to you next Monday when I pick up the vehicle. Of course, for that price, I'll want you to install a new stereo in it." Tim did not hear anything more from Mysty, but he arrived at her door the following Monday with $15 000 in cash. He was delighted to find that a new stereo had been installed in the car, but disappointed when Mysty refused to accept his money or hand over the vehicle. Mysty is required to do so because there was a valid offer and acceptance.

Question 59

An advertisement in a newspaper is usually considered an offer if it contains a clear description of the product and a specific price.

Question 60

As a general rule, the courts will not enforce an agreement that is not in writing.

Question 61

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.

Question 62

How does the death of either the offeror or the offeree affect an offer? Provide examples to illustrate your answer.

Question 63

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.

Question 64

Gigagar Inc manufactures computer components. It wants to develop a new line of product, but realizes that it cannot do so without a complicated device known as a "digital phalange finger." It has tried to design that devise itself, but has failed. It therefore sent a letter to Katenben Ltd, another high- tech company, that said: "We are willing to pay $100 000 for the design of a digital phalange finger." Katenben Ltd responded by saying that it believed that it might be able to design the device. However, it also indicated that it could not guarantee its results and said that it did not want to commit itself to a potentially impossible project. Gigagar Inc then wrote back in a letter that said: "We understand your concerns. We do not require any guarantee of success. We also appreciate that, given the complexity of the project, you may decide to drop the matter after some preliminary investigations. Nevertheless, our offer stands-we will pay $100 000 if you successfully design a digital phalange finger." Katenben Ltd spent the next six months and a great deal of money trying to design the device. As it neared successful completion, however, Gigagar Inc announced that its own engineers had experienced an unexpected breakthrough and had successfully created a digital phalange finger. Gigagar Inc therefore told Katenben Ltd that its offer of $100 000 was revoked. Three days later, Katenben Ltd also successfully produced a working digital phalange finger. It now demands payment of $100 000. Is it entitled to that money? Give reasons for your answer.

Question 65

Explain what it means to say that the offeror is the "master of the offer." Provide examples to support your answer.

Question 66

"If a contractual offer is accepted by conduct, rather than words, the parties must have a unilateral contract, rather than a bilateral contract." Discuss that statement. Use examples to prove your answer.

Question 67

As a matter of risk management, how can a business avoid becoming involved in a battle of the forms?

Question 68

List five ways in which an offer can be terminated.

Question 69

If you insert a coin into a vending machine and receive a chocolate bar in exchange, have you entered into a contract? If so, is that contract unilateral or bilateral? Give reasons for your answer.

Question 70

You have developed a business proposal called the Law Book Club. Your intention is to send books to club members on a monthly basis. Under the proposal, each member would then be charged a price for the book unless he or she specifically indicated, within a one- week period, that he or she did not wish to purchase the selection. Discuss that proposal in terms of the rules regarding the acceptance of offers.